Analysis | Catching Up or Leaping Ahead?: Chinese Investments in Technological R&D

Analysis | Catching Up or Leaping Ahead?: Chinese Investments in Technological R&D

Pascal Hensel.jpg

Pascal Hensel

- MENA Affairs Specialist
- Graduate in Foreign Affairs & Middle Eastern Studies at The University of Virginia
- Former Department of State Intern

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China has been pursuing an aggressive technological development agenda that threatens to undermine traditional U.S. superiority in advanced technologies. The Chinese technology sector’s alarming growth and emerging status as a real competitor to both Silicon Valley and the U.S. defense technology industry mirrors China’s ambitions for global leadership in political, economic, and military arenas. China seeks greater global influence with a combination of highly centralized power in its leadership under Xi Jinping, large regional development initiatives such as the Belt and Road Initiative, and increases in the size of the military amid territorial disputes in the South and East China Seas, and with India. An increase in technological capabilities could become a sort of “cherry on top” that threatens the dominance and security of the U.S. and its allies in the Pacific.

The growth of the Chinese technology sector is visible in the combination of increased spending on research and development (R&D) at home and investments abroad. According to 2015 data from the National Science Board (NSB), although the U.S. was the largest R&D-performing country, with gross domestic R&D expenditures totaling $497 billion and with a R&D-to-GDP ratio of 2.7%, China came in second with R&D expenditures totaling $409 billion and with a R&D-to-GDP ratio of 2.1%. However, what is most notable is not just that China is second only to the U.S. in R&D expenditures, but that it’s rate of increase is so high. According to the NSB, increases in Chinese R&D expenditures averaged 13% between 2010 and 2015 while the United States’ increases have been hovering around merely 4%. Another important trend is that, although the U.S. has maintained a lead in R&D, its global share on R&D activities has decreased from about 37% in 2000 to 26% in 2015 whereas China’s has increased to 21%. It therefore seems that China could surpass the U.S. in R&D performance in the near-future.  

To help understand how technological advances are divided across Chinese society, it is useful to look at the percentages of total R&D spending on the performance of R&D across the sectors of the economy. As the NSB points out, the business sector is the largest contributor to R&D expenditures in nearly all top-performing countries. In 2015, the business sector accounted for 72% in the U.S. and 77% in China. Examples of key private sector players in China include Alibaba, Huawei, and Tencent. Although there are blurred lines as to the level of influence of the Chinese state in China’s technology companies, most R&D is performed for consumer-oriented technologies. Meanwhile, R&D performed by the government accounted for about 11% in the US and 16% in China. Other sectors performing R&D include higher education and non-profits. The U.S. and China are at the front of the pack in R&D, and both split shares in national R&D similarly between business and government, indicating comparable harnessing of private sector and government-led initiatives. 

Chinese investment in advanced technologies could threaten the United States’ technological superiority.

In addition to spending on the performance of R&D, China has also been investing in technology companies abroad and acquiring intellectual capital. According to the Council on Foreign Relations (CFR), Chinese investors, venture capital funds, and state-owned enterprises have been investing billions of dollars into the U.S. technology sector. These investments include acquisitions of both established firms as well as early-stage companies and initiatives in developing technologies, such as artificial intelligence (AI) and other militarily applicable technologies. As CFR points out, Chinese investment in advanced technologies could threaten the United States’ technological superiority and potentially preclude U.S. government investments in the same companies. As a compliment to Chinese firms’ well-documented practices of downright intellectual property theft, purchasing shares to secure ownership of technology companies also helps Chinese companies cut corners and reduce development costs.  

Although detailed reports and budgetary itemizations of how the Chinese government intends to harness R&D for military purposes are not publicly accessible, public announcements and observable testing unveil important developments and potential intentions of advanced technologies. One important field in which the Chinese are investing heavily is quantum technology, which includes quantum communication, cybersecurity, codebreaking, and sensing. Quantum sensors, which utilize the quantum phenomena of superposition and entanglement, can detect atomic and sub-atomic properties such as acceleration, rotation, and electric and magnetic fields with near-absolute accuracy. In practical application, as The Economist explains, quantum gravimeters could detect the gravitational forces induced by geological features to produce accurate maps, allowing ships to navigate and know their precise locations without the need for satellites. Meanwhile, quantum radars would be able to detect stealth aircraft and would be immune to current advanced radar jamming techniques. Finally, whereas magnetometers have been detecting submarines since WWII, quantum magnetometers are much more sensitive and could be used in airborne devices to find submarines several kilometers away instead of just some hundreds of meters.

Although the U.S. still maintains a lead in all of these technologies, China is both catching up and exploring new and sometimes controversial technologies.

Last June, the Chinese Academy of Sciences announced a major breakthrough in its quantum magnetometry research following a major upgrade to a Superconducting Quantum Inference Device (SQUID) system. As David Hambling explains in NewScientist, whereas SQUIDs are typically hypersensitive and suffer from noise that can be caused by minute magnetic alterations caused by distant solar storms, China’s new magnetometer uses an array of SQUIDs to collect and compare data and cancel out noise. Notably, when journalists began speculating about potential applications of the device to detect submarines, the announcement was taken down. The U.S. Navy has already given up on working on superconducting magnetometers due to noise issues and has been opting for more mature technologies. Although China may still not have eliminated all the noise to be able to deploy SQUIDs effectively for submarine hunting, this breakthrough suggests that China is on track to becoming the first to succeed in this endeavor.

China is demonstrating a push for global technological leadership.

Other examples of known technological developments outside of the quantum sector include advancements in maneuverable reentry vehicles for ballistic missiles, hypersonic weapons, directed energy weapons (e.g. lasers, directed electromagnetic pulse weapons, and particle beams), electromagnetic railguns, and unmanned and AI-equipped weapons (See the U.S.-China Economic and Security Review Commission’s Annual Report for 2018). Although the U.S. still maintains a lead in all of these technologies, overall R&D spending, public announcements, and observable tests again show that China is both catching up and exploring new and sometimes controversial technologies. For example, according to the U.S.-China Economic and Security Review Commission, China has shown consistent and growing interest in unmanned and autonomous vehicles and has been pursuing extensive research into cruise missiles with very powerful AI as well as autonomous unmanned underwater vehicles (UUVs). It should be noted that the U.S. Department of Defense has banned full-AI cruise missiles because of ethical concerns, according to the report. Quantum, AI, and other advanced technologies are firmly within the priorities and reach of Chinese R&D initiatives and have widespread military potentials that point to a highly advanced military.

By pursuing massive investments in advanced technology R&D across all sectors of the economy, China is demonstrating a push for global technological leadership. Chinese firms are entering the forefront of global technological innovation, and investors are looking for ways to participate in and get a hold of the momentum of the U.S. technology sector. Meanwhile, government-led initiatives are pursuing advanced technologies that, once combined with the increasing size of the People’s Liberation Army, could overcome the regional dominance and security of the U.S. and its allies. The biggest challenge for China will be how to fuse the civilian and military sectors to emulate the more successful models of private-defense integration in the U.S. However, although it has only achieved limited success to date, China has been pursuing civilian-military fusion efforts and established the Central Commission for Integrated Military and Civilian Development last year to oversee these efforts, according to CFR. Both China’s capabilities, big-picture intentions, and priorities are clear, and it will be a challenge to learn how to deal with such a powerful and increasingly tech-based economy while managing and securing against the threats that will come from innovations in advanced weaponry.


All views expressed in this article are solely those of the author, and do not represent the views of The International Scholar or any other organization.


Banner Photo Credit:

  1. "PLA Air Force J-10B" by Sunson Guo, Flickr
    https://www.flickr.com/photos/145141267@N03/35483335606/in/photolist-W4xnso-W4xm7N-VwRwYS-VwRuJ1-9CVa2g-6gnTEQ-osm7X7-oqkFNf-XKXB7G-oaT5Ur-os9ATU-ftm4YF-ftAswb-ftAro7-ftAgGo-ftAFuA-ftmc48-oaSAKu-ftm1BM-eZgYM-ftAhAw-oqjLgW-ftADBy-6gnSpC-ftAzr3-oaS4tG-8HdZm6-VkepHQ-6gnT5d-ftAHkh-6giHHB-gcZKh6-osam8E-oaRYq7-VTB2EZ-6giEXF-6gnV59-nPSCpY-9CY5KW-5Ydpdw-6giECZ-9DbiRR-9CY5EC-ftAfJW-9DsZyi-osaee9-osmBH6-9CY5Ro-6giGXV-9CZjYg

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