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Asked how long it would have taken to deliver something similar back home, Hafkemeyer, who worked with Audi, Chinese state-owned auto group BAIC and tech giant Huawei before joining VW in 2022, sighs with exasperation. Typically, he says, the technology development cycle in Germany is a slog of around four to four-and-a-half years, where ideas are bogged down in endless internal debate and commercial negotiations with suppliers.
For decades, China has been the world’s factory and companies have tapped into a low-cost labour force with few protections and cheap, dirty energy. The country’s scale — as a manufacturing base and as a consumer market — lured almost all the world’s biggest multinationals. But the underlying technology was retained by companies from the US and Europe. Now China’s research and development prowess is allowing it to compete, and potentially beat, the west.
Whereas the biggest focus of US innovation has become potential moonshot technologies such as artificial general intelligence, for Beijing R&D largely focuses on addressing shortcomings in the real economy — part of Xi Jinping’s pursuit of technological self-sufficiency.
After years of state, corporate and academic efforts to alleviate basic vulnerabilities, China’s advances are now setting up the country to dominate future global supply chains for energy and transport.
Dan Wang, China director at consultancy Eurasia Group, says China’s centralised political system and the Communist party’s command over the economy are giving it “the upper hand” over liberal democracies when it comes to new technologies that require long-term investments.
While government R&D spending in China has exceeded that of the US since 2015, Chinese companies have also rapidly increased their R&D efforts over the past decade, national statistics bureau data shows. The number of corporate R&D institutions has also nearly tripled to more than 150,000. And the number of corporate R&D personnel nearly doubled to 5mn.
Many areas of Chinese R&D are at the sharp end of technological competition with the US, including artificial intelligence, robotics and quantum computing, bioscience and pharmaceuticals, aerospace and nuclear weapons. However, the OECD data reveals that a central focus for China over the past 15 years has been basic engineering and materials.
OECD analysts noted in a report that China “does not only lead in environment-related product manufacturing and exports, but increasingly also in the creation of relevant knowledge”.
Behind the scenes, however, [Chinese] officials are trying to avoid repeating the mistakes of the past where billions of dollars intended for technological gains were wasted. The litany of problems includes corruption among officials and the misallocation of funds by local governments and companies.
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