Copyright © Richard P. Appelbaum, Cong Cao, Xueying Han, Rachel Parker and Denis Simon 2018

The right of Richard P. Appelbaum, Cong Cao, Xueying Han, Rachel Parker and Denis Simon to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2018 by Polity Press

Polity Press

65 Bridge Street

Cambridge CB2 1UR, UK

Polity Press

101 Station Landing

Suite 300

Medford, MA 02155, USA

All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.

ISBN-13: 978-0-7456-8956-2

ISBN-13: 978-0-7456-8957-9(pb)

A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Names: Appelbaum, Richard P., author. | Cao, Cong, 1959- author. | Han, Xueying, author. | Parker, Rachel, 1971- author. | Simon, Denis, author.

Title: Challenging the global science and technology system / Richard P. Appelbaum, Cong Cao, Xueying Han, Rachel Parker, Denis Simon.

Description: Cambridge : Polity Press, 2018. | Series: China today | Includes bibliographical references and index.

Identifiers: LCCN 2018006109 (print) | LCCN 2018020432 (ebook) | ISBN 9780745689609 (Epub) | ISBN 9780745689562 (hardback) | ISBN 9780745689579 (pbk.)

Subjects: LCSH: Technology–China. | Science–China. | Research–China. | Technology and state–China.

Classification: LCC T173.5.C5 (ebook) | LCC T173.5.C5 A67 2018 (print) | DDC 338.951/06–dc23

LC record available at https://lccn.loc.gov/2018006109

Typeset in 11.5 on 15 Adobe Jenson

by Toppan Best-set Premedia Limited

Printed and bound in Great Britain by CPI Group (UK) Ltd, Croydon

The publisher has used its best endeavours to ensure that the URLs for external websites referred to in this book are correct and active at the time of going to press. However, the publisher has no responsibility for the websites and can make no guarantee that a site will remain live or that the content is or will remain appropriate.

Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked the publisher will be pleased to include any necessary credits in any subsequent reprint or edition.

For further information on Polity, visit our website:

politybooks.com

• Table 1.1 Major Indicators of STI in the 13th Five-Year Plan Period
• Figure 1.1 Total Number of Scientific Articles Published from 1990 to 2016 for Selected Countries
• Figure 1.2 Total Number of PhD Graduates across All Disciplines and for S&T Fields in China from 2005 to 2015
• Figure 1.3 Chinese Students as a Percentage of All International Students Studying in US Institutions of Higher Education from 1979/80 to 2015/16
• Figure 3.1 China's S&T Policy-Making Framework
• Figure 4.1 International S&T Cooperation Programs Funded by MOST
• Figure 4.2 Overseas Scholar Cooperation Research Programs Funded by NSFC
• Figure 4.3 Distribution of Annual Expenditures by MOST
• Figure 4.4 Number of PRC Students Going Abroad for Study
• Figure 4.5 Number of PRC Students Going to the USA for Study
• Figure 4.6 Number of PRC Students Going to the UK for Study
• Figure 5.1 Typology of Business Incubators
• Figure 5.2 Revenue from Nano-Enabled Products: Selected Countries
• Figure 5.3 Global Share of Nanotech Publications: Leading Countries
• Figure 5.4 China's Top Ten Nanotech Patent Areas

This book is the result of a decade of research, primarily conducted under the auspices of UCSB's Center for Nanotechnology in Society (CNS), and supported by the US National Science Foundation (NSF) under Cooperative Agreements #SES 053114 and #SES 0938099. Research was also supported by the National Natural Science Foundation of China (NSFC) under grant 71774091. Special thanks also goes to Duke Kunshan University (DKU) for startup funding used to support research used in this project. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the NSF, the NSFC, or DKU.

We are most appreciative of the NSF funding that made this research possible, and wish to single out Mihail (Mike) C. Roco, founding chair of the US National Science and Technology Council's subcommittee on Nanoscale Science, Engineering and Technology (NSET) and the Senior Advisor for the NSF's Science and Engineering at the National Science Foundation. CNS would not have existed were it not for Mike's vision of the transformative possibilities of nanotechnology; and without CNS, particularly the extraordinary leadership (and frequent hands-on advice) of CNS Principal Investigator and Director Dr. Barbara Herr Harthorn, our research would not have been possible. Others at CNS we wish to thank include CNS Assistant Director Bonnie Molitor, Center Administrator Shawn Barcelona, Travel and Purchasing Coordinator Valerie Kuan, and Education and Outreach Coordinator Brandon Fastman.

Our greatest debt of appreciation goes to the members and supporters of CNS's Interdisciplinary Research Groups on Globalization and Nanotechnology, which inevitably expanded to include a broader focus on China's high-tech turn. Our many research trips to China included visits and interviews at facilities in high-tech regions in Jiangsu Province (especially Suzhou Industrial Park), Shanghai, Beijing, Guangzhou, and Wuhan. Over the years, the members of our interdisciplinary research team who focused on China have included both graduate student and post-doc scientists and engineers. Special thanks go to two graduate students (now PhDs) who traveled with us to China in recent years, and played key roles in shaping our research: Matthew Gebbie in Materials, and Galen Stocking in Political Science. (Two of the co-authors of this book also began as graduate students – Rachel Parker in Sociology, and Xueying Han in Ecology, Evolution, and Marine Biology; after earning her PhD, Xueying continued as a post-doc.) We also owe a special thanks to Dr. Aashish Mehta (Global Studies), who contributed to our economic understanding, and to Luciano Kay, who joined us as a postdoc and subsequently as Research Faculty, providing expert data analysis. Among graduate students who in earlier years worked with us on the China project, we thank, on the science and engineering side: Peter Burks, Yiping Cao, Scott Ferguson, and Claron Ridge; on the social science side, Sarah Hartigan and James Walsh; and post-docs Stacey Frederick and Yasuyuki Motoyama. We were also fortunate to be able to draw on the expertise of UCSB science and engineering faculty, including Dr. Tim Cheng (Electrical and Computer Engineering and Dr. Bradley Chmelka (Chemical Engineering). We benefited from collaboration with Dr. Gary Gereffi (who joined us on an early trip to China) and Dr. Tim Lenoir (both Duke University), and Duke graduate student Patrick Herron. Phillip Shapira and Jan Youtie (Georgia Tech) worked with us to help develop our thoughts on the role of innovation in economic development and public policy. Finally, we wish to acknowledge several UCSB undergraduates who also contributed to our research efforts: Cece Choi, Andi Doktor, Emily Nightingale, and Joy Yang.

Finally, our thanks to Polity Press begin with Jonathan Skerrett, who recognized the importance of China's high-tech transition, proposed we write a book on the subject, and then stayed with us despite countless delays and lapsed deadlines. We also wish to acknowledge Amy Williams, who secured the manuscript reviews and initiated discussions about the book's description and cover; Karina Jákupsdóttir, who worked with us on the final preparation of the manuscript and figures, helping us to get the final version ready for production; our production editor Neil de Cort; Ian Tuttle, our meticulous and ever-patient copy-editor; and Adrienn Jelinek, who has the key role in our marketing efforts.

This book is dedicated to the pioneering American and Chinese scientists and engineers, whose cross-border research collaboration has provided the foundation for future S&T cooperation – cooperation that is badly needed to most effectively address the world's most pressing challenges.

China sees itself as an emerging world power. Shortly after his election as the General Secretary of the Central Committee of the Chinese Communist Party (CCP) in November 2012, during a visit to the National Museum off Tiananmen Square, Xi Jinping stood in front of an exhibit called “The Road to Rejuvenation,” and reminded the assembled dignitaries and reporters:

After the 170 or more years of constant struggle since the Opium Wars, the great revival of the Chinese nation enjoys glorious prospects … Now everyone is discussing the Chinese dream, and I believe that realizing the great revival of the Chinese nation is the greatest dream of the Chinese nation in modern times.

(BBC News 2012)

Innovative breakthroughs in science and technology (S&T), resulting in globally competitive goods and services, are key to realizing Xi's Chinese dream. For decades China has been the world's factory, manufacturing and assembling goods ranging from cheap apparel to complex electronics. This role has served China well. Like the newly industrializing economies of East Asia a generation ago, China's meteoric economic growth has been fueled by export-oriented industrialization. The extraordinary amount of foreign direct investment China receives was initially driven by its plentiful supply of cheap labor. In recent years, however, as its economy has grown at historically unprecedented rates, its investments in science and technology have started to pay off. Meanwhile, as labor costs have risen, foreign firms are increasingly drawn to China for reasons other than its manufacturing capabilities: access to what is becoming the world's largest consumer market, and the ability to partner with China's growing (and increasingly better educated) science and engineering talent pool.

China has grown to become the world's second-largest economy, its GDP surpassing Japan's in 2010. In the 33 years between 1978 and 2011, China's annual GDP growth averaged 10 percent, a 20-fold increase over the period (Haltmaier 2013). Even during the 2007–9 recession, China's economy only slowed to about 9 percent (World Bank 2013). Since that time, however, GDP growth has slowed further, as China makes the transition from public investment to consumer spending as a central driver of development. Still, China's GDP grew at 6.8 percent in 2017, more than three times the rate of the world's advanced economies (IMF 2017). When corrected for purchasing power parity, the IMF (2014) estimated that China's GDP surpassed that of the US in 2014.¹ China's rapid growth has resulted in a rising middle class, now estimated at several hundred million people.²

By October 2017 China's foreign exchange reserves had dropped to US$3.1 trillion, after reaching a high of US$4 trillion in the first quarter of 2014 (Trading Economics 2016; SCMP 2017); US$1.2 trillion (39 percent) were in the form of US Treasuries (US Department of Treasury 2017). China still retains a sizeable amount of foreign exchange reserves, which have been plowed back into the Chinese economy in the form of high-speed trains, highways, and other infrastructure; universities and science parks; and vast urban developments.

Public investment, which accounts for an estimated two-thirds of China's growth, has proven to be a successful strategy on the part of the Chinese Communist Party, whose legitimacy depends primarily on a rising tide that lifts a growing number of boats. But this approach has thus far produced limited returns in terms of innovation. China may be Walmart's leading trading partner, but the lion's share of the profits from that relationship is realized by Walmart. China may be the world's largest assembly of Apple and Samsung products, but only a small share of value added remains in China (see chapter 4 for further discussion).

As early as 2005, China's leaders set out to rectify this imbalance. China's role as the world's factory is undergoing a major transition: from “made in China” to “designed and created in China,” from imitator to innovator. The 15-year Medium to Long-Term Plan for the Development of Science and Technology (MLP) set forth ambitious goals to transform China's S&T efforts from imitator to innovator (Ministry of Science and Technology 2006). It identified four basic science areas as “science megaprojects” (reproductive biology, protein science, quantum research, and nanotechnology, with stem cell and climate change added later), along with 16 “engineering megaprojects” (three being classified) and eight “frontier technologies” intended to convert scientific knowledge into commercially competitive leading-edge products.

The MLP has been backed up by China's 11th, 12th, and 13th Five-Year Plans, as well as a host of provincial and local efforts to develop world-class S&T capabilities. Significantly, the MLP emphasized the importance of “indigenous innovation” (zizhu chuangxin) capability to enable China to “leapfrog” its way into scientific leadership (the MLP is discussed in greater detail in chapters 2 and 3). Part of China's approach has been to move away from dependence on low-cost and resource-intensive production, which is seen as providing little in terms of technology transfer. Moreover, wages have been raised,³ not only to placate workers, but also to promote the growth of a consuming class, having apparently learned from Henry Ford, who supposedly favored the “five dollar a day” wage so his workers could afford to buy the Model Ts they were producing. This, in turn, is resulting in some capital flight to lower-wage countries such as Vietnam, Bangladesh, Indonesia, and parts of Africa.

Since its adoption of the MLP over a decade ago, China's leaders have ramped up investment in “indigenous innovation” involving research, development, and commercialization of advanced technologies (Appelbaum et al. 2011a).⁴ Although the MLP serves as an example of state-led S&T-oriented industrial policy, its investment in science and technology has yet to pay the predicted big dividends. As we shall demonstrate, although the trends are promising, China faces some significant barriers to achieving the world-class innovations it hopes to achieve. China's universities and science parks are impressive to look at, with laboratories and facilities that rival those of the US and Europe. Sparkling facilities, however, do not automatically translate into innovative breakthroughs.

In January 2013 China's State Council issued a notice advancing the government's plans for indigenous innovation.⁵ The notice, an addendum to the 12th Five-Year Plan (2011–15) intended to support and implement the MLP, set forth State Council goals intended “to deepen the scientific and technological system to accelerate the nation's innovation system.” It served as an official reminder that “the 12th Five-Year Plan states the urgent needs of our nation, at this crucial period, to build an innovation-oriented country, to thoroughly build a well and prosperous society, to accelerate the development of economic progress to enhance the capabilities of indigenous innovation to higher limits.” The notice reaffirmed earlier calls for “supporting technological leapfrog development,” to be achieved by “strengthening the building of basic conditions for technological innovation.” These included an augmentation of research laboratory facilities, such as national key laboratories, improved instrumentation, and the construction of a network of field research stations. The notice called for “enhancing the ability to continuously innovate key industries,” including advances in materials,⁶ information technology, and energy.⁷ There was a strong emphasis on green technologies, including the “implementation of a low-carbon technology innovation industrialization project, strengthening carbon capture, R&D and capabilities of utilization and sequestration technologies.” Perhaps with growing traffic congestion and air pollution in mind, the notice also called for “accelerating the construction of intelligent digital traffic management, integrated transport, and green transportation.” The notice called for a wide range of mechanisms to “strengthen the regional innovation development capacity [and] accelerate the construction of distinctive regional innovation systems.” While the eastern region – already home to China's leading high-tech and manufacturing sectors – is to provide “an open resource-intensive sharing of its scientific and educational advantages,” the notice also called for investment in central and western China as well. It specifically singled out “national high-tech industrial development zones,” such as Beijing's Zhongguancun, Wuhan's East Lake, and Shanghai's Zhangjiang as the role models.

Finally, China's universities and vocational schools are seen as key to these efforts. While the notice called for such worthwhile goals as strengthening the educational system, enhancing people's abilities and talents, conducting world-class academic research, and promoting collaborative innovation, these are to be achieved largely through technological advances such as improved use of information technology and digital instruction, along with “gathering and training a group of top creative talents.” There is no mention of more open approaches to instruction that might encourage creative, critical, “outside the box” thinking – an acknowledged shortcoming in China's quest to become a first-tier innovator. There is a call “to promote the popularization of science capacity building” through “science websites, virtual museums and virtual science museum building, the use of mobile phones, the Internet and mobile TV and other new media technologies and means of disseminating innovative scientific resources.” The efforts of China's current leadership to boost innovation through these recent reforms will be taken up in chapter 3.

Is China becoming a high-tech world leader, leapfrogging into advanced technologies that will transform its economy into an “innovation powerhouse” – the title of a Foreign Policy article (Wertime 2014) typical of much recent hype? In this book we go beyond popular accounts, and dig more deeply into the evidence, drawing on extensive fieldwork in China that spans nearly three decades. We also examine the statistical evidence for China's advance, drawing on an original analysis of Chinese publications and patents in different fields, to determine the extent to which China's significant investments have paid off.

The first chapter, “China's Science and Technology Policy: A New Developmental State?”, sets forth some of the principal issues that will be the focus of the book, centering on the evolving role of state policy as a key driver of both China's successes and failures. Our central question asks: Does China's state-led approach to science and technology constitute a new, more effective form of the developmental state? Or does the heavy-handed role of government impede truly creative thinking, discouraging innovation both in basic science and the resulting applied technologies? We begin by providing an overview of China's efforts to become a world power in science and technology, reviewing recent industry-sponsored studies that conclude that China's great leap forward in science and technology has been a resounding success. We then summarize the key points of China's current S&T plan for high-tech development. A final focus of this chapter is to evaluate the impacts of China's brain drain, and the effort of the government to convince the best and brightest overseas Chinese scientists and engineers to return through generous laboratory and financial incentives dubbed “talent programs” (for example, the Thousand Talents Program, the Young Thousand Talents Program). We evaluate the success of these efforts, arguing that the outcome has been, in fact, problematic (see also chapter 4). One unintended and undesirable consequence, for example, is a growing tension between those with and those without overseas experience.

In chapter 2, “Science and Technology in China: A Historical Overview,” we survey the development of science and technology in China, providing a historical context to better understand China's current efforts. We begin with a description of the process through which modern science was first introduced and institutionalized in China, before turning to a more extensive discussion of the organization of scientific research in the People's Republic of China (PRC), beginning with the eras of Mao Zedong and Deng Xiaoping, up through the MLP and emphasis on indigenous innovation. We examine the intrusion of politics into science and research – China's top-down approach in formulating and implementing S&T and innovation policy, a historical legacy that has had its enduring impacts. We conclude the chapter with a discussion of the challenges China faces in becoming an innovation-oriented nation and a world leader in science and technology – a topic to which we return throughout the book.

In chapter 3, “China's Science and Technology Enterprise: Can Government-Led Efforts Successfully Spur Innovation?”, we return to our key concern by evaluating the role of the Chinese government as a driver of science and technology development in such key fields as life sciences, nanotechnology, advanced manufacturing, aerospace, clean energy, and supercomputing. The Chinese Communist Party continues to control the scientific enterprise through a Leading Group on Science, Technology, and Education at the State Council and other mechanisms. The central government has initiated various top-down national programs, including the previously mentioned talent-attracting programs, and has approved the setting up of 168 national high-tech parks. The central government still controls a significant share of the R&D funding, which is often distributed without due attention to merit or transparency; its use has all too often been ineffective, inefficient, wasted and abused. We take a critical look at state-led efforts, including the growing emphasis on science and technology parks as innovation hubs.

In chapter 4, “China's International S&T Relations: From Self-Reliance to Active Global Engagement,” we document and analyze China's rapidly evolving international S&T relations – its cooperation, collaboration, and occasionally adversarial relations with its neighbors in Japan and Korea, as well as with the West. Since the announcement of the S&T modernization program in the late 1970s, China's leadership has believed that international engagement would be an important vehicle to help the Chinese S&T system catch up with the West. As a result, Chinese governments at the national, provincial, and local levels have signed a broad range of bilateral and multilateral S&T cooperation agreements with the world's leading nations. How effectively are these relations playing out? How have they shifted as a result of the strengthening of China's own S&T capabilities? In addition to looking at a select array of specific governmental relationships, we also examine the role of technology imports in supporting China's S&T advance, examining the PRC leadership's growing concern about the country's continued high degree of dependence on foreign know-how to drive its economic development. This chapter also analyzes the growing presence of foreign R&D centers in China, which now number over 1,800, as well as the emergence of Chinese global firms and their efforts to extend domestic R&D centers in addition to “listening posts” abroad.

In chapter 5, “How Effective Is China's State-Led Approach to High-Tech Development?”, we address the question of whether high-tech parks can be a key to promoting innovative breakthroughs in China. We first briefly discuss China's current model of economic growth, challenges, and high-tech turn, after which we examine its often contradictory blend of heavy-handed state-driven development and untrammeled free enterprise. After an examination of nanotechnology as one area in which China has sought to achieve indigenous innovation, we then focus on Suzhou Industrial Park (self-characterized as and competing for being “China's Silicon Valley”⁸), which has an annex devoted to nanotechnology. Dubbed “Nanopolis” (a play on Singapore's successful Biopolis), this annex is home to some of China's nanotechnology startups, often involving international partnerships through former Chinese expats (now returnees) with Silicon Valley connections. Firms are provided support for business plan development, legal and incubation services, tax holidays, and other perks. In this chapter we illustrate how China's approach is seeking to create a new regional economic advantage for the country, one that is based on high-tech innovation through nanotech-related firms and supporting institutions. We conclude with some reflections on China's high-tech future, and the successes (and failures) of China's policies intended to foster innovation-driven economic development.

In our final chapter, “Xi Jinping's Chinese Dream: Some Challenges,” we ask the question: Is there a Chinese model of innovation? China has broad ambitions and has invested considerable public resources in a well-orchestrated effort to achieve its goals. Can China's industrial and/or innovation policy pay off? Is a Nobel Prize around the corner? We conclude with some speculations on what China's high-tech ambitions, if successful, might mean for the Chinese economy as well as for its relations with the rest of the world. What are the challenges that China will face, if it succeeds in moving away from an economy based on export-oriented industrialization and public investment, to one that emphasizes technological prowess and private consumption? How will this impact China's growing industrial workforce and its talent pool? Finally, to the extent that China succeeds in its efforts at indigenous innovation, relying on its own vast and growing middle class as consumers for Chinese brands, how will this affect its economic and political relations with the United States and other countries?