It can be a mistake to call China copy and paste – Asia Report

Raghuram Rajan, former Governor Reserve Bank of Indiahe recently did Statement of China this can be disputed by the facts.

It confirms that China is a leader in the manufacturing sector, but not in ideas and innovation, where it dominates USA, essentially because of its open and democratic nature. Their claim is that non-democratic systems do not lead in innovation/ideas. Overall, it may be true that the United States has dominated the innovation landscape for most of the past half century. But it is no less true that China has caught up tremendously in cutting-edge innovation over the past two decades.

While we are fundamentally opposed to China’s political system, as many of us are, we can objectively see China’s great strides in innovation and thought that have led it to close the gap with the United States and even overtake it in some areas.

Some time ago, Reuters reported on the findings of an independent think tank, the Australian Strategic Policy Institute (ASPI), which he claimed that China leads the world in 37 out of 44 critical technologies in defense, space, robotics, energy, environment, advanced materials, quantum technology and artificial intelligence. The West lags behind in many of these sectors.

So Rajan’s blanket claim that China cannot be a leader in thought and innovation is not supported by real facts.

Why such massive innovation leaps occur in a non-democratic society is a topic for further study. There is ample academic literature to suggest that much of the incremental growth and prosperity of the 21st century has taken place in societies governed by authoritarian or semi-democratic regimes. These regimes have developed their own hybrid versions of state- and market-driven models of capitalism. The whole idea that the 21st century belongs to Asia seems to be based on this hybrid framework of the model of state and market capitalism. Many political scientists also refer to it as state capitalism.

The US appears to be emulating this framework with its model of a new state-led industrial policy to counter China’s semiconductor chips and green energy transition.

Chip Act of 2023 and Inflation Reduction Act of 2022 The U.S., which collectively aims to provide nearly a trillion dollars in subsidies for semiconductor chips and the green transition, is a tribute to China’s growing influence in these sectors.

China has also recently surprised the world with a highly sophisticated new semiconductor chip technology for electronics that may eliminate its need to rely on incremental inputs from the West. The news was echoed by the media around the world.

“Yangtze Memory Technologies Corp, which was blacklisted from US trade last December, made a “surprising technological leap” with an SSD (ZhiTai Ti600 1TB) that was launched in July without much fanfare. What makes this from surprising to significant is the fact that 3D NAND memory is an essential component for high-performance computing (HPC) such as artificial intelligence and machine learning,” says Techwire Asia, a technology news website.

In this context, it may not be easy to dismiss China as a mere leader of the old economy and a laggard in innovation and new ideas.

Henry Kissinger, a former US Secretary of State who recently died, was one of the first people to realize what was going on. During one of his visits to Delhi 15 years ago, Kissinger told a group of journalists from the Times of India and the Economic Times in an off-the-record interview (I was present) that China was ahead of the US in many critical areas. technology.

As India did out of necessity by exporting manpower

Raghuram Rajan further argues that the United States continues to reinvent itself through innovation, starting with the Sputnik moment, when the Soviets launched the first artificial satellite, Sputnik I. The success of the launch came as a shock to the hopeful United States. to be the first to achieve this scientific feat. However, the United States more than matched the Soviets in this field. Later, in the 1980s and 1990s, the United States overcame the Japanese threat to take the lead in exporting sophisticated electronics, automobiles, etc.
Now the US is countering the Chinese threat through innovation in green transition and semiconductor chip technology.

China has also recently surprised the world with a highly sophisticated new semiconductor chip technology for electronics that may eliminate its need to rely on incremental inputs from the West. The news was reported by the media around the world.

Closer analysis suggests that in the past the United States partially overcame these threats through coercion and the deployment of its geopolitical forces. Let’s remember The Plaza Agreement of 1985, which forced Japan to appreciate its own currency, which hit Japanese exports in the late 1980s. This led to what many perceived as a lost decade of Japanese economic growth.

The key question is whether the United States today has the same geopolitical dominance and hegemony to do to China what it did to Japan in the 1980s or, more importantly, what it did to the Soviets in the second half of the 20th century. What is clear is that the game of thrones of cutting-edge critical technologies has taken on an entirely new dynamic in the 21st century, in which emerging middle powers are asserting themselves as never before.

In this context, India They have to be very careful about how they align with the technological framework of global cooperation. It may be a mistake for India to be part of a critical technology corridor proposed by the United States and India, to the exclusion of possible cooperation elsewhere. It would be inconsistent with his overall “multiple alignment” approach to foreign policy.

For example in ecological transport transitionChina is far ahead of the United States, controlling 80% of the global supply chain. Having built a strong supply chain ecosystem over the past three decades, the Indian automotive sector can easily work with China to transform its electric vehicle industry. It can also work with the United States on other cutting-edge technologies. Putting all our eggs in the US basket may not be wise given the way several technology regimes are configured globally.

This century may not produce the same patterns as the last in terms of US dominance, regardless of the political system in which the various powers operate. The reality is that the development of critical technology is increasingly divorced from the nature of political systems, contrary to what Raghuram Rajan claims.

In this sense, even the famous democratic political systems of the West, which were considered exemplary in the 20th century, seem to find themselves in uncharted territory today as they erode the pluralist ethos through bottom-up democratic processes. Of course, the great struggle for the values ​​of freedom and openness will continue both within nations and on a transnational scale. However, these battles may take a somewhat different shape, with some key influences stemming from the new geopolitical and geoeconomic nexus of the 21st century.

The article was republished from The Wire as part of a content sharing agreement between the two parties. Link to the original article:

MK Venu is the founding editor of The Wire. An active economic and political writer, he has held senior roles in newspapers such as The Economic Times, The Financial Express and The Hindu. More than a quarter of a century after India opened up its economy in 1991, he has written extensively on economic policy issues. Over the past two decades, he has regularly written columns on political economy for the editorial pages of The Economic Times, Financial Express and Indian Express. He also hosted a regular debate on political economy called “The State of the Economy” on the national public channel RSTV. He has also been called upon by parliamentary committees to speak on matters of public policy

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