Trade dispute can be unexpected opportunity for fresh thinking about China’s innovation drive
Total spending on research and development (R&D) in China hit 1.76 trillion yuan ($254 billion) in 2017, up 12.3 percent from a year earlier, official data showed. The figure was equivalent to 2.13 percent of GDP, a record high in China.
Some observers believe what lies behind the ongoing Sino-US trade dispute is Washington’s concern over China’s increasing ability in terms of technological innovation. If China wants to win this conflict, it must continue on its path to becoming a new science and technology powerhouse. But at the same time, the country must avoid wasteful investment in this area.
Washington’s rising antipathy against Chinese investment in US technology companies has added fresh urgency to the drive for independent innovation.
The R&D figures show the authorities and Chinese enterprises have attached unprecedented importance to this matter. China is in a critical period of technological innovation, where increased R&D investment is necessary for industrial upgrading but excessive, inefficient investment is a mistake that can be easily made.
China must consider how to maximize the effectiveness of its R&D investment amid escalating trade tensions. The country might need to focus on R&D involving cutting-edge technologies such as microchips, engines, space technology and 5G telecoms networks.
The nation needs to concentrate its resources to make breakthroughs. Fundamental research and frontier exploration must be done now.
On Tuesday, Vice Premier Liu He stressed the need to further advance reform of Stateowned enterprises (SOEs). He also said in a contest with a foe of great strength, injuring all of a man’s 10 fingers is not as effective as chopping off one. China should adopt the same strategy in dealing with R&D.
The nation’s ongoing SOE reforms must serve China’s technological innovation and industrial upgrading. SOEs can play a key role in organizing and mobilizing resources to tackle technical difficulties. Even reforms aiming to simplify approval procedures in SOEs can improve innovation efficiency.
In recent years, China has established dozens of R&D industrial parks and incubators aimed at encouraging independent innovation, but most investment in these facilities focuses on low- and middle-end technologies.
Overheated investment in some areas such as low-end artificial intelligence has led to overcapacity. Things need to change.
Experience tells us that it is meaningless to focus only on the growth in R&D spending. The trade dispute offers a chance for China to rethink its R&D strategy and concentrate its resources on efforts to achieve key breakthroughs in cutting-edge technologies.