Aloft and on the ground - in search of China's development strategy

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Strategic Choices for China's future Development. Speech by Hu Angang, professor at Qinghua University's public service management faculty, on a conference held by China's ministry of science and technology, December 2002.

source: Xinhua Wenzhai, May 2003, page 148
posted: 2003-10-16

My subject is to newly understand China's technological situation, from a national perspective, and from a perspective of our country's potential. It is about establishing a technological framework on that basis. According to the World Bank's latest figures, China's national income, based on exchange rates, has a share of 3.4% of worldwide international incomes, which corresponds to the seventh position worldwide - and it is position six in 2002. If based on the gross domestic product, it has already reached 11.1%, which would make it number two, wordwide.
The average individual income in China, based on the exchange rate, would be 840 US-$. Based on GDP, it would be 1,320 US-$. Furthermore, the average number of individual education is 6.4 years worldwide. In China, it is 7.1 years - it has already surpassed the global average. As for the level of trade, China develops rapidly, too. This includes exports of high technology with a global share of 4.1%, which puts us into the ninth position, somewhere between the lower center, or upper last third.

In 2001, the last report used technical performance indices, based on four frames: technical innovation, dissemination of new technology, dissemination of old technology (believing that new and old technologies are complementary), and on individual development of skills. When categorizing the world, we can divide it into four categories.
The first is that of leading countries. The second is that of potentially leading countries. The third are countries that act as dynamic users. And the fourth category are the wallflowers. When we compare the big countries of the world (based on average income, skills, etc. of their inhabitants), America is the number one, then it is Japan, and although China is doing better than India, it isn't doing as fine as Britain or Brazil. We should take a special look on technological innovation. The average patents awarded on average is 28 in America, 994 in Japan, and one in China. We are really lagging behind others several hundred times.

What, in essence, is the North-South divide that we are talking about? As it seems, it is a scientific and technological gap. And this North-South divide, or what we might call "new political science" or "new geo-politics", is even wider in terms of knowledge, than in terms of income.
China isn't yet a technological leader, and it is no so-called potential leader. It still belongs to the group of dynamic users. As for the number of its technological centres, there aren't too many either - not in mainland China, that is. They are mostly in Chinese Taiwan, in Hong Kong, etc..

As for China, there are several conclusions.
  1. China's technological development is setting out from a point much lower than that of the developed countries. The level of our country's reforms and opening to the world is just as low, much lower than that of the developed countries' levels, and the number of patents is zero.
  2. Innovative ability, no matter if scientific or technological, isn't satisfactory.
  3. The number of Chinese articles and dissertations are rapidly rising, but the technological investments and the output of those working in this area is still low - even lower than that of India. We can see that China's position is clearly rising. It was the eighth position in 2001, and it may rise in the coming years - it will be a step-by-step development. EI numbers develop the same way, regarding ranking, and the numbers of articles. Especially from those Chinese nationals that return to our country, this may happen rather quickly, although there are sometimes still some lacks in quality.
Recently, we got the task to research China's actual strength and weaknesses. At the beginning of 2001, we benchmarked America, we established eight different kinds of resources as criteria, which includes economic resources, manpower resources, technological resources, capital resources, knowledge resources, political resources, military resources, international capital, and the results were inspiring.
All in all, America was five times stronger in 1980. In 1998, it was still three times stronger. We hope it will be about two times in twenty years (this applies to total strength). The problem is that among all these eight criteria, the lowest point is at technological resources. With America, our conclusion is that there is one criterion where we are better, and many where they are better. The real strength is about national manpower. Here, we have overtaken them. Our performance is much lower elsewhere, and it is lowest where it comes to technological resources. In the future, we must address questions of scientific and technological innovation. We will generally use several indices to compare. One is personal computers, one is the way they are used, the criteria of patents issued will indicate technological innovation - and one can see that the gap between us and America is too big here -, and there is the numbers of articles and dissertations, where the gap is also quite big.
Certainly, in 1980, our position regarding the output of scientific articles was only a 0.33% global share, and it is about 1.77% now (according to World Bank figures, and it may be a bit more, depending on the sources you use), it is now about 4,800 articles - that is the total number. Also, the costs of R&D, we didn't calculate according to exchange rates, and they are also still relatively low. Another conclusion is very clear: it basically is that China, on these criteria, is way behind America, Japan, and other countries. I believe that to put it simple, you could say that in the framework of the whole world, if we analyze these eight strategic resources from an average per-capita perspective, from the GDP perspective, we can say that China is a big country when it comes to its population, but not a big country when it comes to technological innovation. Our trade, although incessantly rising, doesn't correspond to a big country's position either, so in the coming twenty years, no matter if it is about economic growth, about general national strength, or per-capita living standards, it will all depend on scientific and technological development.
We also establish a concept, that in the 21rst century, we must establish the world's biggest knowledge society, that is the strategic concept of our developing society. Comparing one country with another, China's biggest flaw is about knowledge.

The most important thing for us is to discuss how to think of the future China, to define a development strategy - this will be an enormous task. It is about one fifth of world population, about 30% of global manpower, about one third of the typical and traditional farmer societies worldwide. How can we establish the world's greatest educated society? This task includes some consideration of our catching-up strategies.
During the era of Mao Zedong, the strategy was about overtaking Britain, and catching up with America. During the era of Deng Xiaoping, it was about modestly prospering society [xiao kang she hui]. Using more comparative advantages at our arrival at the 21rst century, the question is if we can seize unparalleled opportunities of education and globalization, if we can build a knowledge development strategy, if we can narrow the gap of knowledge. This narrowing the gap has two meanings. The first is about narrowing the gap with the developed countries. The second is about narrowing the gap between our cities and rural areas. This includes the gap between the educational capital of individuals, too. This kind of national strategy must draw on knowledge to promote economic growth. China's condition today is that we invest into hardware. We are the world's number one in terms of this domestic investment rate. But as for R&D, education, public health we are lagging behind the world. Investment into hardware and that into software must match. If one is too high, and the other is too low, it will be difficult to push economic growth. The 21rst century turns to investment into knowledge. But these investments won't just help economic growth. They will also help people's development. It will considerably lower infant mortality. It will raise people's education. It will transform a widely rural country and its manpower through education. Through a knowledgeable society as the foundation, we will move to innovation through knowledge, and establish the world's biggest learning society, the largest IT society.

[end of speech]

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