China is next in line as the new global superpower – fact or bold assertion?

  • China is testing the waters of geopolitical and economic influence
  • ‘Made in China 2025’ – decreasing reliance on foreign tech
  • The Thousand Talents program: bringing leading researchers back home
  • China is a magnet for startups: (market) size matters

The screech of the first steam engine marked the beginning of the Industrial Revolution and western superiority on the global stage, exercising both political and technological dominance – up until the 2008 global financial crisis, which crippled most developed economies and heralded the end of that era. The Asian financial sector was affected as well, but recuperated quickly thanks to its inherent strength. In the wake of the world’s biggest economic meltdown, China introduced “a massive stimulus package” worth $586 billion to upgrade infrastructure, ensure land reform, and support “affordable housing and environmental protection”.

For the first time in recent history, the US was no longer the epitome of power. “It would be the start… of Asia looking away from the West,” says Hugh Young, an investment manager. “That’s been a steady phenomenon, and if anything, the global financial crisis accelerated … the rise of China – which was going to happen anyhow – but now we see China playing on the global stage as big a role – arguably a bigger role – than even the US.” And strategically, one initiative at a time, China might impose itself as the new superpower.

China is testing the waters of geopolitical and economic influence

As the power of the US slowly wears off, China’s launching a series of bold initiatives to form the basis from which to carve out a path to global market dominance. For instance, the Belt and Road Initiative, also called the ‘New Silk Road’ and ‘One Belt, One Road’, is envisioned to extend the Chinese economic and political domain deeper into Asia, Africa, Europe, and the Middle East through networks of roads, underwater pipelines, and platforms. The idea wasn’t well received by the EU, however, as “twenty-seven of the 28 national EU ambassadors” criticised the initiative, deeming it to be designed to give Chinese companies an advantage. But the CEO of the German industrial giant Siemens, Joe Kaeser, underlines that “China’s ‘One Belt, One Road’ will be the new World Trade Organization – whether we like it or not.”

Fist with American flag boxes fist with Chinese flag
As the power of the US slowly wears off, China’s launching a series of bold initiatives to form the basis from which to carve out a path to global market dominance.

The Balkans and Eastern Europe aren’t being overlooked, either. China’s vision for this region – which it wants to accomplish through its 16 + 1 investment platform – is ambitious: better infrastructure, advanced tech, investments, partnerships, and much more. But not everyone is convinced that China will make good on these promises, due to “the lack of substance the platform is producing”. And the mistrust goes so far that “the platform has been accused of affecting the unity of the EU and being a case of China’s ‘divide and rule’ approach in Europe,” reports The Diplomat. The CEE countries involved in the program, however, welcome even the slightest push that could lift their economies off their knees.

‘Made in China 2025’ – decreasing reliance on foreign tech

Another enormous stride onto the global market – specifically the industrial sectors – is a 10-year state-led industrial program called ‘Made in China 2025’. The program was launched in 2015 and aims to build and strengthen China’s manufacturing base by aggressively entering into ten high-tech sectors. Next-gen IT tech and telecommunications, robotics and AI, aerospace engineering, and emerging biotech are just some of the pursued sectors. With sufficient funds provided by the state, the mobilisation of state-owned enterprises, and support for scientific research, the Chinese aim to decrease their reliance on foreign tech by encouraging their own high-tech manufacturers to rule the roost in the tech world.

And while China’s on a shopping spree, purchasing tech companies the world over, foreign firms find acquiring Chinese companies especially challenging – almost impossible. In theory, Chinese law doesn’t restrict foreign investment, but “if you want to buy a firm in China, you have to overcome many hurdles and go through numerous approval procedures that are non-transparent. Companies with foreign investors aren’t treated like local companies in China. But that’s precisely what’s needed, and it’s standard practice in the West,” explains Ulrich Ackermann, a foreign trade expert at the German engineering industry association VDMA. What’s more, access to the Chinese market often involves the transfer of intellectual property that foreign companies bring to the table, which some deem exploitative. There’s other ways to get know-how, though. China’s prowess is undeniable, and bringing home its own talents that are now dispersed across the world, is another bold step towards becoming the next superpower.

The Thousand Talents program: bringing leading researchers back home

In 2008, China established the Thousand Talents Program, primarily urging researchers who moved abroad to return to Chinese universities and institutions, but also to recruit top-notch international talent. This has caused ‘discomfort’ among the top countries collaborating with Chinese institutions, such as Australia, Canada, Germany, the UK, and the US. What worries the US is that “Beijing also has employed Western-trained returnees to implement important changes in its science, engineering, and math curricula that foster greater creativity and applied skills at China’s top-tier universities,” says Tony Schinella, the US national intelligence officer for military issues.

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There’s growing concern that the program could lead to theft of intellectual property, as the program “is a key part of multi-pronged efforts to transfer, replicate and eventually overtake U.S. military and commercial technology, according to American intelligence officials,” reports Bloomberg. But not everyone shares this opinion. A professor of higher education at Utrecht University, Marijk van der Wende, clarifies how “wider geopolitical issues have ‘always affected [academic] cooperation, for better or for worse’ so, in that sense, recent developments affecting Western-China academic collaborations are ‘nothing new’”.

China is a magnet for startups: (market) size matters

It’s understandable that young businesses increasingly opt for the Chinese rather than the European or the US market, as it consists of nearly a billion consumers. Just last year, China invested some $60 billion in startups, which is pretty close to the $70 billion invested in the US. But despite these similar numbers, the markets are nowhere near close in size. For instance, due to its sheer magnitude and rate of growth, German entrepreneurs are encouraged to enter the Chinese market. “The window of opportunity is now. There are still many startups who are afraid of going to China, but the brave Western entrepreneurs who go today will have a once-in-a-lifetime opportunity to participate in the biggest economic boom in history, which is hungry for innovation and people who can execute on it. A huge market is awaiting you there,” says Eran Davidson, a famous VC investor in Berlin.

While China is strategically executing one bold initiative after another, the US fears losing its global market dominance. One good approach could be to start directing some heavy-duty investments toward education, science, and infrastructure – not to counteract China, but to create an equilibrium of knowledge and power.

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This article is written by Richard van Hooijdonk

This article is written by Richard van Hooijdonk

Trendwatcher, futurist and international keynote speaker Richard van Hooijdonk takes you to an inspiring future that will dramatically change the way we live, work and do business.

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