Updated: Jan 14
"Shenzen is expected to replace Silicon Valley and become the world’s innovation centre!"
Yao Yang, Dean, National School of Development, Peking University, made that bold statement at the recently held 2022 NetEase Economist Annual Meeting.
Like clockwork, economic expectations are the in-thing at the start of the year. For a top academia from Peking University, Yao added that point when he shared how China will take its place as the world’s largest economy within six to eight years.
It's clear that China will prioritise next-gen technology and forward-thinking innovations. According to Zennon Kapron, Founder and Director, Kapronasia – a Shanghai-based fintech-focused think-tank, ongoing state intervention within China's internet sector won't hobble expansion in semiconductors and infrastructure solutions.
“If the country does become self-sufficient in terms of technology and then is able to sell and export those products and services that are based on the technology, then that would be a huge bump to its economy," he shared in a recent interview on China with Voice of America.
Both Yao and Kapron are not pulling these facts out of thin air. In fact, Yao's declaration is derived from a report that the Organisation for Economic Cooperation and Development (OECD) published. One of the key findings – China managed to attract the most foreign capital in the first half of 2021. The specific data he is referring to is on Page 6 in the “OECD FDI in Figures” study – a report that OECD published on October 2021.
"The next 30 years will be the best 30 in these thousand years and that China will continue to lead in next-gen technology and innovations, like artificial intelligence (AI)," added Yao.
While he acknowledged that China is still lagging behind the United States for, in his words: “so-called algorithm layer”, which likely refers to the data ecosystem or programming as per the McKinsey Artificial Intelligence: Implications for China report, he believed that in five to 10 years, China will become a world leader as well.
That same McKinsey report confirmed that Chinese market players have achieved breakthroughs in developing AI algorithms used in voice recognition and targeted advertising. Thanks to global open-source platforms, these innovative companies in China could quickly replicate the most advanced algorithms developed anywhere else in the world.
Even with this milestone achievement, even China knows it is still a laggard in the field of AI research. One of the key reasons is how it all boiled down to talent shortage – there is just not enough data scientists to go around. As is, as the McKinsey study noted: "Over half of the data scientists in the United States have more than 10 years of work experience, while up to 40% in China have less than five years of experience."
While all this may sound like Kool-Aid or hearsay, there is some truth to these views. Both The Guardian and the BBC, using data-sets from UK-based The Centre for Economics and Business Research (CEBR), have reported that China’s economy can achieve this goal and even top the European Union.
What China needs to do now is not overlook the importance of establishing and developing its own semiconductor manufacturing; boost microprocessor research and high-performance computing capabilities; and grow its data centre and cloud sectors.
"AI represents a significant opportunity for China to accelerate productivity growth, which is a crucial concern as the population ages. As China considers its strategy to develop artificial intelligence, it is important to note that the new technologies are becoming (increasingly easier to access and scale globally). All aspects of the AI value chain, from fundamental research to application development to hardware manufacturing, (will require) global collaboration. In addition to building its own data ecosystem, from its pipeline of data science research talent and semiconductor workforce, China needs to make sure that its AI industry is built on an open system that is integrated into the global market," the McKinsey report added.
If anything, it's clear that China is on the fast-track in its efforts to build a more robust data economy and ecosystem. This will enable it to set and implement digital marketplace standards, open up public-sector data even more for private exploration and encourage international exchange of data streams. Once all these factors are in place, China – via its digital-first Shenzen – is on track to overtake Silicon Valley.