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ABSTRACT
In the last decade China has made major strides in developing and producing some world-class products: high performance computers, space exploration vehicles, and financial technology software and devices. Yet, China’s record in other key sectors (semiconductors, electric and autonomous vehicles, and smartphones is unimpressive). This article provides an overview of China’s efforts at increasing the speed and complexity of its domestically produced technical items, and summarizes the findings of a project at NYU’s Center on U.S. China Relations evaluating prospects for future innovation.
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No potential conflict of interest was reported by the author(s).
Notes
1 Abrami, R., W. Kirby, and F.W. McFarlan, “Why China Can’t Innovate” Harvard Business Review, March 2014.
2 For a summary of increased Chinese assertiveness, see K. Campbell and E. Ratner, “The China Reckoning,” Foreign Affairs, March/April 2018, 60–70.
3 Kelly, L., “China’s Belligerence in the Taiwan Strait Poses New challenges for the U.S.,” The Hill, June 6, 2023.
4 Sullivan, J. “National Security and Industrial Policy – Guiding Lights of U.S. Trade Policy,” (Washington, D.C.,: Brookings Institution speech, April 27, 2023).
5 De Mott, F. “Yellen: New Yet Familiar Policy … ” Business Insider, June 2, 2023.
6 Kong, W., “Russia’s War Could Re-Shape the Global Arms Market in Favor of China,” Defense News, July 10, 2023.
7 Next Generation Artificial Intelligence Plan (Beijing: China State Council, 2012).
8 Kennedy, A.G., “China’s Innovation Trajectories,” Survival, June-July 2018, 71–86.
9 De Mott, F., ‘Declining Foreign Investment in China,” Business Insider, June 23, 2023.
10 For an overview of the liberalization program and its impact, See A. Kroeber The Chinese Economy (New York and Oxford: Oxford University Press, 2017) Chapters 12, 13.
11 To see more discussion of the efficiency of authoritarian systems versus democracies, see J. Ramo The Beijing Consensus (London: Foreign Policy Centre, 2004) and A. Nathan, “The Beijing Consensus: How China’s Authoritarian Model Will Dominate the 21st century,” Foreign Affairs, May-June 2010.
12 2149 is the 100th anniversary of the CCP’s victory over the Kuomintang and the establishment of the People’s Republic of China (PRC). “Xi’s vow of world dominance by 2049 Sends Chill Through Markets,” Bloomberg News (October 26, 2022).
13 This was partly because China had repeatedly stressed that it would pursue a “Peaceful Rise” and that China was too far behind the West to be an imminent challenge. For a detailed assessment of China’s military capabilities in 2000, see M. Swaine and A. Tellis Interpreting China’s Grand Strategy: Past. Present, and Future (Santa Monica, Cal.: RAND, 2002)
14 Graham Allison’s book Destined for War (Boston: Houghton Mifflin Harcourt, 2017) became a best-seller and helped make the American “attentive public” aware of the possibility of a major military conflict.
15 These are some of the key aspects of “Decoupling” which both China and the Western countries are considering.
16 International Monetary Fund, Staff Report on the Status of the Chinese Economy,” (Washington, D.C.: August 2019).
17 Peattie, M., “Japanese Naval Construction, 1991–41,” in P.P. O’Brien, ed., Technology and Naval Construction in the 20th Century and Beyond (London: F. Cass, 2001) p. 97.
18 Gilli, A. and M. Gilli, “Why China Has Not Caught Up Yet,” International Security, Vol. 93 (Winter 2018–2019) pp. 141–189.
19 For a comparison of how China and India handled these issues, see A.G. Kennedy, “Powerhouses or Pretenders? Debating China’s and India’s Emergence as Technological Powers,” The Pacific Review, 2018: 2, 281–302.
20 For a comprehensive overview of such measurements, see O. Morgenstern, K. Knorr, and K. Heiss, Long-Term Projections of Political and Military Power (Cambridge, Mass.: Ballinger, 1963).
21 Lacey, J., Great Strategic Rivalries: From the Classical World to the Cold War (New York: Oxford University Press, 2016).
22 Mearsheimer, J., The Tragedy of Great Power Politics (New York, Oxford University Press, 2016).
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25 Raymond Dalio was CEO of Bridgewater Associates, the largest hedge fund in the United States. See Dalio’s volume: Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail (New York, Simon and Schuster, 2021) which makes his case for cooperating with Beijing’s leaders.
26 Pottinger, M., “Beijing’s American Hustle – How Chinese Grand Strategy Exploits U.S. Power,” Foreign Affairs, Sept./Oct. 2021, 102–114.
27 Prud’Homme, D. and M. Von Zedtwitz, “The Changing Face of Innovation in China,” MIT Sloan Management Review, Summer 2018, 24–32.
28 Tiewton, C., Statista, January 17, 2022, 1. Because of the Covid pandemic, GDP growth in China dropped significantly in 2019 and then recovered somewhat in 2020.
29 In 2022, China has over $3 Trillion in foreign exchange reserves. The “trade surplus” refers to net flows of merchandise; the “current account” refers to merchandise and services. As the world’s largest manufactured goods exporter, most of China’s trade surplus is in physical items, not services (tourism or interest payments).
30 Zhu, X., “Understanding China’s Growth: Past, Present, and Future,” Journal of Economic Perspectives 26, No. 4, 103–124.
31 Witt, M., P.P. Li, L. Valikangas, and A. Lewin, “Deglobalization and Decoupling: Game Changing Consequences? Management and Organization Review 17:1, Feb. 2021, 6–15
32 There are three principal sources of data on capital inflows and outflows from China: the World Bank, the State Administration of Foreign Exchange (SAFE), and the International Monetary Fund (IMF). There are significant differences between their figures and much of the data is several years old.
33 For a discussion of “decoupling,” see D. Denoon, “China and the Global Order: Economic Decoupling and the Creation of New Alliances,” in N. Lateef and M. Auslin, Eds., America and the World − 2020 (New York and Stanford, Cal: Foreign Policy Association, 2020).
34 O’Hanlon, M.E., The Senkaku Paradox: Risking Great Power War Over Small Stakes (Washington, D.C.: Brookings Institution, 2019).
35 Talmadge, C., “Would China Go Nuclear? Assessing the Risk of Chinese Nuclear Escalation in a Conventional War With the United States,” International Security 41, No. 4, Spring 2017, 50–92.
36 Friedberg, A., “Competing with China,” Survival, 60, No. 3 (June-July 2018) 7–64.
37 Kutty, S., and R. Basrun, “The Quad: What It is and What It Isn’t,” The Diplomat, March 24, 2021,
38 Dearlove, R., “Australia’s ‘Pine Gap’ Facility Is ‘Hugely Important’ to Monitor China,” The Guardian, February 19, 2022,
39 Barndt, L., J. Litwack, E. Milova, L. Wang, Y. Zhang, and L. Zhou China’s Productivity Slowdown and Future Growth Potential World Bank Policy Research Working Paper No. 9298, (Washington, D.C.: June, 2020).
40 Krepinevich, A. Defense Investment Strategies in an Uncertain World (Washington, D.C.: Center for Strategic and Budgetary Assessments, 2008).
41 Roy, D. Return of the Dragon: Rising China and Regional Security (New York: Columbia University Press, 2013).
42 “14th Five Year Plan Outline, The State Council, “The National Medium and Long-Term Program for Science and Technology Development (2006–2020) Outline,” 2006.
43 United States Office of Trade and Manufacturing Policy, “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World,” June 2018 https://www.hsdl.org/?view&did-812268.
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David Denoon
David Denoon is Emeritus Professor at New York University, where he was formerly Professor of Politics & Economics and Founding Director of NYU’s Center on U.S.-China Relations. He is the author and editor of numerous articles and 10 books, including a trilogy on U.S.-China relations in Central Asia, Southeast Asia, and Latin America. His most recent volume is: China’s Grand Strategy: A Roadmap to Global Power?