In recent years, China’s technology sector has witnessed explosive growth in specific areas and across a broad and deep spectrum. Take the field of artificial intelligence, for example. By the end of 2024, the Chinese AI company DeepSeek launched its large language model V3, which rivals the functionality of the chatbot developed by the American tech giant OpenAI, astonishing the international market.
A research report released by State Street Global Advisors Asia Limited last year revealed that China had significantly outpaced the United States in eight key high-tech sectors, including artificial intelligence technologies; advanced information and communication technologies; advanced materials and manufacturing; biotechnology, gene technologies, and vaccines; defence, space, robotics and transportation; energy and environment; quantum; and sensing, timing and navigation.
Numerous Chinese tech products, including renewable energy solutions and drones, have already established a dominant presence in the global market.
Factors Behind Rapid Development
The rapid advancement of China’s technological innovation is no coincidence but a consistent upward trajectory over the past decade, reminiscent of the saying “grinding an iron rod into a needle.” This progress is driven by a confluence of multiple factors working together.
- With rapid economic growth, China’s rise as a global manufacturing powerhouse has provided a vital foundation for investment in scientific research, technological innovation and their practical applications.
- The Central Government possesses the authority and capability to develop and promote strategies for technological advancement, industrial policies, research and development investment, and infrastructure. A prime example is the effective implementation of the “Made in China 2025” initiative, launched in 2015. It outlines a two-phase plan to achieve the strategic goal of transforming China into a global leader in advanced manufacturing by 2035.
- The authorities prioritize attracting and cultivating technological talent to foster a high-quality innovation environment.
- China boasts a substantial domestic market that supports technological innovation and application.
Promising Prospects
The U.S., China and the European Union are the most important forces driving technological development and progress today. They engage in complementary collaboration within the tech industry, jointly maintaining the stability of the global high-tech industrial chain. This collaboration is a mutually beneficial endeavour aligning with their respective developmental interests. Therefore, despite various frictions among the three major technological systems of the U.S., China and Europe, it is believed that the fundamental pattern of competition and cooperation will remain essentially unchanged.
China’s role in the future of global technological development is viewed differently from an international perspective. Some observers argue that China is unlikely to surpass the U.S. as the world leader in this arena. They point to significant gaps in fundamental research, original innovation and corporate R&D investment intensity.
For example, when comparing knowledge industries, China’s tech giants – BATX (Baidu, Alibaba, Tencent and Xiaomi) – do not possess the same strengths and international influence as their U.S. counterparts like GAMMA (Google, Amazon, Meta [Facebook], Microsoft and Apple).
However, there are compelling reasons to believe that China will emerge as a leader in global technological innovation and development. The international tech community typically assesses the world’s technology leaders based on four key factors: first, R&D intensity; second, R&D spending per capita; third, the number of research publications and citations; and fourth, the number of patents filed under the Patent Cooperation Treaty. Among these, R&D intensity stands out as the most fundamental and significant, defined as the ratio of R&D expenditure to GDP.
In 2024, China’s R&D expenditure exceeded RMB 3.6 trillion, with an intensity of 2.68%, ranking 12th among major countries worldwide. However, in absolute terms, data from the American Association for the Advancement of Science indicates that in 2021, the U.S. accounted for 32% of global R&D spending, leading the world, while China came in second at 27%. China currently ranks first globally in the number of research publications and citations, and it has maintained the top position in patent applications for five consecutive years. The pace of improvement in China’s research and innovation capabilities is notably rapid.
In a highly competitive international landscape, China has consistently placed technological innovation at the core of national development. The country still possesses numerous opportunities and driving forces for further technological advancement, including:
- Increased R&D investment by the Government and enterprises.
- The transformation of China’s research achievements into technological products demonstrates strong international competitiveness, and the market is rapidly expanding.
- Compared to Western companies, China’s tech firms have just begun to harness international market funding to expand their investments and outputs, and the Hong Kong capital market can play a significant role in this process.
Overall, China has the potential and strengths to develop into a technological superpower and a global leader in technology within the next two decades.
For Hong Kong, comprehending the prospects of national technological development amid the global tech race is crucial for defining its position and role, enabling it to seize this once-in-a-century opportunity for growth.
Dr Tse Kwok Leung, Senior Research Fellow (Honorary), Lau Chor Tak Institute of Global Economics and Finance (IGEF), The Chinese University of Hong Kong