Superpower Rivalry in the Knowledge Economy: Is the Balance of Power Changing?

Of the world’s 114 smartest factories deploying advanced Fourth Industrial Revolution (4IR) technologies, China has 42. The United States has just seven.

These factories – beacons in the jargon of the World Economic Forum (WEF) – will lead the world into the knowledge economy of tomorrow. A smart factory implements the Internet of Things (IoT), artificial intelligence (AI), 3D printing and advanced robotics to transform the manufacturing process, value chains and business models. In fierce competition, only a select group of leading companies have successfully deployed such technologies to qualify as beacons, symbolizing the race of superpowers for supremacy in the emerging era of the knowledge economy. It is an existential question who is going to win this race.

But what propelled China to this leadership position in the first place? Dr Marina Zhang of Swinburne University of Technology, Australia, believes the huge innovation machine launched by Beijing in the late 1970s is behind this phenomenal advance. At its heart is the vision of technological independence. It doesn’t just want to make innovative and distinctive products; he wants to do it entirely with his own knowledge, investing heavily to make that vision a reality. Between 2000 and 2017, Beijing’s research and development (R&D) spending increased by 17% each year. During the same period, the United States was far behind with a paltry growth rate of 4.3%. The trend continues under Beijing’s 14th Five-Year Plan (2020-2025), which plans to increase R&D spending by more than 7% each year. In 2017, global R&D spending was $2.2 trillion, of which 25% and 23% came from the United States and China respectively, and the gap is rapidly closing.

So far, Beijing’s priority has been more on experimental development that is closely tied to manufacturing processes and less on basic and applied research essential to developing new scientific ideas. In 2018, it spent just 5% of the research budget on basic research, compared to 17% in the United States. For applied research, the corresponding figures were 11 and 20.4%, respectively. In contrast, nearly 80% of China’s R&D spending went to experimental development. Very conscious, Beijing wants to strengthen its fundamental research programs and make breakthrough innovations. Its researchers are already creating growing impacts within the global scientific community, as reported by Japan’s National Institute for Science and Technology Policy. In 2019, about 27.2% of the top 1% of most cited papers came from Chinese institutions. The United States came second with 24.9% of these citations. In the total number of publications, Chinese works surpassed those of the United States in 2020 (305,927 against 281,487).

University rankings follow a similar trend. Successive lists of world university rankings by Times Higher Education (THE) show a steady decline in the number of US universities in the top 100 as China’s rises. US institutions in the top 100 saw their number increase from 43 to 34 between 2018 and 2022, while Chinese universities increased from two to seven. Unsurprisingly, China’s share of global patents rose from 16 to 49% between 2010 and 2020. Its capacity for innovation also increases, rising from 29th place in 2015 to 14th in 2020 in the global innovation index. Beijing has risen from fourth to first place in the world ranking of patent filings, becoming a major exporter of intellectual property (IP).

But are these developments bringing significant tangible benefits to Beijing? The case of Chinese DJI Technology, the world’s leading drone manufacturer, can help answer the question.

Recently, DJI is under sanctions from Washington for its involvement in the surveillance of Uyghur Muslims. But unlike Huawei, it’s proving difficult to take down as hundreds of US public safety agencies use its products, including the New York Police Department. DJI’s 80% market share in consumer drones fell to 54% due to sanctions. But it was another Chinese company Autel Robotics that took back most of the lost market. This is how Chinese technology has become ubiquitous in the daily lives of Americans.

China has also made great strides in a much larger and more complex arena, space. Space missions involve the highest level of achievement in hundreds of advanced interconnected technologies. A major player in space, China is the fourth country to have a global navigation satellite system (BeiDou). It has an almost perfect heavy load launch system (Long March rockets). All of this indicates that Beijing may be well on its way to achieving its goal of becoming a global technology leader by 2050.

Is the balance of power in the knowledge economy changing?

In the book “Crest of the Peacock: Non-European Roots of Mathematics”, Professor Emeritus George Gheverghese Joseph of the University of Manchester makes an interesting point about the evolution of science. Mathematics, the root of all sciences, borrowed from the Egyptians, Babylonians, Greeks, Arabs, Indians and Chinese to become what they are today. Likewise, China’s advances in cutting-edge technologies have their roots in the knowledge generated by scientists in many regions over millennia. No matter who leads the knowledge economy, everyone benefits. Xin Xu, a researcher at the University of Oxford, summed it up well: “The sun may rise in the east, but it shines across the world.” Science, innovation and knowledge belong to all humanity. Understanding this is essential for peaceful coexistence.

Dr. Sayed Ahmed is a consulting engineer and CEO of Bayside Analytix, a technology-focused strategy and management consulting firm.