By Vijay Eswaran
The current trade war between the U.S. and China will, like all such disputes, produce no winners. But for all the damage it causes in the short term, in the long run it will likely prove to be barely a footnote in the struggle that really matters in our still young century – for pre-eminence in the knowledge economy.
In that competition, the East is fast catching up with the West. Led by China, and supported by India and southeast Asia, the region is transforming itself from the world’s factory to its innovation and research centre.
The Trump administration’s punitive measures against $250 billion (€220 billion) worth of Chinese goods is premised more on the 20th century industrial era than on the 21st century digital revolution currently sweeping the world.
The West should be less concerned with the size of their trade deficits than the fact that China last year invested three times more in renewable energies than the U.S., with nearly half of the world’s new renewable energy investment of $279.8 billion (€246 billion) coming from China.
China has overtaken the Americans in creating ‘unicorns’ - start-up companies valued over $1 billion. With 164 such companies, compared with only 132 in the US, China has become a scientific and innovation superpower in less than two decades. In 2016, China published more academic scientific papers than the US for the first time. China’s spending on research and development in 2018 is also forecast to grow by 6.7% to $475 billion (€418 billion), closing in on the US’s $553 billion (€486 billion) at a much lower growth rate of 2.9%.
Asian governments seem to have acknowledged that traditional goods and services are stagnating, while global digital trade flows are booming – with a 45-fold increase from 2005 to 2014, according to McKinsey.
India’s technological progress may not be as dramatic or as purposeful as China’s, but the government clearly knows that the global winds are blowing eastwards. In February, Delhi announced that it will raise its annual spending on science by 10% to $8.4 billion (€7.4 billion) for 2018–19, including a national programme for artificial intelligence.
India’s talent and ingenuity has already created global companies like Wipro and Infosys, as well as the creation of a renowned tech hub in Bangalore, while the ambition of the Indian Space Research Organisation is appropriately stellar. In the past decade, it has launched the country’s first lunar probe and first interplanetary mission – the Mars orbiter Mangalyaan (which is also the first from Asia).
The story of Asia’s technological prowess involves more than these two titans with 38% of the world’s population between them. Singapore boasts two of the world’s top 15 universities, according to the QS rankings. My own country Malaysia is shifting away from mid-level tech manufacturing to the digital economy. It has launched a Digital Free Trade Zone and in 2015, ICT-based companies contributed 18% of GDP, surpassing the 2020 target of 17%. Indonesia, a sleeping giant with its population of 261 million, has four of those precious unicorn companies of its own.
When I meet students in former British colonies in Africa, South East Asia and MENA region, their most commonly expressed goal is to find a job with a large multinational company. When I encounter young people from China and the Far East region, they want to create their own company and employ other people. It is this entrepreneurial spirit that in part led to the declaration of the “Asian century” – a phrase used widely in the 1980s and 1990s to forecast the coming 100 years.
Its usage has gone out of fashion somewhat, but with the East embracing the digital economy and innovation with more enthusiasm than the West, it perhaps deserves another airing. If this trend continues, Silicon Valley’s dominance of tech the past four decades may come to be nothing more than the swansong of the “American century”.
The rise of the East is often seen in the West as a threat, when it is in fact an enormous opportunity. Technology and innovation are endeavours that benefit from transnational cooperation and collaboration. China and India have something to teach and learn from the West, and vice versa.
Thus, there would be no need for winners or losers.
Vijay Eswaran is a Malaysian entrepreneur, philanthropist and author. He is also the founder and Executive Chairman of the QI Group of Companies.
Opinions expressed in View articles are solely those of the authors.