Why is there such a big gap between China’s hard technology and the world?

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Text / Wei Xi

Source / Wei Xizhibei (ID: weixizhibei)

one,

Let’s take a look at some simple facts –

1. my country has the largest number of mobile Internet users in the world, but almost 100% of the operating systems in our mobile phones are Apple’s iOS and Google’s Android. The core of the mobile phone, the chip, is almost dependent on imports. In 2014, the chip surpassed oil and became my country’s The category with the largest proportion of imports.

2. my country has the largest computer engineers in the world, but hardly any programming languages ​​have been invented, and there are very few open source frameworks, protocols, and standards that come from China and are widely used in the world.

3. There are game companies with the highest output value in the world in my country, but the “shovel sellers” and the two major game engines in the game industry, Unreal and Unity, were all born in foreign companies.

4. my country is the only country in the world that has all the industrial categories of the United Nations, but the basic equipment in the fields of high-end CNC machine tools, industrial design software, and intelligent manufacturing is heavily dependent on imports.

5. We have the largest agricultural production base in the world, but most of our corn, potatoes, and vegetable seeds are imported from foreign giants such as Bayer and Monsanto. Among the top ten seed companies in the world, there are only two in my country, Syngenta and Longping Hi-Tech. , the former is still an acquisition.

6. my country breeds and eats the most pork in the world, but more than 90% of the “breeding pigs” called “pig chips” rely on imports from the United States, Denmark, and France, and the “white-feathered chicken” which accounts for the largest proportion of chickens. Breeders “are also entirely dependent on imports;

7. We are the world’s largest drug consumer, but the gap between my country’s innovative drug industry and developed countries is huge, and none of the world’s top ten pharmaceutical giants are Chinese companies on the list.

8. We still can’t build high-end lithography machines, and even we can only use European Tetra Pak for a large proportion of milk-packed cartons.

……..

The list could actually go on for a long time.

There is no doubt that China’s overall technological prowess has changed dramatically over the past four decades.

However, an irrefutable fact is that today China still has a very large gap with the world level in many core technology fields. The most intuitive manifestation is that there are still too few hard technologies.

The four new inventions in China that we talk about with great interest—“scan code payment, shared bicycles, high-speed railways, and online shopping” are essentially the leaders in the application layer and business model, not the underlying technology.

In the final analysis, my country’s hard technology is still far from the world’s advanced level.

First briefly explain the word “hard technology”, it does not refer to hardware technology but hard core technology (Key & Core Technology).

Generally, it refers to technical products, equipment and systems based on scientific discoveries and technological inventions, which have high technical thresholds and technical barriers, are difficult to copy and imitate, and have a strong leading and supporting role in the development of the industry.

In 2010, Mi Lei from Xi’an Institute of Optics and Mechanics, Chinese Academy of Sciences first proposed the concept of hard technology. .

two,

So what is the core reason for the large gap between China’s hard technology and the world?

The essential reason is that my country’s past development has been picking “low-hanging fruit”.

“Low-hanging fruit” is a common metaphor in Western sociology, meaning “tasks that are easy to accomplish and low-cost.”

If you think that “picking low-hanging fruit” is a derogatory term, then you are wrong. On the contrary, this strategy is a rational choice based on real conditions in our country.

The core background behind this is that the starting point of China’s economic construction is too low.

How low is it?

Let’s feel it from two simple historical details –

1. In 1978, the then Vice Premier Gu Mu visited five European countries. During this eye-opening visit, members of our delegation encountered embarrassing situations where they bumped into the transparent glass door many times during the inspection.

During the period, the French served ice cream to the delegation members at lunch, and one representative said: “This is too cold, can you warm it up?”

2. Liang Heng, the former editor-in-chief of People’s Daily, shared an experience——

“In 1984, when I was a provincial reporter of a major newspaper, I went to the office once and saw a group of people gathered around an object. This was a piece of tissue paper brought back by the newspaper’s reporter in West Berlin. It was eight inches square, white and soft, and printed on it. Very beautiful pattern, the reporter said, this is the toilet paper for other people’s public toilets.

My God, I almost fainted. The foreigners are so lavish and wasteful. I took this paper back and passed it on to many people, all of whom were so shocked that they couldn’t shut their mouths. “

That’s right, this was the real state of the Chinese economy more than 40 years ago, starting from a low even today’s Gen Z can imagine.

In 1978, China’s total economic output accounted for 1.7% of the world’s total. Whether in terms of capital, technology or other factors, China at that time did not even have access to a modern economy.

At that time, China did not develop the strength of “hard technology”, nor did it need to develop “hard technology”. What it needed to solve was how to make people eat ice cream and use paper towels as soon as possible.

three,

Specifically, China’s strategy of picking “low-hanging fruit” is to introduce technology through cooperation and expand production by taking advantage of labor costs.

This also has an important basis in economics. The theory of “late-mover advantage” of former World Bank chief economist Justin Yifu Lin well explains the rationality of this strategy.

The core of the “late-mover advantage” theory is simply summarized as the following three logics:

1. Economic development depends most importantly on three factors—factor endowment, industrial structure and technological level, of which technological level is the core of the three factors.

2. There is a cost to improve technology, and the cost of introducing technology is much lower than the cost of independent research and development of new technology.

3. Countries with low technological level have a “late-mover advantage” in economic development because they have ready-made advanced technologies that can be introduced.

So, according to the “late-mover advantage” theory, we are dealing with an orchard that has both low-hanging and high-hanging fruit.

There is no doubt that picking the “low-hanging fruit” first is the best choice.

After all, it was time-consuming and labor-intensive to take a ladder to pick fruits at high places, and we couldn’t even afford the wood for the ladder at the time.

Make money first.

Four,

Two examples from Jack Ma and Liu Chuanzhi vividly illustrate our strategy –

On August 1999, the 35-year-old Jack Ma started his second venture outside of Yellow Pages China – Alibaba.

In order to boost the morale of employees, Ma Yun gave an impassioned speech at the house in the lakeside garden at that time, and one of the paragraphs said:

“Americans are strong in their hardware, and strong in their systems. It is true that they did this earlier, but when they play soft information, Chinese people will never be worse than foreigners. We are here. You are no worse than others.”

In a sense, “playing with information and playing soft” has become the model of almost all Chinese Internet companies later.

There is no need to do low-level innovation, the huge market at the application level is enough for startups

Coincidentally.

In March 1998, “Computer World” magazine published Liu Chuanzhi’s article “Trade, Industry and Technology, Triple Jump”, taking this as a turning point, Lenovo abandoned the principle of technology priority and chose to do product trade first, then industrial production, Finally, the “trade, industry and technology” route of technology research and development.

It is not accidental that Jack Ma and Liu Chuanzhi adopted a similar strategy, but a choice to maximize benefits under the objective conditions of the development level and technical level at that time.

People cross the river by feeling the stones, and we cross the river by feeling them.

In game theory, there is also a famous model of “smart pig game”, which is roughly described as the big pig and the little pig press the button on one end of the pipe, and the other end will come out food. If they press the button at the same time, the big pig will earn more than the little pig Big, but pressing this button is a time cost.

At this time, the pig’s optimal strategy is to stand still and wait for the big pig to press.

We used to be the smart little pig, but we have been accumulating strength and slowly become a big pig today.

Therefore, the strategy also needs to be changed accordingly. After all, crossing the river by feeling the stones of others is not a long-term solution.

five,

Therefore, in general, the core reasons for China’s backward hard technology lie in two points –

1. From a subjective point of view, China’s development starting point is low, and introduction rather than independent development is an economically more reasonable subjective choice for the country and enterprises.

2. Objectively, hard science and technology have large capital requirements, high development costs, and many preconditions. In the past, China did not have the conditions for development for a long time.

China’s high growth in the past was mainly due to the diffusion of the technological dividends of the first three scientific and technological revolutions in the context of globalization. We made reasonable use of the large-scale domestic demographic dividend and the introduction of international technologies to find a suitable position in the global division of labor and completed the economic Primitive accumulation at the level and at the technical level.

Economist Raul Prebisch used the “Core and Periphery Theory” to explain the global division of labor in the previous world –

Developed countries such as the United States are the “center” in the model, and emerging economies such as China are in the “periphery” of the model.

“Central countries” occupy the high-end part of the industrial chain, and “peripheral countries” occupy the low-end part of the industrial chain, and the two benefit from each other through trade.

However, with the continuous advancement of technology in “peripheral countries”, their industrial chains will also move from low-end to mid-to-high-end. As a result, the industrial chains of peripheral countries are getting longer and longer, while the industrial chains of central countries are getting shorter and shorter.

This is actually the entire history of past industrial changes in China and the United States.

Under the historical background that the world has entered the game of stock, the current round of technology cycle has entered the end, and a new round of scientific and technological revolution is being conceived, all major industrial powers have invariably locked their strategic goals as hard technology——

China launched “Made in China 2025”, the United States proposed a reindustrialization strategy, and Germany emphasized the Industry 4.0 strategy.

As a former “peripheral country”, we have gradually begun to become a “central country” in small regions such as Southeast Asia. To further occupy a more strategic position in the global industrial chain, China must bite the last hard bone of “hard technology” .

And this is bound to be an uneven road, and the process is not as simple as many keyboard warriors say.

six,

Any advanced technology does not spring out of the cracks in the stone, it depends on many conditions, ecology and time.

Taking the integrated circuit industry where the chip is located as an example, it involves a very long upstream and downstream chain. From the perspective of large links, it includes at least chip design, manufacturing, equipment, materials, testing, packaging and testing, and industrial software. extremely complex technology.

Taking the lithography machine with high media exposure as an example, it is only a link in the chip manufacturing process, but it is extremely critical. At present, only the EUV lithography machine of ASML in the Netherlands can do the advanced process chip manufacturing of 5nm and below.

And this same $150 million machine requires more than 100,000+ parts, 3,000+ cables, and 40,000+ bolts.

These parts come from more than 5,000 suppliers in many countries, the core light source is from the United States, and the optical lens is from Germany, of which the American light source accounts for 27%, the Dutch cavity accounts for 32%, the Japanese material accounts for 27%, and the German optical system accounts for 14%.

An EUV lithography machine weighs 180 tons and requires 40 containers to complete shipping loading, and its commissioning process takes more than 12 months.

Part of EUV lithography machine Part of EUV lithography machine

Sam Sivakumar, director of Intel’s lithography department, once said-

“High-end lithography is a very difficult technology, and in terms of complexity, it probably falls under the Manhattan Project.”

Many people say that we can build atomic bombs back then, but can’t we build a lithography machine?

Yes, its difficulty is in a sense the level of an atomic bomb. It is almost impossible to break through in a short period of time. It must be a gradual process.

From this example, we can see that the difficulty of hard technology breakthrough lies in the barriers of patents and other technologies themselves, industrial chain barriers and time barriers.

And these barriers cannot be quickly broken through simple short-term capital and technology investment. China’s road to hard technology has a long way to go.

seven,

The reason why the development of many underlying technologies in China is insufficient is that another feature that is easy to ignore is that the absolute output value of underlying technologies is usually smaller than that of the application layer.

For example, the digital economy is a large market with a global output value of 32 trillion US dollars, while the next-level electronic information industry (including computers, communications, and electronics) is about 5 trillion US dollars.

The next level of the chip industry, the global scale is only about 440 billion US dollars, and then to the lower level of the lithography machine subdivision track, it only reaches the level of 10 billion US dollars.

When the output value of the entire track is only at the level of 10 billion US dollars, and there are stable leading companies, capital is usually reluctant to bet, because the imagination space is too small, even if it occupies 100% of the share, its attractiveness is not enough. big.

At the same time, the payback cycle of the underlying technology is also much slower than that of the application industry, which often requires a long-term cold bench accumulation.

For example, TSMC, the king of the chip industry, was born in 1987, and ASML, the leader in lithography, was born in 1984, which are the results of decades of long-term technology accumulation.

It’s a far cry from how Internet projects burn cash to end battles for months.

Capital is unwilling to wait, and Chinese capital is even more impatient. According to Pitchbook data, the average holding period of Chinese VC projects is only 3.3 years, compared with 8.2 years for American VCs.

Therefore, the small output value and long return cycle of vertical subdivision industries are also important reasons why domestic capital is reluctant to bet on hard technology subdivisions.

Eight,

Of course, we have also seen some gratifying changes at the hard technology level, and these changes come from multiple levels-

First, the top-level design at the national level spared no effort.

China’s national strategy has been formulated by 2035, China will become an innovative country, and by 2050, China will become a world science and technology power.

Under this big framework, the launch of “Made in China 2025” and the launch of the Science and Technology Innovation Board and the launch of the National Integrated Circuit Fund are specific measures to increase hard technology.

In fact, the rise of the hard technology industry in the United States, the European Union, South Korea, and Japan has all received strong and long-term support from the government.

74 years ago, American scientist Vannevar Bush wrote a report on national science and technology policy to then-President Truman – Science: The Endless Frontier.

Under the guidance of this seminal report, the United States got rid of its dependence on European basic research and scientific research talents, and achieved the status of the United States as a scientific and technological power today.

Secondly, in terms of investment orientation in the industry, more and more capital has begun to enter the field of hard technology.

In recent years, it has even entered a climax of hard technology investment. Among them, 2020 is a historic turning point-semiconductor investment surpassed the Internet for the first time, becoming China’s first investment track.

A large amount of capital investment is a good thing, but in fact, it is necessary to prevent the negative effects of overheating. For example, some sub-sectors may need to concentrate high-tech talent-saturated R&D in order to make pictures, but overheated capital will diversify the talent density of some companies. It is possible that Affect the overall health of the industry.

Again, there are some industries where there is an opportunity to “change lanes and overtake”.

An important feature of the technology industry is its discontinuity, that is, some technologies are not incrementally improved but developed in leaps and bounds.

For example, in the auto industry, if the Chinese auto industry can reach and surpass the level of BMW and Mercedes-Benz in the field of fuel vehicle engines, 20 years may not be enough.

But in the field of electric vehicles, the gap between domestic companies and the world’s top level is actually much smaller, and we even have a leading edge in core links such as batteries.

Today, under the background that all countries are seizing the commanding heights of science and technology, the entire hard technology industry has been mobilized from government to capital, from industry to company.

The journey of hard technology has begun, which is destined to be a long and difficult road, which will encounter more difficulties than imagined, and the industry needs to have enough patience and courage.

Nine,

Essentially, an economy is a system of increasing entropy.

Today, the phenomenon of involution in many industries is actually a concrete manifestation of the increase in entropy caused by the stagnation of technology, and the most important strategy to reduce the entropy of the economic system is to inject new technologies into the economic system.

Creating new production functions and continuous technological progress are the only solutions to combating entropy increase.

“Although ancient China made many contributions to the development of human science and technology, why didn’t modern science and industrial revolution happen in China?”

This is the famous “Question of Needham” by British scholar Joseph Needham in “History of Science and Technology in China”.

It is true that none of the first three technological revolutions took place in China, but in the fourth industrial revolution, China should not be a bystander.

Come on, China’s hard tech people.

This article is reproduced from: http://finance.sina.com.cn/tech/csj/2022-06-14/doc-imizirau8439363.shtml
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