China Competes to Become Global Technology Leader

Are China’s questionable intellectual property tactics challenging US dominance?

In ancient times, China was a global leader in technology. Today, the country is on track to become one again. The Chinese government is investing heavily in intellectual property and innovation since developments in technology are seen as a critical factor in establishing the country as a global superpower.

In the past several years, China has become infamously known for intellectual property (IP) theft, although this transfer of IP has long been a requirement for companies doing business in China. Since the 1980s, China has required all foreign companies to enter joint ventures with local companies as a condition of entering China and doing business there. This process required foreign companies and investors to knowingly transfer their IP to the Chinese companies they partnered with. In other words, multinational firms were willingly trading technology transfers for access to China’s market. 

The problem here is that China has taken this transferred information and used it in Chinese state-owned companies to its own benefit and without permission. This has come at the expense of the US economy through counterfeit goods, pirated software and the unapproved use of trade secrets in seperate Chinese companies. To many people, particularly from Western cultures, this has demonized China. But was the use of willingly shared IP in other domains entirely malicious, or was it in part a cultural difference?

It’s interesting to consider Shenzhen, China’s technology capital, which has a different approach towards invention. The culture in Shenzhen strongly encourages its young demographic of engineers to invent and innovate in collaboration. Electronic parts are sold in bulk at cheap prices in stall-style shops that resemble traditional Asian markets. In other words, you can find almost any part you need under one roof. Because of this, Shenzhen serves as a hub that gives rising inventors easy access to quick production. Perhaps this lapse in cultural understanding is in part responsible for the current IP theft issues. 

From China’s point of view, they deny having coerced any foreign companies to transfer this IP because these firms had, and still have, the option to leave China’s market and safeguard their IP in doing so. It is, in fact, their choice to stay there. It is also important to note that requiring joint ventures is actually a common practice among many emerging economies and is not unique to China. 

From a Western perspective, China has stolen IP unfairly, unjustly, and betrayed our trust in doing so; However, we should not have assumed that a foreign culture would view IP in the same way we do. It is in part our responsibility to recognize that different countries and cultures do things differently, and we will be better off if we acknowledge this and act accordingly. This is true not only regarding technology, but across all other sectors as well. Taking different cultures and their norms into perspective, and being open to adjusting our own standpoints, is increasingly vital to being successful in the globalized world we live in. 

Although IP theft helped China catch up to the global playing field of high-tech, China is now moving beyond this stolen technology and coming up with technological advancements of its own. For example, China has invented the world’s fastest supercomputer, the first fully electric cargo ship, the first package-delivering automated drone and is the first country to ever land on the far side of the moon.

The future of emerging technologies is one of the biggest areas of competition between the U.S. and China and may determine which country holds the most geopolitical and economic power moving forward. China clearly sees this and is pouring funding into research and development of cutting-edge technologies, making it an important player in this increasingly competitive and critical sector. In a 2010 speech, then-president Hu Jintao said that “a nation’s technological competitiveness determines its place and future in international competition.”

Under pressure from the US, China has agreed to tackle the issue of IP theft, but IP is a tricky thing to track and monitor. One way to stop China’s IP theft would be for countries to relocate their businesses, but China’s economy has become so prominent that many multinational and other foreign companies are still willing to risk IP theft to keep a foothold in China.

As technology continues to become one of the most important things in our lives and a huge economic driver, the US and China will continue their virtual battle for IP and technology dominance.

Although by questionable means, it is undeniable that China has come a long way in a short amount of time, but is China really a current technological rival to the US? Some experts believe they are, while others won’t entertain the idea. Regardless of which country currently leads the world in technological innovation, China is quickly, and undeniably, gaining momentum.