In the weekly column we take turns writing about innovation and economic trends in Asia.
(Photo: Klawe Rzeczy)
There is currently an exhibition in the German Historical Museum in Berlin that deals with the question of what would have happened if history had developed differently. “Roads not taken. Or: It could have turned out differently,” she says.
The question also arises for the further development of China: What would have happened if…? This applies in particular to the technological development of the People’s Republic in the coming years.
China has made tremendous technological advances over the past few decades, refuting the long-held thesis that innovation is not possible in an autocracy. What Chinese companies have not yet achieved with the combustion engine, they are now able to do with the electric car.
In mechanical engineering, they have long since competed internationally with the German world market leaders – and China has also had impressive successes with chips, which are probably the most important technological product of the 21st century.
Although they are not yet close to the competition from the USA, for example. But Chinese companies, including Huawei, Alibaba, Baidu and SMIC, have made remarkable strides in manufacturing even high-performance chips.
When it comes to semiconductors, China benefits from international know-how
There are three factors behind this: On the one hand, massive state and private investments in the sectors (some of which are extremely inefficient), diligence and ambition on the part of companies and researchers and: international cooperation, i.e. cooperation with companies worldwide.
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This is especially true for the semiconductor industry. Not only the chips themselves, but also the skilled workers and the machines with which the best chips are made in China often come from the USA, Europe or Japan – even if only outdated technology is now used due to US restrictions.
Most recently, Washington had dealt the People’s Republic a sensitive blow in October by further tightening the restrictions not only on the purchase of chips, but also on the tools for manufacturing semiconductors. Now things are getting worse from Beijing’s point of view: The USA is deepening its alliances with those countries where the most powerful manufacturers of equipment for manufacturing chips are located: the Netherlands and Japan. The procedure is similar to the ousting of the Chinese IT company Huawei from the 5G network equipment.
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The United States sees itself threatened by an increasingly aggressive international China. And they don’t see that American companies should help China catch up technologically – especially since there is no clear separation between the military and civilian industry in China due to a policy mandated by the Chinese government.
In a way, the US restrictions are benefiting the industry: According to the analysis firm Daxue Consulting, the Chinese semiconductor industry saw a rapid increase in its sales in 2021, depending on the area between 20 and more than 30 percent growth. And Beijing is channeling billions and billions into the Chinese chip industry in view of the dramatic tightening of restrictions on the industry.
What if China left Taiwan alone?
But none of that is likely to be enough to offset the damage being done by the US and its allies’ restrictions.
This results in a paradox: on the one hand, Beijing is helping the development of the industry with massive domestic political and financial support. On the other hand, it harms the industry through its aggressive behavior on the international stage and the difficult relationship with the USA.
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What happened if? What if Beijing didn’t regularly threaten to take Taiwan by force? What if there hadn’t been massive breaches of trust? What would have happened if China’s head of state and party leader Xi Jinping had not promised then-US President Barack Obama in 2015 that he would refrain from militarizing artificial islands in the South China Sea – and had not broken this promise shortly thereafter, as the author Susan Shirk did describes in her new book “Overreach” (German: gone too far)? What if China’s leaders actually prioritized cooperation and cooperation with the world, as they keep claiming in Sunday speeches?
It’s impossible to know. But one thing is very likely from today’s perspective: China’s technological rise will be slower in the next few years than in the past ten years – and Beijing has to a large extent to blame for this.
In the Asia Techonomics column, Nicole Bastian, Dana Heide, Sabine Gusbeth, Martin Kölling and Mathias Peer take turns writing weekly about the most exciting technological and economic trends in the world’s most dynamic region.
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