试听180秒078：China's Technology Agenda

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Hello, Himalaya’s subscribers. My name is Timothy Taylor. 

And today  we're going to discuss China's technology agenda. Imagine your climbing the tallest mountain in the world. In English, as we call this Mt. Everest. In China I think the mountain is called Qomolangma, international border between China and Nepal runs right through the summit of this mountain and about eight thousand eight hundred meters high. Now, I certainly don't have the skill or ability to climb that kind of mountain, but I've sometimes gone on vacation where they were smaller mountains may be only three or four thousand meters high, and I've taken hikes there. When hiking up a trail in the mountains, there's an interesting moment in the middle of the hike. 

If you look backward down the mountain where you started off earlier in the day, it's clear you've come a long distance, and sometimes it just looks impossibly far off in the distance. If you look up at the rest of the mountain near where you're planning to reach by the end of the day, it's all so clear you have a long way to go, and sometimes it looks almost impossibly far. China's economic growth has been a steep climb up a mountain. If you look back when China started its economic reforms in the late 1970s, the economy of China has come remarkably far. 

But if China is going to keep growing faster than the global average, keep catching up and reach high income status, it still has a lot of climbing to do. What's this new catch, a path going to look like for China? Well, the main thing we know and discussed in earlier lectures is that China's future growth will not look like growth in the past. You already climbed up that part of the mountain, China is not mainly an agricultural an economy anymore, it's not mainly a low wage economy anymore,it's part of the global economy. 

And so as China's new path moves forward, it's going to involve greater emphasis on technology, services, and information industries. A goal sometimes expressed by China's government is to reach the summit of the mountain, and that China's economy should try to become a world class innovator by the year 2050. In this lecture, we’ll discuss three steps along the path that China is taking. Step one is a country trying to become a world class innovator needs to be in touch with the cutting edge of new technology in many areas. Step two is to think about how the new technologies will spread across the entire economy. And step three is to think about the issues of dislocation and disruption from new technology as they arise. 

Let's start off with step one, getting in touch with the cutting edge of new technology in many industries. Now we talked in the previous lecture about the development of intellectual property rules in China, but even with patents and copyrights and trademarks and trade secret laws in place, estimates from US and European studies find that a innovating company often gets only about one third of the new economic value of what it's created. 

A lot of the rest of the value goes to those using their product and also to competitors who might figure out new ways of doing things and benefit as well. So what other policies are possible to help research and development and innovation？ One common process is to build up a country's national scientific capacity, more training in science, more scientists, more research and development spending. And China has very much been following this path. Let me give you a few examples. In 2017, eight million students graduated from Chinese universities, and that was ten times higher than twenty years ago. 

It's also about two times the number that are graduating from US universities in any given year, although of course, the US has only about one fourth of China's population. If you look above the university level, about three hundred and forty thousand students were enrolled in Chinese doctoral programs in 2016 and about one point six million were enrolled in masters degree programs. So those are postgraduate college programs in round numbers about half of those students are science and engineering students. China now has more laboratory scientists working in its economy than any other country. About one point five million total laboratory scientists. That's compared with about one point three million in the United States. 

Or if you take all the countries of the European Union together, it's about one point seven billion lab scientists. Again, of course, China's population is much larger, so if you look at this as a share of the total workers as a percentage, China still has some catching up to do. But clearly, one method of approaching China's technological future is to build up the number of people with the skill to do that kind of research and work and China's making that happen. To go along with this approach of more skilled people, there's also a need to build up research and development spending. 

If you look at countries around the world and their research and development spending on new technology, here's the pattern you see. High income countries like the US, Germany, Japan, they typically spend about two and a half maybe three percent were a little more of their gross domestic product on research and development. Low income countries like certain countries in Africa or south Asia don't spend very much at all on research and development. And as you expect, most middle income countries are in the middle here. They spend maybe one percent of their gross domestic product on research and development. 

China stands out here because although China is still a middle income country, it is spending on research and development more like it was a high income country. China spends more than two percent of its gross domestic product on research and development. That's not quite as high as the US, Germany and Japan, but it’s pretty similar to countries like France and Canada. Some of this research and development spending happens in government research facilities. As one example, there's in shanghai, there's something called the synchrotron radiation facility, that's a particle accelerator and the way a particle accelerator works when I have toured one or two of them is that there's a stream of tiny little particles which are shot down a long, long tube usually accelerated by magnetic forces. 

And then the stream of particles is split into half, so half of them go around the right hand side of a circle and the other half go around the left hand side of the circle. The two streams of particles then meet and collide, breaking the particles into tiny little bits. And people who study physics can learn a lot from studying the results of what happens when different kinds of particles collide. And that kind of research is a good example of what scientists and economists call basic research. It's research into basic principles of science in the future. Basic research might lead to giant breakthroughs in commercial products and dramatic new industries, but probably not right away. And it's not at all clear just what those products will be. 

As a result, companies don't like to invest too much in this kind of basic research. The commercial payoff is just too far away and too uncertain. The company can't be sure of being able to appropriate a good share of the gains. Thus, it's common around the world for governments to support basic research directly. That's done in research centers or often in universities. Governments around the world also subsidize research and development done by businesses. Sometimes they do this with direct grants to businesses, sometimes with incentives in the corporate tax system. 

In the US about one tenth of all research and development spending is financed by government incentives to private businesses. That's not counting the money that businesses spend on their own on research and development. In China, it's about one fifteenth of all research and development is financed by government incentives for private businesses. So how well is always working to create new technology? It's hard to measure ideas of course, but a couple of common methods are to look at the number of scientific papers published or the number of patents granted. But of course there's an immediate issue here. How do you take quality into account? 

What if scientists from one country publish a lot of papers but most of them are small scale and not very important or what his business is from a country that have a lot of patents, but again, most of the inventions are small and unimportant. To deal with this, a common approach is to look at scientific papers that are appearing in the most prominent journals or research that is often cited in research by others or with patents, you can look at patents that are taken out not just in China but also in the US and the European Union and Japan and you can see how much new patents are referring to the discoveries made by previous patents. 

So if you look at these kinds of measures, China's share of scientific papers in top journals that are most commonly cited, China's share of patents that are given not just in China but by patent offices all around the world and which are then cited by other patents as the previous discoveries in that field. You can see China is definitely making real and continued progress toward becoming a world class innovate. But building up this ability doesn't happen in a short time. It takes decades, a sustained effort over several decades. So China is still in that way, climbing the mountain. 

Let's move to our second main step. How do these new technologies spread across the economy? Just inventing something isn't enough. There's a saying from the US fiction writer I always liked, he said “the future is already here. It's just not very evenly distributed. Coming up with the ideas of the future is one thing. Distributing them so they are widely used across the entire economy is something else.” I'll give you one example from the agricultural sector. Early in two thousand eighteen, a group of forty six agricultural researchers in China published the result of a major study on agriculture in China. 

They have worked with twenty one million different farmers over a ten year period. And they looked at detail it. What did these farmers do and how much output they produced. They looked at irrigation,the density of plants and how close together they were planted, fertilizers to use and all those kinds of things. And they found that by using looking at what other farmers did and learning from what actually produced more output, it was possible for the output of maize and rice and wheat to increase by about ten percent with even less use of fertilizer and irrigation than before. The farmers were spending less money on their land and earning more from it. 

But then there's the next step. Tens of thousands of local officials and industry representatives have spread out across China to try and explain these results and get other farmers to try to use them. Because there are something like two hundred million small farmers across China. In other words, it's not just enough to discover something, you have to spread out the discovery, so it affects people's lives. This kind of example comes up in almost every industry, almost in every industry, there's a leading firm, a most productive firm. It's sometimes called superstar firm. It's of course great to have some leading superstar companies. But what is the middle company doing or the companies that are below average? Spreading new ideas and new technologies to those companies will also have a big effect on raising economic growth. It's not just the invention, it's spreading it across all of the economy. There's also a geographic issue here. It's common in many countries around the world to have some regions that are more economically advanced than others. And the US for example, for a long time, the southern part of the country lagged behind economically. In China. The urban areas in the eastern part of the country have generally had faster growth than western rural areas. 

Again, the economy is about overall averages. And so spreading growth to those other areas through education，the linkages of communication and transportation, all of that helps economic growth spread. Our final point here is step three. How do we deal with the problem of economic dislocation? There's always a concern that a new technology or new foreign competition or new domestic competition might displace existing companies and jobs. And we talked about this a fair amount in some of the earlier lectures. How to deal with dislocation of economic change is a huge issue in the US and in Europe. 

But I confess it's a little strange to me to talk about issues of disruption in China. In China, the amount of economic disruption since the start of the economic reforms over the last forty years is just extraordinary. It's unprecedented in world history. A China knows how to adapt to new reforms and new changes. China has been demonstrating that for forty years. But it's also true that as economies grow, they in some ways become less flexible, more powerful economic groups form, and they like the pattern of production the way it is. They don't see why their companies should have to change or their workers should have to change, or why people should have to move to another place or take different jobs. 

They like their neighborhood the way it is, and the roads the way they are. They don't want to see more construction. So my guess is that as China's economy develops, there will be more and more groups that will have all sorts of very good reasons for why enough economic change has already happened. And if China wants to keep climbing that mountain toward being a high income country, it will have to keep accepting change, as it has in the past. Let's finish with a couple of review questions. What are some of the policies that China is using to become a world class innovating country? And why is disseminating innovations, not just inventing them so important? In the next set of lectures we’ll switch to a new set of topics. We'll talk about issues of poverty and economic inequality in China and around the world. 

I'm Timothy Taylor. Thank you for listening to Himalaya.