In a recent Fairbank Roundtable conversation, Keyu Jin, Professor of Economics at London School of Economics, Harvard Professor of Economics David Yang, and Fairbank Center Graduate Student Associate Austin Jordan explored China’s capacity to meet and sustain the innovation demands of a contemporary political economy.
Professor Jin, author of The New China Playbook: Beyond Socialism and Capitalism, argued that China’s command of user data, innovation-driven business models, and “the most efficient supply chain in the world” enables domestic technology companies to iterate forcefully on technologies and leapfrog rival nations like the United States. Professor Yang added that the Chinese state remains integral in coordinating major innovation sectors and shifts in industrial policy. China “is a developing nation, but it also has the size of a superpower,” he said, and the country’s sophisticated manufacturing ecosystems enable business actors to quickly implement abstract innovation and business objectives.
However, Jin maintained that challenges remain: China’s current fiscal constraints limit its ability to subsidize electric vehicle (EV) innovation, and trade friction with international actors like the U.S. and EU will hamper China’s ability to penetrate international markets despite globally competitive products. As such, Jin argued that China must make its current “high growth, high cost” model more efficient and create domestic talent pipelines and intrinsic motivation to match.
China’s growth, meanwhile, is calling on international decisionmakers like the WTO, IMF, and World Bank to rethink whether their representation reflects the shifting global distribution of power. Yang concluded that - despite popular impressions that politics dominate Chinese decision-making - economics remains the driving force of domestic incentives. Fierce global competition will encourage national governments to promote domestic innovation and expedite the pace of global technological development. “That might come out as a net benefit for the world in a few decades,” he said.