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UBS’ senior economic adviser George Magnus published a lengthy note earlier this week explaining why Asia is slowing down, and what can be done to avoid it.One passage stuck out to us because it connected China’s lack of technological progress to deap-seated cultural norms.
According to Professor Peng Gong of Tsinghua University and Berkeley, China’s problem isn’t the amount of R&D it produces, but the quality, and this is related to two cultural genes that have passed through generations of Chinese intellectuals.
The first is the Confucian proposal that intellectuals become loyal administrators, the second comes from the writings of Zhuang Zhou who proclaimed that a harmonious society would arise from isolating families to avoid exchange and conflict, and by shunning technology. The modern consequence, he says, is a society that discourages curiosity, critique, challenge, commercialisation and collaborative technology. China’s celebrated high speed rail network may be a case in point. Until 2003,the Ministry of Railways sought to develop high speed rail and track without foreign assistance, and in an official attempt to take on world bullet train manufacturers. But this indigenous technology initiative failed seemingly for many of the reasons suggested above, and was abandoned abruptly in favour of a ‘market access for technology transfer policy’, which resulted in approaches to major high speed companies in Japan, France, the UK and Germany. The programme accelerated rapidly, with China buying the patents, but its suppliers retaining the intellectual property rights.
Magnus thinks they must make changes soon or they’ll never truly become global leaders:
Anecdotes and examples, such as this, can certainly be seen as half full, or half empty examples of where China has arrived. But there’s a strong view that China’s innovation and technology shortcomings are rooted in a socio-cultural system, and an incentive system that emphasises incremental over radical change, and quantity over quality and uniqueness. No one can say that these problems will retard Chinese innovation and technological competitiveness forever. But in our view they emphasise that in the absence of on-going political reform, and the creation of robust institutions, China’s technological cutting edge may forever lag behind that of its western competitors and rivals.
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