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Economy

In the Digital Era, Tech Decoupling Won’t Deliver

Jun 21 , 2019
  • Wang Wei

    Associate Researcher, Chinese Academy of Social Sciences

Technology brings changes to daily life and drives social development. Nowadays, changes are happening faster and having ever greater far-reaching impact on our lives. So it’s no exaggeration to say that learning has become a way to survive and advance with the times. Individuals, companies, and governments all need to learn to adapt to the ever-changing technological environment.

Always staying open-minded to the new is the first step to learn. Some 20 years ago, people learned to use calling cards in order to cut phone bills. About 10 years later, people learned new input skills in order to type and send text messages faster. And about five years ago, people learned to use emoji signs and apps like WeChat for efficient social networking. With new technological breakthroughs being made one after another, learning is the only way to stay up to date with trends and not to be left behind. This is also true and applies to enterprises. Each year, newcomers make it onto the Forbes 500 list. In the fields of science and technology, advancement and replacement can happen in a matter of months. For instance, Google developed the AI program AlphaGo in 2015, which made great strides in the ancient Chinese game of Go (also called Weiqi), which was once considered impossible for computers. In the following year, many technology companies across the world developed and unveiled similar artificial intelligence breakthroughs. In general, the process of transforming a technological concept into real products has been much shortened.

What, then, helps accelerate the development of technology? There are at least two factors to underscore: market demand and collaborative innovation.

Demand is the driver of invention. Users’ demands for social networking helped stimulate the development of various social networking tools and applications, including Facebook, Twitter, QQ, and WeChat. Many small tech companies, programmer groups, and tech fans also got involved in the development of social networking apps and software.

At the same time, professionalization, division of labor, and cooperation help optimize the distribution of market resources, and the collaborative effect helps to greatly improve productivity. From Apple to Boeing, and from Huawei to Lenovo, each and every assembly line is a mix of parts and components made by different professional producers from all over the world. Due to reasonable division of labor, each technician and tech organization could perform their expertise in the most effective and efficient manner, with the overall production efficiency being maximized.

Nonetheless, the so-called “technology decoupling” strategy has recently begun to gain momentum and supporters in the United States. Advocates and backers of this approach claim that US technological dominance is under threat and waning, and this would undermine the comprehensive competitiveness of the United States. They blamed the Chinese government and Chinese companies for this, claiming that the US companies were subjected to “coerced technology transfers” and were victims of “intellectual property theft.” Decoupling proponents not only demanded that China protect intellectual property through legislation, but also urged China to clearly define procedures and rules for the enforcement of the legislation. Some advocates have even asked the US government to decouple US companies from the Chinese market via legislation.

Advocacy for technology decoupling with China has put American companies in an awkward position between “political correctness” and market access. “Decoupling” might mean depriving Chinese enterprises of opportunities to learn from American technologies—similarly, American companies would also lose the chance to learn from the Chinese market. I firmly believe that the government should appropriately play its watchdog role, neither allowing technological development to disrupt social order, nor letting the state become a factor hindering technological advances.

In some fields, the Chinese market is more mature and developed than others, and the operations of Chinese companies in these fields are more efficient. For example, in the sector of mobile payments, China is certainly a world leader. In Chinese cities, big or small, a “cashless” economy has taken shape, with people having developed the habit of not carrying wallets, and choosing to make mobile payments for buying vegetables, taking cab rides, or going to the movies. But this is not yet common in many American and Japanese cities, even big metropolises. The development and expansion of the Chinese market means more opportunities for foreign companies, and it is also true for the United States, one of the biggest technology exporting countries.

However, changes in US domestic politics and the international situation have forced American companies to make a difficult choice. For enterprises, technological confrontation is the biggest obstacle hindering their development, and technological cooperation is the best force driving their growth. Therefore, it would be a wise choice to let politics stay out of business and the market.

For China, it remains a strategic and visionary policy to maintain its policy of technological openness: to promote the flow of technologies, and to carry out international technological cooperation under mutually beneficial arrangements. China has repeatedly stressed that cooperation can lead to win-win outcomes while confrontation will do no good to anyone. It is hoped that China and the United States can solve their problems, maintain an open international environment for technology, and let the Chinese and American enterprises make the maximum contributions to society through mutual learning.

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