Douglas Fuller is an associate professor in the Department of Asian and International Studies at the City University of Hong Kong and the author of Paper Tiger, Hidden Dragons: Firms and the Political Economy of China’s Technological Development. In his book, Fuller explores a question that has hounded heads of state around the world for decades: How can a developing country get ahead in the tech sector? Drawing on the results of 499 interviews from experts over the course of 15 years, Fuller discusses China’s answer to this question in the context of its attempts to dominate the global semiconductor industry. Fuller and Jordan also touch on the transformative impact of the trade war and the concept of technology transfer and their implications for the immediate future of the Chinese tech sector.

Jordan’s newsletter is now available for sign-ups: chinaecontalk.substack.com. In the past few weeks, he’s translated articles on topics like the troubled future of VPNs in China, the role of “operations” in Chinese internet companies, and the rise of a cheese tea Starbucks slayer.

What to listen for in this week’s ChinaEconTalk:

27:38: Chinese tech companies are often portrayed as monolithic, but in reality, the financial decisions that brought companies like ZTE and Huawei to the international stage are significantly different: “[Huawei CEO and founder] Ren Zhengfei — there was a method to his madness. He decided to forgo what were these rational incentive structures to just embrace state procurement and instead took a very high risk strategy of very early on looking abroad for contracts, for markets because he really wanted to hone Huawei’s capabilities by competing against the best… In contrast, a firm like ZTE was more than happy to be much more reliant on the Chinese marketplace when it went abroad. It sort of very much followed this [path of taking] China Development Bank subsidized loans to sell equipment in African countries where the leading foreign firms were not interested because the price points were so low.”

41:16: What should U.S. policy look like in regards to Chinese tech policy? In considering this question, Fuller notes: “Investment binges [by China] have wrecked certain markets… Now the United States is extrapolating forward. What if they do this in memory chips or other semiconductor products? Those two areas are of high concern, particularly when thinking about, ‘Well, are these natural outcomes, or not?’ And I would say the investment binges and the levels of subsidization of a lot of industrial investment in China, this obviously didn’t just happen because the market dictated it.”

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