Opinion | Many multinational corporations understand China better than Western politicians

By Augustus K. Yeung

Introduction

That the US businesspeople understand China better than their compatriot politicians or policymakers—who are hawkish--is a promising proposition. In an age of misinformation, it's essential to establish this fact. Or there will be more misunderstanding.

What Has Driven China's Innovation Abilities?

The Belfer Center at Harvard University's Kennedy School released a paper in December titled "The Great Tech Rivalry: China vs the US", analyzing the technological status of the two giant economies.

Harvard professor Graham Allison, lead author of the report, and Eric Schmidt, the former Google CEO, also published an op-ed in The Wall Street Journal on the subject. They contend that China has already surpassed the United States in areas like artificial intelligence, 5G, quantum information science, semiconductors, biotechnology and green energy.

The study identified China's "whole-of-society" approach as the differentiator. But how does this accelerate China's technological development? The US needs a comprehensive understanding of what has driven China's innovation abilities in general, so policymakers can develop a more strategic response.

China's five-year plans lay out the country's priorities and responses to both domestic and external changes. While US policymakers have long scoffed at China's top-down planning system, these directives have generally delivered good outcomes.

Today China Has Surpassed US in AI

Today, Schmidt insists, China has surpassed the US in AI and this is, coincidentally, an area China started focusing on over a decade ago.

The recent US sanctions on a range of technology, such as high-end semiconductor chips, have triggered faster domestic development in China. Many in the world expect China to catch up with the West, Taiwan and Korea in high-end chips in the not-so-distant future.

Along the way, the central government has released a report on the digital economy, covering the development of digital infrastructure (especially for big data) and key technologies, and the digital transformation of traditional industries and public services, over the next five years.

While China pursues top-down planning policies, it also nurtures dynamic private-sector enterprises along with state-owned enterprises, creating a unique, dual economic structure.

SOEs provide public goods, often going beyond the narrow definition of economic returns to fulfill their social responsibilities. These public goods and infrastructure in turn support all types of enterprises, foreign and domestic, creating a better ecosystem for business in China.

In addition, local governments function as a link between the central government and private enterprises, channeling resources according to Beijing's priorities while supporting businesses through funding, the incubation of start-ups and public-private partnerships. This layered approach ensures the nation's resources are used to meet the most critical objectives, providing cohesion and resilience.

Fusion: China's Culture, Capitalism and Marxism

China is an ancient civilization that has developed fine-tuned and learned from a wide range of philosophies over time. This inclusive nature, coupled with absorption of Western political ideas such as capitalism and Marxism, serves as the backbone to China's modern thinking or mindset.

At the centennial anniversary of the Communist Party, President Xi Jinping repeatedly emphasized the theme "To learn from history and build a better future". As China searches for its modernity with Chinese characteristics, this mindset is manifesting itself in everything it does.

In the face of technology sanctions, China must move to neutralize such threats, given its clearly stated and justifiable objectives and goals, the Chinese people and businesses have been willing to go along with the government's plans and policies.

MNC Understand China Better than Western Politicians

Western multinational corporations operating in China understand this approach much better than politicians. Doug Guthrie, formerly of Apple University, recently underscored why being in China was so critical for the success of Apple.

As the hub of Apple's global supply chain, China's cluster of suppliers, diligent workers and support from local governments created a structure offering unparalleled reliability, optimized cost, quality and timeliness. Apple and Chinese partners co-created the intellectual property needed for Apple products, leading to a win-win situation.

The same can be said for Tesla and Nvidia. When Tesla was having trouble in the US back in 2019, the central government cleared its new gigafactory in Shanghai with a US$1.4billion loan from several Chinese state-owned banks. That turned Tesla's fate around.

Today's Tesla is the top-selling electric car brand in China and half of Tesla global deliveries are from Tesla's Shanghai plant.

Similarly, US semiconductor company Nvidia benefited immensely from the massive demand for automotive chips in China, the world's largest automotive market.

Ali Kani, Nvidia's vice-president, stressed the importance of China's dynamic electric vehicles sector to the company's efforts to expand its global automotive business, which has projected revenues of US$ 8 billion over the next six years.

US Tech Companies See Working with China a Win-win

Many US tech companies have benefitted from being part of the Chinese economy and understand the effectiveness of the Chinese approach to governance. These companies share one thing in common: they see working with China as a win-win.

"The same applies at a national level. While the Harvard Belfer study calls US-China relationship in technology a 'rivalry', perhaps a more constructive way to think about it would be to compete where necessary but collaborate where appropriate," says Edward Tse, founder and CEO of Gao Feng Advisory Co., a strategy and management consulting firm with roots in Greater China. ("Vision for winning". South China Morning Post. Friday, January 28, 2022)

Conclusion

There have been false accusations that Chinese scholars working in the U.S. are spying on their host country, causing these Chinese scientists or physicists to feel unwelcome. There has also been a fabrication of the so-called "debt trap" myth, a US plot to tarnish China's international image.

China's diplomats should tap the resources of US businesspeople who have shown a deeper and better understanding of the nation than those US politicians or lawmakers.

The lesson that we've learned from these business people is that US officials and politicians should have more in-depth contacts--which will lead to less scathing comments.

 

The author is a freelance writer; formerly Adjunct Lecturer, taught MBA Philosophy of Management, and International Strategy, and online columnist of 3-D Corner (HKU SPACE), University of Hong Kong.

The views do not necessarily reflect those of DotDotNews.

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