As the U.S. chip ban continues to escalate, has China fallen into a "medium technology trap"?
（图片来源：pixabay）
Under the current great changes unseen in a century, China's science and technology field is facing a critical moment of "internal and external troubles".
Recently, the U.S. Congress announced the passage of the National Defense Authorization Act of 2024, which prohibits the United States from purchasing batteries from CATL, BYD and four other Chinese companies starting in October 2027 on the grounds of "national security". Earlier, the U.S. Department of Commerce announced restrictions on the export of lithography machines from Japan and the Netherlands to China, as well as the launch of an investigation into the supply chain of mature process chips, pointing to the development of Chinese chips.
On January 31, Matthew S. Axelrod, assistant secretary of the U.S. Department of Commerce for export administration, said that nearly 800 Chinese entities have been added to the Entity List, of which more than 300 were added under the Biden administration.
Not only the changes in the external environment, but also "internal worries". In the field of cutting-edge technologies such as semiconductors, AI, and biomedicine, there are no big technology giants such as Microsoft and Nvidia in the big market, and China seriously lacks original technology. At the same time, the R&D expenses of domestic listed companies are lower than those of American companies, the fundraising, investment, management and withdrawal of investment and financing institutions have declined across the board, and cutting-edge technology companies are facing certain financing difficulties and listing difficulties.
As China's gross domestic product (GDP) grows from 1.094 trillion US dollars in 1999 to 126.058 trillion yuan in 2023, it will become the second largest economy in the world. But at the same time, have factors such as China's weak basic technology and the continuous tightening of U.S. export controls caused China to fall into a bottleneck period of mature technology dividends, and the original technological capabilities of "from 0 to 1" are far behind those of developed countries, and will economic growth enter a state of relative stagnation for a long time?
Recently, a research team led by Professor Zheng Yongnian, Dean and Professor of Qianhai Institute of International Affairs, Hong Kong Chinese University (Shenzhen), published a series of articles entitled "Overcoming the 'Medium Technology Trap' and Realizing Chinese Modernization" in the Bulletin of the Chinese Academy of Sciences, Volume 38, Issue 11, 2023, proposing the concept of "medium technology trap" for the first time.
Zheng Yongnian believes that developing countries, including China, continue to introduce, imitate and develop mature technologies, but lack of original technology investment, which may become an important challenge in industrial upgrading and development to high-quality countries.
"Today, the U.S. 'stuck' approach shows that it no longer allows China to continue to climb the 'mountain', and the 'decoupling' of the system is even more serious, indicating that the U.S. intends to drive China off the 'mountain'. China should not fall into the trap of the Americans, close itself off and leave the 'mountain,' but should tell the United States that although the United States now occupies the 'mountain,' the 'mountain' has both the scientific and technological contributions of the United States and China, and it is both American and Chinese. Zheng Yongnian called for China to adopt a more open policy and comprehensive reforms to upgrade science and technology to overcome the "medium technology trap".
A few days ago, Dr. Yuan Randong, Assistant Dean and Associate Researcher of Qianhai Institute of International Affairs, Hong Kong Chinese University (Shenzhen), had an exclusive dialogue with Titanium Media App.
Dr. Yuan Randong said that the above original research results have both theoretical value and practical significance. If an economy is to achieve high-quality development, it must overcome the "medium technology trap". In the future, China needs to cultivate original technological innovation capabilities from "0 to 1", and at the same time, it also needs to make efforts to achieve sustainable technological upgrading, that is, from the level of "4-7" or lower on the technical scale to the level of "above 8", so as to promote China's high-quality development.
"In the long run, if we take two steps, based on the correct high-tech investment model, we will be able to achieve 8-10 in time, and then China's science and technology will really lead the world. Yuan Randong said.
Chip import dependence accounts for as much as 80%, and China urgently needs to strengthen high-tech investment
Since 1978, China has fully implemented "reform and opening up". Especially since joining the World Trade Organization (WTO) in 2001, Chinese enterprises have made full use of labor cost advantages and policy preferences to integrate into the global supply chain system to achieve "Made in China", thereby promoting the rapid development of China's economy.
According to the data, in absolute terms, in 2021, the added value of China's manufacturing industry will account for as much as 30% (29.79%) of the world——, close to the sum of the five countries of the United States, Japan, Germany, South Korea, and India. At the same time, in 2023, the domestic GDP will exceed 126 trillion yuan, compared with 1.1 trillion US dollars in 1999 (about 9.06 trillion yuan at that time), with a growth rate of more than 1,390%.
However, compared with the world's first-class manufacturing powers, China's technology manufacturing is still large but not strong.
According to the manufacturing power development index released by the Chinese Academy of Engineering, the technological intensity of China's manufacturing industry is still in the third array, lower than the first and second arrays of developed countries such as the United States, Germany, and Japan, and there is even a risk of being constrained by these countries in the middle and low end.
At the same time, the "Outlook on the Development of China's Industrial Economy (2020)" released by the China Academy of Information and Communications Technology pointed out that although China has maintained its position as the world's largest industrial power since 2010, it is controlled by others in key core technologies, and its dependence on foreign countries in core basic components, key basic materials, basic technologies and industries is more than 50%; Seals accounted for nearly 100% of imports.
This is despite the fact that China's manufacturing industry accounts for nearly 30% of the world's value-added, close to the United States, Japan, Germany, South Korea and India combined. However, according to the 2018 data of the Organization for Economic Co-operation and Development (OECD), China's R&D expenditure (US$465.287 billion) ranks second in the world, second only to the United States, while China's technological strength is still the third in the world, and China (2.14%) ranks 16th in terms of R&D investment intensity, which is lower than the OECD average (2.49%) and behind the United States, Israel, South Korea, Japan and major European developed economies.
This reflects that China's absolute investment in technological innovation has been among the best, but there is still a large gap between the intensity of investment and that of technological powers such as the United States.
Obviously, as scientific and technological innovation has become the core of the strategic competition between major powers, China is still in the "bottleneck" period of the dividends of mature technology transfer, the technological blockade initiated by the United States, and the vicious competition at the internal low-end technology level.
So, what is a "medium tech trap"?
To put it simply, if "0 to 1" represents the key original technology, "1 to 10" represents different levels of application technology. At present, China lacks original technology, and the application technology in many fields has not yet reached the world's top level, and the overall scientific and technological level is generally in the position of "4-7". At the same time, the transition of an economy from low-income to middle-income can be achieved with the help of technology diffusion from advanced economies, but it is difficult to make the leap from middle-income to advanced economies through pure technology diffusion.
"Late-developing countries often experience difficulties in industrial upgrading and transformation to high-income countries because of their lack of original technological advances after technology is introduced, imitated, absorbed and tracked. Zheng Yongnian mentioned in the paper that Chinese manufacturing companies have found it increasingly difficult to move up the value chain.
Then, if China, the world's second largest economy, is to achieve high-quality development and avoid stagnation, it must overcome the "medium-tech trap" and urgently need to strengthen high-tech investment and build an independent and open system.
Yuan Randong told Titanium Media App that in fact, many people have certain misunderstandings about pure basic research. For example, there is no causal relationship between the level of pure basic research and the problem of "stuck neck", although the United States and other Western countries have blockaded China in some key technological fields and want to prevent China's progress, they should not rush to the hospital because they are "stuck" by others, and blame the root cause on China's insufficient level of pure basic research and the US blockade.
"The output of pure basic research is a 'public good' belonging to all mankind, and as long as you can read the papers published by others, you can understand the principles, and there are no regional 'barriers'. We are "stuck", which is embodied in the fact that a certain product cannot be manufactured independently, such as high-end chips, lithography machines, high-end bearings, and so on. The most critical reason why we cannot achieve complete domestic production of these products is that there are many details and parameters of the process in the manufacturing process of these precision products that we do not know, and there are many patents and non-patented trade secrets behind them. Many of the truly valuable manufacturing process details do not exist in the form of patents, but are handled by enterprises as secret trade secrets, because once the patent is registered, the details must be disclosed, and the patent has a term, and as long as the trade secret is not leaked, it can always bring profits to the enterprise. A classic case is the formula of Coca-Cola, which has not been patented, and is still a trade secret. Recipes for beverages are difficult to get by reverse engineering. If we want to completely replicate Coca-Cola, we can't do it, but no one will say that we are "stuck" in the beverage industry, and no one will say that this is a problem with our basic scientific research. Yuan Randong said.
Yuan Randong believes that since the founding of the People's Republic of China, China has made a lot of progress in scientific and technological research, but it is the "soft underbelly" of China's science and technology in the new development model of pure basic research, applied technology, and financial support. He pointed out that in order to comprehensively improve the level of pure basic research, it is necessary to first clarify some misunderstandings, and then find out the root cause of the relative weakness of pure basic research in China, and on this basis, formulate strategic ideas for improving pure basic research.
Yuan Randong told Titanium Media App that more than 90% of China's "basic research (scientific research)" is not real pure basic research, but applied research.
In his paper, he pointed out that China's investment in scientific research is still insufficient compared to other scientific and technological powers, especially in the field of pure basic research. In recent years, the United States, Britain, France, Japan, and other scientific and technological powers have spent 12 to 23 percent of their total domestic R&D expenditures on pure basic research, while China has only accounted for about 6 percent.
"The distinction between basic and applied research in China is not rigorous and somewhat vague, which is actually very detrimental to our scientific research management. Yuan Randong said that many people have been "confused" about related concepts.
Yuan Randong pointed out to Titanium Media App that China has not yet begun to make efforts in the development of real pure basic research, which is the fundamental reason for the relative backwardness of China's pure basic research, and therefore has great potential. With the rise of China's comprehensive national strength, it is a wise move to gradually increase investment in pure basic research within the scope of its capabilities, which is in the long-term interests of China and mankind.
Yuan Randong emphasized that if China wants to be the first number one in the global science and technology field, it is not a simple "copy homework" and be a "model student" to solve the problem, but to have "endogenous creativity", the science and technology industry needs underlying technological innovation, and China needs to recognize its own shortcomings. In the future, the country will need to spend longer and greater investment to develop basic scientific and technological innovation.
The road to leapfrogging: establishing a talent system, scientific research reform, and encouraging capital
"We must adhere to the principle that science and technology are the primary productive forces, talent is the first resource, and innovation is the first driving force, and thoroughly implement the strategy of rejuvenating the country through science and education, the strategy of strengthening the country with talents, and the strategy of innovation-driven development, open up new fields and new tracks for development, and constantly shape new momentum and new advantages for development. ”
At present, China has realized the important role of scientific and technological innovation and basic scientific research, and has vigorously supported and invested in cutting-edge technology industries such as humanoid robots, artificial intelligence, and chip semiconductors.
On February 1, China proposed that scientific and technological innovation can give birth to new industries, new models and new kinetic energy, which is the core element of the development of new quality productivity. It is necessary to strengthen scientific and technological innovation, especially original and disruptive scientific and technological innovation, accelerate the realization of high-level scientific and technological self-reliance and self-reliance, and do a good job in tackling key core technologies, so that original and disruptive scientific and technological innovation achievements can emerge one after another, and cultivate new momentum for the development of new quality productive forces.
Take humanoid robots, for example. Not long ago, the Ministry of Industry and Information Technology of the People's Republic of China issued the "Guiding Opinions on the Innovation and Development of Humanoid Robots", proposing that by 2025, the Chinese humanoid robot innovation system will be initially established, a number of key technologies such as "brain, cerebellum, and limbs" will make breakthroughs, and the whole machine products will reach the international advanced level and achieve mass production; by 2027, the technological innovation ability of humanoid robots will be significantly improved, and an internationally competitive industrial ecology will be built, and the comprehensive strength will reach the world's advanced level.
Not only that, in terms of investment, according to the departmental budget data released by the National Natural Science Foundation of China, in 2023, the total project budget of the National Natural Science Foundation of China will increase by 1.180 billion yuan compared with 2022, a year-on-year increase of 3.6%, a record high.
In terms of private capital, in 2023, the number of completed investment cases (by enterprise) in China's equity investment market will reach 7,107, a year-on-year decrease of 12.2%, and the total investment amount will reach 692.826 billion yuan, a year-on-year decrease of 23.7%, which is narrower than that in 2022. Among them, the four major areas with large investment are semiconductors and electronic equipment, biotechnology/medical health, IT, and machinery manufacturing, accounting for about 66% of the total investment in the whole industry.
Zheng Yongnian said in the paper that in order for a country to break through the "medium technology trap", it must meet three conditions: a large number of universities and scientific research institutions capable of conducting basic scientific research; a large number of enterprises or institutions that have the ability to transform basic research into applied technology; An open financial system, whether it is basic research or the transformation of applied technology, requires a lot of financial and fiscal support.
"These three conditions must be coordinated with each other, and none of them is indispensable. Once any of these conditions are missing, it will not only be difficult for technological innovation to enter a virtuous circle and achieve continuous progress, but it will also make technological innovation come to an abrupt end at a certain node. Zheng Yongnian believes that whether it is at the institutional or policy level, China's science and technology innovation system needs to make a series of changes, and China needs to think about how to meet these conditions according to its own actual situation.
Zheng Yongnian mentioned in the paper that in terms of talent and free thought, "the biggest uncertainty in China's basic research comes from the 'decoupling' of China by the United States and Western countries." ”
Yuan Randong told Titanium Media App that basic research is inseparable from cutting-edge scientific and technological talents. Similarly, basic research is inseparable from the full exchange of scientific researchers from different civilizations, cultures and countries.
Yuan Randong said frankly, "The fundamental problem of scientific and technological innovation is 'people'. I propose that the concept of 'scientific and technological population' can be divided into two parts, one is the scientific population, and the other is the technical population. If China wants to increase the proportion of the scientific and technological population on a large scale, it will need to reshape the education system, and exam-oriented education will not be effective in increasing the size of the scientific and technological population. The ability to think independently, think logically, creatively and imaginatively, get hands-on and solve practical problems is the key to cultivating a scientific and technological population, but the current education system cannot meet these requirements. ”
In Yuan Randong's view, in the future, China needs to meet the three necessary conditions of education, management and "soft infrastructure" as the core, expand the scale of the "scientific population" and make the "scientific population" make the best use of their talents, so as to fundamentally improve the level of pure basic research in China.
In addition, state-owned enterprises and private enterprises are also the core elements of China's scientific and technological innovation and development.
"In terms of company operations, the non-openness of enterprises is China's biggest shortcoming. Zheng Yongnian believes that compared to American companies that extend their supply chains to the rest of the world, the situation in China is just the opposite, and companies are still basically in a closed relationship with each other, "like the relationship between the potatoes that grow on a plant." Therefore, the most important thing for Chinese companies is market share, and profit is guaranteed by market share, and once the market is saturated, profit becomes a problem. More importantly, closed firms lack the incentive to compete.
Zheng Yongnian mentioned in the paper that China needs to encourage state-owned capital to play an important role in venture capital, play a coordinating role of the government, and play the role of private venture capital. These include partnering with universities to invest in basic research, exploring a venture capital system with Chinese characteristics, and investing in the transformation of applied technologies.
In fact, Yuan Randong added, the return on venture capital generally takes a long time, generally 8-15 years, or even longer. Such long-term investment is not allowed by the current system, because the tenure of state-owned capital managers is generally 3-5 years. In order to overcome the shortcomings of this system, it is necessary to carry out reforms. Moreover, venture capital funds need to focus on and invest in "tech talent", rather than focusing on returns.
Yuan Randong said frankly that if China really wants to overcome the "medium technology trap", it needs to have a sufficient number of scientific and technological population, which is a very important factor. Once China has 10%, 20% or even 30% of the scientific and technological population in the future, it will become "inevitable" for China's scientific and technological innovation to lead the world.
(This article was first published on the Titanium Media App, author: Lin Zhijia)