Through strategic investments, policy incentives, and a distinctive governance model, China expedites its evolution into a superpower

China’s strategic approach to technology development is distinguished by an integrated model that merges government guidance with market forces, positioning it uniquely within the global landscape. This model is grounded in the central role of the Chinese Communist Party (CCP), with all levels of government collaborating to attain technological supremacy. The distinctive aspect of this approach is its capacity to swiftly mobilize resources, expedite decision-making processes, and execute policy directives across multiple sectors, thereby hastening technological advancement and innovation.

China’s technological ambitions are extensive and encompass numerous sectors. Its primary focus areas encompass advanced information technology, artificial intelligence, quantum information, integrated circuits, biotechnology, and green energy technologies. These sectors are considered crucial for achieving the breakthroughs necessary to propel economic transformation and facilitate China’s dominance in high-tech industries. The plan underscores the importance of establishing resilient digital infrastructure as the foundation for these advancements, which entails substantial investments in areas such as 5G and emerging 6G networks, cloud computing, and the Internet of Things (IoT). This infrastructure aims to facilitate the transition to a digital economy, enhance industrial productivity, and foster the development of innovative ecosystems.

In China, High and New Technology Enterprises (HNTEs) are entitled to a variety of incentives aimed at fostering innovation and technological advancement. These incentives are integral to a broader Chinese strategy aimed at positioning the country as a global leader in high-tech industries.

The main incentives for HNTEs are as follows:

1. Low Corporate Tax Rate: HNTEs enjoy a preferential corporate tax (VAT) rate of 15 per cent, which is considerably lower than the standard 25 per cent VAT rate. The rebate aims to enhance the financial position of high-tech companies and empower them to allocate more resources towards R&D and innovation.

2. R&D Expenditure Deductions: HNTEs may take advantage of additional deductions for R&D expenses. This policy enables companies to deduct a higher percentage of their R&D expenditures from their tax base, thereby further decreasing their tax burden and fostering investment in technological innovation.

3. Financial Support: High and new technology enterprises can access direct financial support from the government, including grants, subsidies, and other forms of financial assistance aimed at fostering the development and commercialization of high-tech products and services.

4. Preferential Treatment in Government Procurement: HNTEs frequently receive priority in government procurement processes, benefiting from policies that incentivize government agencies and public institutions to procure from these enterprises. Besides furnishing a direct market for their products, this also enhances their reputation and market presence.

5. Intellectual Property (IP) Protection and Support: Acknowledging the significance of intellectual property (IP) in the high-tech industry, the Chinese government offers support to HNTEs to safeguard their intellectual property rights. This assistance encompasses aid with patent filing, legal protection measures, and initiatives to combat intellectual property (IP) infringement.

6. Talent Attraction and Retention Policies: HNTEs leverage policies crafted to attract, retain, and nurture talented professionals, which include tax incentives for highly skilled workers, support for continuing education and training, and more flexible immigration policies for foreign professionals.

7. Access to Innovation Resources and Platforms: HNTEs have access to government-funded innovation platforms, technology parks, and incubators, which furnish essential resources such as research facilities, funding opportunities, and networking platforms for collaboration with universities, research institutions, and other companies.

These incentives underscore China’s dedication to enhancing its technological capabilities and competitive edge in the global market. By supporting HNTEs through these measures, China aims to expedite the advancement of the high-tech sector and foster an ecosystem conducive to innovation and high-tech entrepreneurship. The global implications of China’s technology strategy are profound. By positioning itself as a pioneer in new technologies, China aims to rebalance the global economic and technological landscape in its favour. This objective has the potential to challenge the prevailing dominance of Western countries in technology and innovation.

Focusing on self-sufficiency and domestic innovation in critical technologies may result in a more fragmented global technology landscape, characterized by competitive standards and platforms. Such a shift could have ripple effects on global supply chains, trade relations, and geopolitical dynamics, as other nations adapt to the challenges and opportunities arising from China’s ascension as a technological superpower.

Furthermore, China’s technology strategy has the potential to redefine global competition across vital industries, spanning from telecommunications to artificial intelligence. This could precipitate a restructuring of global markets and innovation ecosystems. In conclusion, China’s comprehensive and coordinated approach to technology development outlined in the 14th Five- Year Plan for National Digitalization sets a roadmap for the country’s goal of becoming a leader in the global technological arena by 2030. Through strategic investments, policy incentives, and a distinctive governance model, China aims to expedite its evolution into a superpower within the global technological and economic landscape.

The success of this strategy not only reshapes the global balance of technological power but also challenges existing international norms while redefining the paradigms of technological progress and cooperation.