China’s $4 trillion Tech investment

Updated: Sep 3, 2021

China’s technology industry is now valued at $4 trillion. This is earmarked by the country’s mega state-controlled entities that continue to expand and grow locally and then internationally. China’s mega investments into technology is a sign of the country’s quest to consolidate its prosperity and gain some level of economic dominance in the international front.

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In the international front, Chinese tech companies use a collective front to build tech firms that grow exponentially. China’s eye is on the achievement of a mega technological industry that can rival the United States’ technological infrastructure. In doing this, China has sought to gain leverage in its home economy and close doors to international competitors that can pose a meaningful threat to them.

Collectivism remains the driving force behind China’s mega tech industry. A Chinese firm like Alibaba now undertakes more digital activities than any other company. As a matter of fact, Alibaba processes twice as many orders as Amazon. This is driven by China’s numbers, while a company like Amazon is driven by innovation and better solutions. China’s technological advancement is driven by the need to serve as many people as possible and scale technology far and wide. American tech giants on the other hand continue to pursue the profit motive which makes it difficult for them to compete in some international spaces like poor developing countries.

China’s Centralization of Tech and the West

China’s goal is to drive long-term economic prosperity for its people. They therefore started by gaining dominance over manufacturing. China is now moving into artificial intelligence, biotech and other exponential technologies. The goal is to achieve greater levels of authority and control over different sectors that have a global implication and help China to achieve its international leadership goals and ends.

American supremacy is therefore put to the test and there is the need for the United States to figure out the best way of competing to stay ahead of the competition. Chinese companies continue to grow into different countries and economies like the US and other nations that depended on American technology for many years.

On the home front though, China’s president has led a quest to maintain centralized control over China’s tech industry. This includes various centralized sanctions and policing techniques that implicated some of the oligarchs in China’s tech industry. In effect, China’s president, Xi Jinping maintains a central control over affairs in the tech industry.

At the same time, Xi Jinping continues to consolidate his grip on power and extend his term at the helm of affairs. This is presented as a nationalist agenda which China is increasingly accepting. Therefore, it is fair to say that China’s technological advancement is here to stay and would play a major role in the way China will continue to engage on the global scale.

On the other hand of this process is China’s government’s use of various techniques to humble Chinese tycoons and tech company owners. The “One China” ideology is used as a basis to hold tech companies accountable and over time, it is apparent that technology will be centralized in China to a level where China can compete internationally as a major contender around the world.

The goal of benefiting consumers is at the core of China’s technological advancement. The ultimate end is to redesign the technological industry and put China at the forefront of affairs in technology and innovation. This is seen in the regulatory framework used by Chinese agencies and it is seen as a source of concern among western politicians who feel China’s technology is expanding too quickly.

Why the West may stay ahead of China

International tech companies will struggle to compete against China’s centralized technology industry. This is because a unified China will have stronger margins and a greater leverage on the markets. This will be difficult for American and other international entities to compete against.

However, technological hubs in different parts of the world continue to thrive on innovation. This kind of reactive innovation as well as free enterprise and capitalist anti-trust laws in the west provide hope of the ability to continue innovating to levels that will keep a strong Chinese technological conglomerate structure at bay.

Then, there is the possibility that a centralized Chinese mega tech industry will be too specialized. This will create gaps for smaller western businesses to thrive and grow without feeling the stress of China’s mega tech industry.

Strategic Implications

China’s tech expansion drive is something that will be strategically important in the years to come. China has an agenda to centralize its tech to boost the country’s internationalization agenda. The immediate implication is that China has closed its doors to foreign tech businesses who will struggle to compete due to the low profit margins and regulations.

On the international front, China seems to have an agenda of challenging western countries in grey zones and even in the West. This is likely to be driven by cost leadership and a quest for economies of scale and scope. However, western countries are likely to be survive an emerging Chinese tech war through continuous innovation and patenting of new products as well as a focus on sectors where people have pressing needs.

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