According to the Australian Strategic Policy Institute's 2025 Critical Technology Tracker, released last week, China leads in 7 out of 8 AI categories, 13 out of 13 advanced materials and manufacturing technologies, in all 7 categories of defence, space, robotics and transportation, 9 out of 10 in energy and environment and 5 out of 9 in biotechnology, genes and vaccines.
No such qualms in the Chinese Communist Party, which is in charge of a country whose population of workers is declining. The communists are driving the technology bus, not billionaires as in the US, and the few Chinese entrepreneurs who managed to amass a fortune serve at the pleasure of the party. China's arrival as tech supremo was on display last month at the 27th Hi-Tech Fair in Shenzhen.
As Industrial Transition Accelerator executive Faustine Delasalle says: "There's an acceleration in China that we're not seeing in the rest of the world." China used to be trying to catch the West, specifically the US. Then it caught up. Now the West is trying to catch up to China, but likely can't.
Success Of Planned Innovation Over Market led Innovation
Blogger Noah Smith described what "whole of nation" meant in a post last week: "Essentially, what China has done is to ditch the standard innovation model, where government, academics, corporations, and financiers all work independently toward their own goals, and to replace it with a model where the government coordinates their interaction toward a single overarching goal from beginning to end.
"It tries to identify a technological goal — say, becoming nationally self-sufficient in robotics — and then works backwards to figure out what breakthroughs it needs in order to reach that goal. Then it tries to fund the basic and applied research to create those breakthroughs, transfer the breakthroughs to the appropriate companies, help the companies create new products, and then help the companies commercialize and scale those products."
The government works backwards from the goal and then directs the basic research and funds the companies to create products and then to commercialize.
China's government spends hundreds of billions of dollars on what it calls a "whole-of-nation" industry policy, which began with "Made in China 2025" unveiled 10 years ago, and morphed into the 14th five-year plan in 2020 committing US$ 1.4 trillion over five to six years on new infrastructure, including 5G networks, smart cities, and industrial digitalization.
Conclusion
In many ways, autocratic China is where democratic America was in 1944 when the Bretton Woods conference established its global hegemony. China may soon absorb Taiwan, perhaps without firing a shot. America and the world will object, and likely do nothing, confirming a new global order. There are many things wrong with China, but the implication of all this for Australia is clear: In a G2 world, we must find a way to pivot.
Author: Saikat Bhattacharya
