China is fast becoming one of the most important centres of innovation in the world. Nathalie Cachet-Gaujard, CBBC’s Director of Education and Innovation, explains why.
The landscape of innovation in China has been changing at break-neck speed in recent years. This is partly as a result of decades of investment, but also thanks to more recent policies from central government. ‘Made in China 2025’, launched in 2016, puts innovation as one of its core tenets; the ‘Innovation Driven Development Strategy’ and the ‘New Generation AI Development Plan’, announced in July 2017, are all aimed at driving innovation and pulling China further up the value chain.
As well as an increase in government support and funding, there has also been a boost from private money. Significant investment from private Chinese companies, a vibrant venture capital (VC) scene and the emergence of an entrepreneurial class is further contributing to the end of the copycat era and the start of indigenous innovation in China.
China is shifting away from an investment and export-led model, and instead innovation, together with consumption, is now seen as the main driver for current and future growth.
The country has stated its intention to join the world’s top innovative nations by 2020; to then become a leading country in innovation by 2030, and a strong global leader and international hub of science and innovation by 2050.
The themes of the recent UK industrial strategy – AI, an ageing society, clean growth, mobility – match China’s sector priorities and reflect the fact they these are global themes addressing global challenges
A number of factors combine to make China an increasing likely leader in some aspects of innovation. Firstly, the sheer size of the Chinese market enables even niche technologies to be commercially viable. In addition, the unique needs and challenges of the Chinese market give potential for innovation to blossom. Upgrading the manufacturing sector, solving environmental problems and dealing with a rapidly ageing population are all major issues China is facing and require innovation to be addressed effectively. China also has an unparalleled supply chain that allows for rapid production to market; it has a huge talent pool of highly qualified graduates; and it has huge data sets that can now be captured thanks to the recent digitisation wave.
China’s innovation capabilities are demonstrated by a number of indicators.
Research and development is a commonly used measure of innovation and as a marker of investment in technology and future capabilities. According to a report published earlier this year by the US National Science Foundation, China overtook the US in 2016 to become the global leader in the number of scientific publications. China is also the second-largest performer in terms of R&D spending on a country basis, and accounts for 20 percent of total global R&D expenditure.
Another measure of innovation and technological advances is the number of students in science and technology. According to the World Economic Forum, China had 4.7 million recent STEM (Science, Technology, Engineering and Maths) graduates in 2016 while the US had 568,000. Recent programmes by China such as the ‘Thousand Talents Plan’ also strive to bring Chinese talent overseas back home.
A vibrant private sector and VC market
Impetus for innovation has come from the incredible speed of digitalisation in China. The development of digital infrastructure, AI and big data are powerful enablers of many vertical industries. Traditional industries can digitally transform to become more efficient, but China is also seen as a leader in key emerging industries such as autonomous vehicles.
The famous BATs (Baidu, Alibaba and Tencent) led the digital revolution, and all are investing heavily in AI and Big Data, capitalising on the huge amount of data they hold. But many new players are also contributing to this rapidly evolving ecosystem, from bike-sharing companies to face or speech recognition start-ups.
The VC market further supports the development of innovative applications and solutions.
After huge technology deals in Q3 2017, many in AI, VC investment for Q4 included two £2.8 billion mega-deals in China, one by Didi-Chuxing (transportation) and the other by Meituan-Dianping (e-commerce). Latest trends forecast continued appetite for investment in autotech and AI, whilst many of the big tech giants in China are increasingly looking to Southeast Asia for growth opportunities.
An opportunity for the UK to collaborate with China
The themes of the recent UK industrial strategy – AI, an ageing society, clean growth, mobility – match China’s sector priorities and reflect the fact they these are global themes addressing global challenges. It also presents the UK and China with the opportunity to collaborate, building on their respective strengths. This was recognised last year when the UK-China Joint Strategy for Science, Technology and Innovation Cooperation was officially launched on 6th December 2017, outlining the commitment for both nations to take science and innovation collaboration to a new level.