Technological breakthroughs will boost China’s competitiveness with the US

By Hu Weijia Source:Global Times Published: 2017/2/23 0:13:39

As the world's largest and second largest economies, the US and China have a competitive relationship. The competition is not just on economic size or military strength, but includes breakthroughs made in the research and development of key technologies for the 21st century, such as microchips.

Increasing investment barriers and uncertainties resulting from a rising wave of anti-globalization have set obstacles for Chinese high-tech firms looking to merge with or acquire companies in the US semiconductor industry, leaving China few choices than to pursue a path of independent innovation.

The Chinese government announced a major initiative in 2014 to boost the development of its integrated circuit (IC) industry, with a consensus in Chinese society that innovation in the microchips - which act as the brains of electronic products from smartphones to guided missiles - should be a matter of national strategy.

One recent view is that China is likely to become the No.1 producer of 300mm silicon wafers in the world over the next 10 years. Although the US, Japan and South Korea still lead in the global IC industry, its center of gravity is likely to shift toward China as Beijing invests huge resources in scientific and technological innovation.

Institutional advantages in the Chinese economy have fueled China's rise over the past decades due to the government's ability to concentrate resources into big projects. Now the country will probably make breakthroughs in key technologies such as microchips, engines and batteries. China's top leaders have repeatedly stressed that the country must rely on scientific and technological innovation to seize new development opportunities in the increasingly intense international competition. It can be expected that the government will once again play a role in promoting innovation for key technologies.

Some analysts claim that China has already overtaken the US to be the largest economy based on GDP in PPP terms, but it is of little practical significance. There will be no way that China can catch up with the US if China cannot become the world's leader in scientific and technological innovation. As China's cost-effectiveness of human resources dribbles away, switching from labor-intensive industries to technology-intensive ones will also become a critical test for the country to maintain its status as a global manufacturing giant.

While Beijing steps up to shift the world's center of gravity in technological innovation from the US to China, Washington is ramping up efforts to bring back low-end manufacturing from China. Will those efforts have na impact on the overall competitiveness of the two countries? Let's wait and see.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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