China’s Technological
Capability
Asian Development Bank Institute
Beijing December 3-4
Jon Sigurdson
East Asian Institute, Singapore
&
Stockholm School of Entrepreneurship
Textile Industry A
• US and EU companies currently buy from about
60 countries - might source from as few as 20
by 2006 and less than 10 by 2010.
• China might capture some 50 per cent of the
trade compared with presently 16 per cent.
• Many Chinese companies are already offering
improved supply-chain management and valueadded services in design
Textile Industry B
• The average Chinese garment worker was paid
$1,600 in 2001, more than double his Indian
counterpart
• Despite the Chinese worker’s higher pay
productivity was significantly higher: he adds
$5,000 a year in value to the garments he
processes, compared with $2,600 by his Indian
equivalent.
• The difference reflects China’s greater
investment in modern manufacturing equipment
and in infrastructure such as transportation.
Industrial Categories - Lall
•
•
•
•
Resource-based industries
Low-technology industries
Medium-technology industries
High-technology industries
R&D share of GDP 1998-2003
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1998
1999
2000
2001
2002
2003
Three Goals of China's Science
and Technology
• China aims to be one of the frontrunners
among developing countries around 2010,
to the medium level among world giants in
science and technology 11 years later –
2020 - and squeeze into the top rankings
among those giants around 2049
Source:
Bai Chunli, Vice President of the Chinese Academy of Sciences
People’s Daily, November 26 2004
China’s First S&T Strategy
• Make full use of the global innovative
resources
• participate widely in bilateral, multilateral
and global competition and cooperation
• enhance China's capability in innovation
and industrialization level in science and
technology.
China’s Second S&T Strategy
• boost the foundation and vigor of science and
technology
• improve foresight at the frontiers of basic
research and important hi-tech fields
• enhance original scientific innovation;
• prioritize information, life, material sciences and
important interdisciplinary sciences
• realize breakthrough and leap forward in
selected key technologies where China has a
competitive advantage.
China’s Third S&T Strategy
• exert special efforts to solve problems affecting
the development of science and technology.
• strengthen the construction of the national
innovation system
• Strengthen reform on marketization
• promote the close combination of science and
technology, with economic and social
development - also with national security
• Reform and develop the educational system
China’s Changing Universities
•
•
•
•
1990-95 Xiahai – Go into business
1995-2000 Consolidation
2000-2005 Expansion
2005-2010 Upgrading quality
Critical Mass in Technology?
• By 2014, which is 10 years away, the number of college
graduates in China could reach 80 million.
• At this point China could achieve sufficient critical mass
to pose a strong challenge to its neighbours - the
Japanese and South Koreans - in technological
development.
• Let us assume that 20 million Chinese graduates in 2013
have engineering training and, among them, 1% are
engaged in research on high-tech marketable products
• China would then have around 200,000 brains pushing
that frontier
All Students in Population - %
University Students/1,000
25
Students: Population %
University Students
20
15
10
5
19
78
19
80
19
85
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
0
in
g
ng
in
ee
r
nc
e
A
gr
ic
ul
tu
re
M
ed
ic
in
M
e
an
ag
em
en
t
E
S
ci
e
is
to
ry
H
n
Li
te
ra
tu
re
tio
du
ca
E
La
w
hi
lo
so
ph
y
E
co
no
m
ic
s
P
University Enrolment - Fields of Study 2003
x1,000
4000
3500
3000
2500
2000
1500
1000
500
0
an
a
re
en
t
ci
ne
ge
m
ed
i
ul
tu
2003
er
in
g
e
ry
2000
M
to
2002
Ag
ric
gi
ne
n
re
ie
nc
Hi
s
te
ra
tu
io
w
2500
M
La
ic
s
ph
y
uc
at
Sc
Li
En
so
on
om
ilo
Ed
Ec
Ph
University Enrolment - Fields of Study 2002-2003
x1,000
4000
3500
3000
1500
1000
500
0
Graduate Studies - Total and New Enrolment 1978-2002
x1,000
600
500
Graduate Enrollment
400
New Graduate Enrollment
300
200
100
20
01
19
99
19
97
19
95
19
93
19
91
19
89
19
87
19
85
19
78
0
Challenging Factors - Moreira
• Endowment
• Productivity
• Scale
• Government suppport
Technology upgrading and frontier
development
China’s Position in Selected Sectors
•
•
•
•
•
The IT sector
Integrated Circuits
High-performance computers
Aircraft
Other sectors, e.g. biotechnology
Integrated Circuits
• Domestic demand: memories. ASICs etc.
for global IT products
• Earlier: almost total imports
• Domestic supply:
• - Taiwan companies: SMIC
• - Intel & Infineon&Motorola & Matsushita,
etc.
• - Chinese companies started to produce
advanced processor chips: Arca, Longxin
High-performance Computers
• China is in late 2004 in possession of 14
supercomputers out of a total of 500 which gives
China a fourth ranking in the world on level of
Germany and only behind the US, Japan and
Great Britain.
• The Shanghai Supercomputer Center in June
2004 assembled a machine that at the time
became the world’s 10th fastest computer, by
using more than 2,500 chips designed and
manufactured by Advanced Micro Devices in the
US
Supercomputer companies
• Lenovo (formerly Legend) spun-off from the
Institute of Computing Technology (ICT) in 1981
and entered the HPC market in 2001. ICT is one
of major research institute of the Chinese
Academy of Sciences
• Dawning that was spun-off from ICT in 1995
and the same year entered the HPC market.
Development jointly with ICT and the Shanghai
Supercomputer Center.
• Langchao entered the HPC market in 2002
• Galactic Computing become the recent
entrant in the computer industry in 2004
China’s Aircraft Industry
”Aviation Industries of China”
• CAICI – regional jet domestic development – ARJ21
• CAICII - regional jet joint venture with Embraer –
EMB170
• Boeing and Airbus - subcontractors
• civil aviation fleet would have to add 1,400 large jet liners
by the year 2022, which if all are imported, as in the past,
would cost in the region of US$100 billion
• aviation industry executive declared in March 2004 that
he anticipates China's first large aircraft to fly by 2018
China’s Path Towards TechnoPower
Labor intensive
Industries
FDI
Exploiting ”floaters”
Moving inland
High.tech
Brainpower
Knowledge infra-structure
 Nano, bio, new materials
FDI
Engineers
Technology
IPR
Industry
Labour-intensive
R&D Investment Talents
 Young
 University graduates
Universities
Incubators
Industrial Parks
Science Parks
Heterogenity - Devlin
•
•
•
•
•
•
Shanghai
Ningbo
..
..
Dongguan, Guangdong
..
Ningbo – Moulding Industry
• Metal molding already strong is expanding into new
product areas, attracting investments from Hong Kong.
• There are three molding industry centers in China.
 One is Shenzhen which has its focus on die-casting for
electronics.
 The second one is Taichu in Zhejiang that is strong in
plastics.
 The third center is Ningbo which has become strong
in molding for the automobile sector and for home
electric appliances.
Ningbo – Moulding cluster
•
•
•
Molding industry employs some 100,000 workers.
1. Expansion in Shanghai forcing an industrial
restructuring in Ningbo.
2. Private industry has played a pivotal role.
3. Expanding demand from Japan, Germany and
Taiwan has fostered a local development of the
molding industry
4. Machinery for plastics molding developed at early
stage.
Ningbo enterprises deliver molds for products that
weigh only a few grams to pieces as large as 50
kilograms
Subsidiaries in the US, and companies from Korea and
Japan have made investments in Ningbo.
1. Operational clusters
Proximity gives speed of throughput, product
changeovers, increasingly specialized
engineering and assembly labor.
Operational clusters may on occasion be sources
of new product ideas, but their principal goal is
to achieve operational efficiencies
Any new technologies they create are meant to
improve production processes of supply chain
management
2. Technological clusters
Technological clusters offer co-location of
activities that lead to the recognition of
new market opportunities, the
development of new technologies and the
design of new products.
Such cluster change over time as new firms
enter into the technological field and new
designs offer or demand major changes in
global production networks.
Flying Geese over China – Advancing Technology
Inland – Western
Northeast
Costal Areas