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Is China a technology powerhouse?

For the past few years, China has been steadily cementing its position as a technology powerhouse with innovation after innovation especially in the areas of artificial intelligence (AI) and digital payment. China is the pioneer in using Quick Response (QR) technology and digital payments are processed at the point of sales by scanning QR codes that are linked to customers’ bank accounts in China.

However, its ambition does not end there. China is undoubtedly pulling out all the stops in its march towards world domination in the technology sphere. Supreme leader Xi Jinping made it very clear during the recent Communist Party Congress that he wanted China to be a nation of innovators and a leader in technological power. China wants to be the undisputed world leader in technology as part of a grand plan to transform itself into a country of global influence.  Leveraging on this national objective, China also intends to transition into hi-tech manufacturing as its economy matures, shifting from replicating to innovation as a catalyst for further economic growth.

One of the foremost priorities for the Chinese government is in the area of AI.  In July 2017, China unveiled a strategic plan aiming to become the global number one and create an industry worth US$150 billion by 2030.  In a sign of strong public-private partnership, the government is collaborating with tech giants Baidu, Alibaba and Tencent to accelerate development of next-generation AI technologies ranging from voice activated digital assistants to self-driving cars. 

Within China’s vibrant private sector, Chinese technology companies are creating new business models and disrupting markets. With a combined market capitalisation of US$900 billion, Baidu, Alibaba, Tencent and Xiaomi have incubated around 1,000 new ventures. Their average annual growth rates are in excess of 50 percent. 

Moreover, there are also the next generation unicorns such as news app Toutiao, group-buying service Meituan-Dianping and ride-hailing app Didi Chuxing that are making waves in the mobile and online services industry fuelled by the advancement of AI.  Unicorns are privately-held start-up companies worth more than US$1 billion.

China stands a realistic chance of achieving its aim of global technological leadership. China has a winning multi-prong strategy of having a well-defined national governmental AI action plan with strong commitment and support from the top echelon of leadership, complemented by the initiative of mobilising the support of the private sector.  The government is also actively spending billions of dollars on research, as well as on implementation and adoption of AI. 

On top of this, it definitely helps in that there is already a very potent domestic technology industry that has continuously been rolling out a stream of innovations that not only has tremendous impact locally but internationally as well. For example, China is currently arming its police officers with hi-tech sunglasses that use facial recognition technology driven by AI to spot suspects in a crowded train station. So far, this innovation has resulted in the arrest of 33 offenders. China is also using AI to enhance the decision-making process of commanding officers of nuclear submarines, thereby giving China an advantage in naval warfare.

Looking into the future, with China having ascended into the status of a technology powerhouse and moving into hi-tech manufacturing, what is the implication for the rest of Asia?  China’s transition is opening up the field for other countries to move into low-cost mass production, where China dominated for the past decades and has now vacated. 

Cambodia, Bangladesh, Indonesia, India, Malaysia, Myanmar, Thailand and Vietnam are moving into low-cost manufacturing of garments, footwear, toys, consumer products, basic electronics parts among others. These countries offer the major advantages of relatively low labour cost, government support, adequate infrastructure, and availability of large number of workers. As these countries are building up their manufacturing capability, there are ample business and investment opportunities for foreign companies. China is effectively, in an indirect way, providing the impetus for economic growth in these countries.

Therefore, with the emergence of technology as the uppermost priority for top leadership, the quick and relentless pace of implementation of national initiatives, and the support from the private sector, China’s current technological trajectory will see it become the world leader by 2030.   


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Lee Kok Leong, Content Director, Technical Associates Group (TAG)

 You can connect with Lee via LinkedIn or email.

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