China: An Emerging Technological Superpower?

Content

Abstract

Key Words

1 Introduction

2 The Technological Situation in China
2.1 Economic Progress
2.2 Foreign Contribution
2.3 Classification of Technology
2.4 Research and Development

3 China’s state of education
3.1 Stages of Education
3.2 Compatibility of Education Systems
3.3 China’s Educational Achievements
3.4 Educational Challenges
3.5 International Competitiveness

4 Conclusion

Bibliography

Abstract

This paper aims to answer the question of whether China is emerging as a technological superpower. After analysing the major constituents of China’s recent technological progress the Chinese education system is evaluated. It is shown that critical deficiencies as to indigenous innovation and technological competitiveness still exist. In conclusion, it is stressed that China’s great potential of future technological advancement significantly depends on enhancing its state of education.

Key Words

China, Education, Technology

1 Introduction

In the course of globalisation, the world economy has increasingly been growing together with the markets being subjected to rising international competition. As a consequence, it seems that the wealth of a nation strongly depends on its ability to surpass foreign competitors. This may be the reason why China’s recent economic rise has caused widespread concern all over the world. The variety of Chinese goods is no longer represented only by toys, apparel or footwear. Technologically more advanced manufactures, such as notebook computers or DVD players, constitute a substantial share of China’s range of products and are traded in large quantities. As a result, a great number of both small companies and multinational corporations are facing decreasing prices and a decline in producer rents. There has been an intense debate about China’s growing economic influence and it is often said that China is emerging as a high technology superpower. However, these assessments are usually not based on a careful examination of the underlying elements of China’s advancement.

A strong educational foundation is essential in order to develop indigenous innovation capacity and thus sustain technological competitiveness. The Chinese Premier Wen Jiabao recently stated that “science and technology are the decisive factors in the competition of comprehensive national strength … We must introduce and learn from the world’s achievements in advanced science and technology, but what is more important is to base ourselves on independent innovations.”^[1]

This paper is concerned with the question of whether China can be considered as an emerging technology superpower. This question may be answered by analysing China’s present technological characteristics followed by an evaluation of its state of education.

2 The Technological Situation in China

2.1 Economic Progress

China’s economic and technological progress is mainly based on Deng Xiaoping’s open-door strategy. After Mao’s death in September 1976 and the arrest of the Gang of Four, Deng gradually emerged as China’s leader and consolidated control over the Communist Party of China. His open-door policy aimed at transforming China into an outward-looking country by promoting international trade and attracting foreign investment.^[2] Deng’s reform programme was launched in 1978 and focused on agriculture, industry, technology and defence. These Four Modernisations were arranged according to priority and the field of technology was initially dominated by agriculture and industry.^[3]

The fundamental change of China’s economic situation primarily resulted from the establishment of special economic zones, which were essential for the opening-up of China’s economy. These zones were set up in several Chinese cities and regions to provide significant advantages for enterprises operating there. In particular, imported goods were free of both tariffs and taxes. As a consequence, an increasing number of foreign investors started to take advantage of the attractive conditions and the special economic zones evolved into China’s major economic centres.^[4] Over the course of time, the Chinese government began to focus on technology as a top priority. This strategy was a direct result of the massive flow of foreign direct investment (FDI) into China’s more capital-intensive industries. FDI flows were to become the driving force of technological progress in China and initiated a period of sustained economic growth.

According to the World Trade Organization (WTO), China’s gross domestic product (GDP) in real terms grew at an average annual rate of ten per cent over the period from 2000 to 2006.^[5] This impressively high growth appears to be closely linked to China’s remarkable trade performance in recent years. The trade to GDP ratio for China is 69 per cent and its current account surplus amounted to $160.8 billion in 2005. China’s production of manufactures constituted 92.4 per cent of China’s total exports and 73.2 per cent of total imports.^[6] Hence, the production of manufactures seems to be a critical determinant of China’s economic development. Preeg states that high technology manufactures account for 55 per cent of China’s total exports, whereas 19 per cent are low technology manufactures.^[7] These statistics suggest that China’s present state of technological development has already reached the level necessary to compete with technologically advanced countries, such as the United States or Japan. Nevertheless, there are several facts indicating that China’s level of technology seems to be overrated.

2.2 Foreign Contribution

First of all, it is necessary to become aware of China’s dependence on foreign direct investments (FDI). FDI flows usually increase the capital stock in the country of destination and thus mainly concern physical investments into buildings, machinery and equipment. According to the United Nations, FDI flows into China amounted to almost $70 billion in 2006. This amount accounts for 11 per cent of China’s constantly rising GDP and even exceeds the aggregated FDI flows into South and Central America.^[8] Apparently, there is a close linkage between these investments in China’s capital stock and its level of technology. Preeg states that FDI is the decisive factor for the development of Chinese technology. He argues that Taiwan is the major investor in China and Taiwanese investments have risen to an estimated $30 billion.^[9] Foreign direct investment from Taiwan essentially contributed to the creation of modern manufacturing industries in China. Major investments have been made in the semiconductor sector. Semiconductor technology is crucial for producing components necessary to produce several types of modern electronic goods, e.g. notebook computers, mobile phones or digital audio players. According to Preeg, a large proportion of all companies in the Chinese semiconductor sector are wholly Taiwanese-owned firms.^[10] Bergsten et al state that Taiwanese companies such as Quanta, Compal and Asutek account for 80 per cent of the global output of notebook computers. In this context, 90 per cent of all notebook computers manufactured by Taiwanese companies come from factories located in China.^[11]

Another meaningful characteristic as to China’s technological situation can be concluded from its range of exported goods. Electronic products and communication equipment dominate Chinese high technology exports. According to the Organisation for Economic Cooperation and Development (OECD), 88 per cent of these exports are produced by foreign firms. Moreover, the share of wholly foreign-owned enterprises has substantially increased in recent years. In contrast, exports of low technology goods such as toys and footwear are predominantly produced by domestic firms.^[12]

A further aspect reflecting China’s questionable position regarding advanced technology concerns the share of Chinese value added in its exports. China is considered a major export platform for multinational enterprises. The term export platform describes a country that merely assembles imported components for re-export.^[13] According to the WTO, Chinese imports of integrated circuits rose by almost 30 per cent between 2005 and 2006.^[14] These parts are mainly incorporated in final products for re-export, particularly in the information and communication technology sector. Bergsten et al argue that the typical notebook computer made in a Chinese factory has an operating system by Microsoft, hard drives from Japan and a display imported from South Korean firms. Consequently, the share of Chinese value added is only one third of the value of the output. The other two-thirds are embodied in the imported parts and components.^[15] Hence, “export platforming” is a relevant reason for China’s rapid export growth and leads to further misinterpretation as to China’s current state of technological development.

2.3 Classification of Technology

Besides China’s disputable contribution to domestically manufactured high-value products, the categorisation of these goods is certainly an additional key aspect to consider. The assessment of technological competitiveness requires an appropriate classification of the specific fields of science and technology. The most commonly used listing was developed by the United Nations. The International Standard Industrial Classification (ISIC) divides industries into high-technology, medium-high-technology, medium-low-technology and low-technology groups. Radio, TV and communication equipment as well as office and accounting machinery are classified as high-technology sectors. Furthermore, electrical machinery and apparatus are defined as medium-high technology products.^[16] As a result, the ISIC classifies almost 65 per cent of Chinese exports of manufactures as high-technology and medium-high-technology goods.^[17] Although the ISIC system is widely accepted and applied to analyse a country’s level of technology, it does not sufficiently reflect the whole spectrum of modern technology. Thus, a reasonable evaluation of China’s technological situation and its international competitiveness must not be restricted to the ISIC. According to Bainbridge and Roco, advanced technology can be divided into four main categories. They state that nanotechnology, biotechnology, information technology and cognitive science represent technological fields that are most relevant with respect to future significance and innovative potential.^[18] On this new basis, China’s technological competitiveness appears to be limited to only one sector. Bergsten et al point out that information technology products such as notebook computers, LCD displays or DVD players constitute the vast majority of Chinese manufactures, whereas output in the other advanced technology industries is negligible. Between 1998 and 2004, Chinese exports of digital cameras to the United States increased from $7 million to $2 billion. In comparison, exports in the biotechnology sector rose by only a third.^[19]

[...]

^[1] Wen Jiabao cited in Pillsbury (2005), p. 5.

^[2] See Smith (2007), pp. 54 f.

^[3] See Preeg (2008), p. 26.

^[4] See Smith (2007), pp. 56-58.

^[5] See WTO (2007a), p. 38.

^[6] See loc. cit.

^[7] See Preeg (2008), p. 62.

^[8] See United Nations (2007), pp. 253 ff.

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^[9] See Preeg (2008), p. 49.

^[10] See loc. cit., p. 50.

^[11] See Bergsten et al (2007), p. 106.

^[12] See OECD (2007a), p. 15.

^[13] See Preeg (2008), p. 53.

^[14] See WTO (2007b), p. 214.

^[15] See Bergsten et al (2007), p. 106.

^[16] See OECD (2007b), p. 219.

^[17] See WTO (2007b), pp. 214 f.

^[18] See Bainbridge/Roco (2002), pp. 1-4.

^[19] See Bergsten et al (2007), pp. 104-106.