China’s Technological Crossroads: Breaking Free from the Middle-Technology Trap

In the midst of the ongoing technological conflict with the United States, the Chinese Academy of Sciences has issued a warning about the potential dangers of falling into a “middle-technology trap”. This trap could impede the country’s progress at the lower and middle levels of the global value chain, stifling its ability to drive sustainable economic growth through innovation. As China grapples with the increasing technology restrictions imposed by the US and faces challenges in moving up the value chains, the question arises: Is it time for China to open its doors wider to avoid being trapped in this critical stage of technological development?

The concept of the “middle-technology trap” illustrates a scenario in which developing countries initially benefit from industrial transfers due to their low-cost advantages. However, they subsequently face long-term economic stagnation as these advantages diminish, leaving local firms struggling to catch up with the core technologies retained by developed nations. This warning has become a cause of concern for Beijing at a pivotal moment when the need for technological innovation has never been more urgent.

Despite making significant strides in terms of manufacturing and research and development spending, China’s technological strength still lags behind that of the United States. The Chinese Academy of Sciences report revealed that China’s manufacturing sector is primarily positioned in the downstream of the global value chain, making it vulnerable to being constrained at the low and mid-end by developed countries such as the United States, Germany, and Japan.

In response to these challenges, prominent political scientist Zheng Yongnian of the Chinese University of Hong Kong has emphasized the necessity for China to promote industrial innovation through scientific and technological breakthroughs. This includes the cultivation of subversive and cutting-edge technologies to give rise to new industries, models, and momentum. Moreover, Zheng stresses the significance of embracing a more open policy and implementing sweeping reforms to facilitate the much-needed technological upgrades.

The call for a wider open-door policy is a key aspect of Zheng’s recommendations. He advocates for the attraction of international talent to China, even amid the prevailing trend of decoupling. In his view, this could involve efforts to draw European, American, and other international scientists to the country. Additionally, Zheng highlights the importance of opening up China’s national industrial experimental laboratories to a broader spectrum of private enterprises and advancing reforms within the enterprise system. This would enable state-owned firms and large private companies to collaborate and expand the supply and industrial chains.

China stands at a pivotal crossroads, facing the imperative to break free from the potential entrapment of the “middle-technology trap”. With the global tech race continuing to unfold, the country must navigate a path towards sustainable economic growth and technological innovation. As calls for openness and reform resound, China’s response to these challenges will continue to shape not only its technological future but also its position within the global economic landscape.