1. What is the reality behind the “Chinese DARPA”?


1.1. A context of renewed geopolitical tensions favors the reorganization of military innovation

There are currently three great powers on the planet. Since 2014, geopolitical tensions between these powers have increased significantly. This trend has been accompanied by an intensification of military technological innovation efforts. Both Russia and China have established military R&D super agencies, that present themselves as being based on the DARPA model. Both countries are also in the process of developing fifth-generation combat aircraft with more or less enhanced stealth abilities.

DARPA once laid down the scientific and technological foundations for a large number of military and civilian innovations used today, starting with the Internet. Following a period of low geopolitical tensions from 1992 to 2014, during which civil technologies developed faster than military technologies, the current intensification of military innovation efforts largely consists of integrating civilian innovations into military applications. The American 2014 Third Offset Strategy marked a turning point in this regard. One year later, the Defense Innovation Unit was launched (initially under the name DIUx) with the task of facilitating the integration of emerging technologies from the civil sector. The addition of this initially experimental unit strengthens the open organization of the Pentagon innovation system.

In this new context, what can be expected from the Russian and Chinese DARPA pendants in terms of contributions to technological progress ? After the Russian case, we examine in this article the technological innovation capabilities of China.

The integration and fusion of civilian and military technologies became a top priority with the arrival of Xi Jinping at the head of the People’s Republic of China in 2012. The establishment on January 22, 2017 of the Central Commission for Integrated Military and Civil Development (CCIMCD, 中央军民融合发展委员会), presided by Xi Jinping himself, can be seen as a vector for the open organization of State Enterprises in the defense sector with a view to making them faster, more agile, and more efficient in their cost management. The US DARPA and IUD are indicated as models for the CCIMCD.

The establishment of this Commission is part of the strategic plan formulated by Prime Minister Li Keqiang, Made in China 2025, which is partly inspired by the German Industry 4.0 initiative and aims to transform the manufacturing advantage of China into an industrial advantage.

In April 2018, the Air Force announced a competition of intelligent drones in partnership with state enterprise CETC (electronics), Tsinghua University and the Beijing Institute of Technology. This competition is open to military research institutes, but also to universities, private companies, and even drone enthusiasts, quite in the spirit of DARPA competitions.


1.2. Chinese stealth planes

The Shenyang J-31 and Chengdu J-20 are two fifth-generation fighter jets developed by China.

The Shenyang J-31 is a multi-role aircraft intended for export and aiming to compete with the American F-35. Currently still in a prototype stage and equipped with a Russian engine, this model is destined to benefit from many improvements and updates in the years to come. Half as expensive as the F-35, its commercial target is countries not aligned with the West.

A heavier multi-role aircraft able to operate at great distances, the Chengdu J-20 entered service in March 2017, equipped with Russian engines. Production of Chinese WS-15 engines is expected to start shortly.

Trump won't prevent Chinese innovation

Everything seems to indicate that the stealth performance of these two models, as well as their relative speed of development, owes a lot to intelligence obtained on American technologies.


1.3. Can China innovate for real?

The case of the two aircraft presented above suggests that the ability of China to innovate technologically is a question. We have little information on what is really going on in the CCIMCD and military research centers. However, in the remainder of this article, we will formulate an answer based on contextual elements accessible to observation.

The sectors and technologies in which China is active are numerous. Our task is not to examine everything, nor to provide a detailed overview, but only to try to see if China is able to innovate. We shall specifically be taking a look at one technology and one technological field: artificial intelligence and biotechnologies.

Needless to say, even if China can innovate in these areas it does not imply it can innovate in others, such as aircraft engines or machine tools. However, it will prove that China is capable of innovating.

Let’s begin our examination by taking a critical look at two influential ways of responding in the negative, that would prevent us from seeing where the originality of the Chinese approach might reside.


2. Two ways to miss the innovation potential of China


2.1. Emmanuel Todd: pessimistic on China, empathetic with Trump’s policies

Unlike Russia, China is far more integrated in the globalized productive system. So much so that the demographer Emmanuel Todd asserted in 2017 in his book Où en sommes-nous ? that ” today’s China was invented by the West, and very early.” According to him, Chinese growth is not miraculous, and is explained by the fact that the country was from 1980 to 2015 a “paradise of super-profits” based on “selling on the markets of advanced countries the goods produced by an underpaid workforce.” Todd predicts that demography condemns in the short term this “paradise” to a “crisis with incalculable geopolitical consequences.”

The analysis of Emmanuel Todd seems in line with the trade and technology war launched by Donald Trump. The origins of this American turnaround lie in the crisis of autumn 2008. Just before that, China’s organizational and athletic performance during the Summer Olympics had made a strong global impression. The dysfunctional character of the Sino-US relationship became a matter of intense discussion. Even the drug that decimates depressed Americans (Fentanyl) is massively produced in China… One might be tempted to say East and West have exchanged roles at a century and a half’s distance. In any case, America no longer believes in regime change via globalization for China. This change of attitude extends beyond America: Western countries have increased protective measures against China, based on the justification that China doesn’t respect the rules of the global economy game.

One of the major Western criticisms is the conditioning of access to the Chinese market on joint ventures and technology transfers. However we would like to note that such an outcome is the inevitable result of competition between Western companies, who’d rather accept these terms than risk leaving the market to rivals. It is probably to this kind of short term mindset that Lenin referred when he spoke of the capitalists being ready to sell the rope that will be used to hang them … But things are changing and it is now possible to invest in China without associating with a local partner.

Bill Gates knew very well that his innovations resulted from unauthorized use of Xerox R&D results. This should encourage us not to exaggerate the opposition between copying and innovating

In any case, Trump’s policy is very clear. Seeing that China is still far from having all the technological bricks needed to fully industrialize itself, Trump is simply doing everything he can to break the momentum towards Made in China 2025.

This scenario is reminiscent in some respects of the fate of Japan in the late 1980s. However, China, unlike Japan, claims the status of a great power. If it proves to be able to innovate, then the measures applied by Trump are eventually condemned to be insufficient.

The Chinese trajectory is seen by Todd and Trump as a monstrous aberration engendered by a Western mistake. Their view in a nutshell: China has too much exports, savings, and investing, and not enough political liberalism. This position is, in the main, more indicative of Western problems than of China’s situation and potential. While it is true that the trade imbalance was not fated to last forever, the pessimistic certainties of Emmanuel Todd seem on the other hand insufficiently founded.


2.2. Peter Thiel 2014 vs. Peter Thiel 2018

Another important opinion is that of Peter Thiel, who wrote in From Zero to One in 2014 that “China is the paradigmatic example of globalization, its plan over twenty years is to become like the United States today. ” For Thiel, globalization consists of “going from 1 to n”, as opposed to technology, which increases from “0 to 1”: the first spreads, for example in China, what the second creates, in the Silicon Valley.

Thiel believes that the Chinese are too pessimistic and far-sighted to really care about and invest in innovation. According to him, the Chinese mainly aim at accumulating sufficient reserves to overcome future economic crises. In which case the role of the CCIMCD would indeed be quite secondary.

But this conclusion, interesting as it is, does not hold. Or at least it does not hold anymore. First, the Chinese have read Thiel with enthusiam, like the founders of OneSpace in 2015 (零壹空间 “zero one space”). Secondly, Thiel appears to have recently changed his mind about China. and to be preparing to invest in Chinese “0 to 1” type startups. This choice suggests at the very least that the Chinese technocracy is able to provide a favorable environment for some innovations.

The Western ritual of ethical objections does not change these facts. As for the great narrative of technological acceleration, it is not interested in the role played by the multiplicity of civilizations in technological progress. There is no doubt that when the American titans of the Internet paw at the closed gate that would give them access to the vast Chinese market, they think exclusively of the profits that this market represents as well as of the insignificance of their future submission to the demands of the Party, in comparison to the  coming all-mighty Singularity. But both ethical pretension and technological pretension commit the same error, which is to believe that the difference of culture only rests upon an authoritarianism with no other foundation than itself.


2.3. How to approach the question of innovation in China?

In the face of the Western technological lead, Chinese appropriation constitutes a rational strategy. But this does not preclude the ability to innovate.

Nothing can justify disregarding the Chinese origin and Chinese character of the innovations that would take place in China. China’s integration into the globalized economic system does not erase its identity.

It is now necessary to go further and to positively specify certain factors favorable to innovation in China. Where can we find them ?

The analysis of Emmanuel Todd claims that China is behind in the rate of the population with a higher education. However Todd finds nothing to report in the fact that the IQ of the Chinese is relatively high. The French demographer also does not ask Joseph Needham’s question of why Europe took off scientifically rather China, which had more advanced technology until the seventeenth century.

There is also a good chance that Thiel’s investments in China will focus on biotechnology.

These two hints can be used to help us find an explanation.


3. China is becoming a new pole of innovation


3.1. Innovation in applied artificial intelligence

Albert Meige recently noted the importance of the role played in China by transparency … of personal data collected in public spaces. This feature of the Chinese digital ecosystem offers particularly favorable conditions for applications based on artificial intelligence, including visual and auditory perception. In his book AI Superpowers: China, Silicon Valley, and the New World Order, Kai Fu Lee talks about “cultural nonchalance”.

Kai Fu Lee is a former Googler who nom works as a VC in China. He takes a particularly informed look at the current AI boom in China, whose origin lies in a “Sputnik moment”: the victory of an AI against a go game champion.

The case of the company Xiaomi, created in 2010, is emblematic of this boom. After conquering the smartphone market, Xiaomi is now developing a set of connected and smart home appliances based on an ecosystem of 220 companies and the incubation of 29 startups, most of them based in Shenzhen. At the end of 2017, the number of connected objects in this network was 85 million. Of the 29 startups, 4 are unicorns and the anticipated valuation of Xiaomi is $ 100 billion. As Albert Meige would say: “fast, big, transparent.”

The Chinese digital environment follows an original development path. One of the aspects that strikes western consciences by its strangeness is the introduction of social credit systems. In a so-called “low trust” culture, where what matters is the social bond network (extended family), if necessary at the expense of individual merit, the sorting capacity provided by such systems tends to be seen as a positive opportunity by the majority of the population. A lot of things fall under the vague term “social credit”, such as financial services. Ant Financial finances more than 7 million small and medium-sized businesses through loan management using artificial intelligence.

Meritocratic sorting is a core competence of the Chinese state, which massively encourages this ecosystem, notably through large projects of intelligent urban infrastructures.

One of the goals of the CCIMCD is to foster the military applications of the dual technology of artificial intelligence.

The applications of artificial intelligence are also numerous in the medical field.

3.2. Innovation in biotechnology

Biotechnology is another booming sector in China. The government is encouraging a transition from generic drugs R&D to innovative medicines R&D. China is also pioneering the use of CRISPR genetic rewriting techniques. The rivalry with the United States in this area is already intense.

China will soon face an aging population problem on an unprecedented scale. As Emmanuel Todd notes, this aging process will go faster than GDP per capita growth. It is in light of this context that the Chinese government seeks to improve health care by focusing on the development of cures for diseases rather than the long and costly treatment of symptoms.

Biotechnology will also be used to prevent genetic defects. In the same way as not smoking during pregnancy, eugenics (yousheng, 优 生) is a practice considered quite normal in China.

Biotechnology will also have a significant impact on the agri-food sector. China is particularly targeting genetic improvement of rice and pork.

3.3. A global configuration favorable to the rise of Chinese innovation, on a general level

We have identified two areas where China is poised to become an engine of innovation. We now wish to end our analysis with a more general remark about China’s capacity for innovation in a world that is no longer one of unilateral globalization. What impact can Trump’s countermeasures have?

These various measures, commercial and others, are not entirely new. Trump is more the reflection than the cause of a profound evolution of the global economic system. The exclusion of Chinese astronauts from the International Space Station since 2011 illustrates this idea. The Chinese have since launched their own program and it is possible that in 2024 the only space station in operation will be Chinese.

In the short term, economic difficulties will probably slow down Chinese growth.

These difficulties are unlikely to change the fact that the Chinese market is very attractive for foreign companies. Manufacturers such as BMW and Tesla recently jumped on the opportunity to invest in China without opening a joint venture and this trend will not disappear. Western companies are wondering how best to operate in China, but simply can not afford to ignore this market.

Noting the instability of the global monetary and financial system in 2008, as well as the unchecked drift of Western public debt, China has developed an alternative system based on the Yuan for its regional and energy partners. This new element can help to protect China and its regional sphere at least partially from a possible global economic crisis.

China has also launched a vast infrastructure program in Eurasia, the famous “One Best One Road” plan. The purpose of this program may seem enigmatic and its staying power remains to be seen. But it can help to increase China’s logistical independence vis-à-vis the West.

Predictions of political dislocation seem completely unrealistic. Any challenge to the supremacy of the CP is likely to be crushed in a way similar to the past. It should also be noted that for some time now the regime has been blending its official doctrine with classical Chinese thought. This choice contributes to increasing or at least repairing its civilizational prestige. A prestige that is a source of attractiveness, especially from the global pool of technological talents, which includes a significant proportion of individuals in affinity with Chinese civilization.

Americans are not very present in Chinese R&D laboratories. On the other hand, Chinese individuals of Chinese origin participate significantly in American scientific activities. By way of illustration: America invented the CRISPR-Cas9 technique, but one of the names most related to this technique is that of Feng Zhang, born in China and of American nationality: one of three people most likely to receive the Nobel Prize in Biology for this invention.

Under such conditions, it is to be expected that China will become more and more a pole of innovation in the world. The geopolitical rivalry with the United States is actually the factor, so far absent from its long history, that will most surely activate China’s long-inhibited innovation potential.


Trump won't prevent Chinese innovation


The way forward with digital transformation