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China makes us rethink capitalism

14 1 8
11.05.2021

China regularly forces us to check our assumptions about how the world works. The country’s return to regional and global prominence challenged preconceived notions (in the West) about leadership. Then, there was the stubborn defiance of expectations that one-party communist rule would give way to democracy. Sharpening tensions between China and the West (and its neighbors) reflect a whole series of inaccurate priors about ways that Beijing’s policies would evolve.

Now, China is forcing us to reassess how capitalism works and how the world should adjust to its refusal to mimic Western corporate and business practices. These differences assume great significance in the race to catch up with and overtake the West in the development of leading-edge technologies. Make no mistake: China is in many important ways a capitalist country; but Chinese capitalism is a very different animal from that practiced in the West.

Let’s start with some shibboleths and misperceptions. First, there is a belief that China can’t innovate and its technological progress is the product of massive intellectual property theft from the West. Proponents of this theory either rely on simple prejudice or China’s use of administrative provisions to force companies that want to do business in the country to turn over technology.

They are wrong. Historically, the Chinese were extraordinary innovators, inventing paper, printing, the compass and gunpowder. Lee Kai-fu, former head of Google China and now a venture capital investor in China, argues that “Chinese companies are innovating as much as the American ones.” They “use their scale, spending, and efficiency at the grunt work level, … (burning) cash like crazy and (relying) on armies of low-wage delivery workers to make their business models work,” he said. This “alternate internet universe” befuddles “analysts entrenched in Silicon Valley orthodoxy.”

Lee concedes that “the Chinese culture does not frown upon copycatting as much as Americans do,” but adds that “that is more of a cultural issue, not a business one.” Dubious of Lee’s conclusion? Then listen to Eric Schmidt, former chair of Google. He worries that China is poised to overtake the U.S. in key fields such as artificial intelligence in a few years.

Second, the charges that China illegally acquires all its technology are wrong as well. While........

© The Japan Times


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