How our world functions in another five, 10, 20 years’ time will depend significantly on China. Whether you like it or not, they are and will become the most influential world economy in just a matter of a few years.
They already are significantly influential and powerful. But there’s still this underlying view in the ‘Western world’ that the US will continue to ‘reign supreme’. I just don’t believe that’s the case.
If we want to talk about global empires (and we have a bit previously in Money Morning) then I think we need to address the possibility that we could be at the end of the American Empire.
The US has been a global might for the last 120 years. The entirety of the 20th century and the current chunk of the 21st has all been about the US.
But as we know in the last five or six years, the change and development of China has been something to take notice of. China has very clear and specific goals of being the world’s leader of science and technology by 2030.
They’re doing this and I believe will achieve this by dominating fields such as robotics and automation, artificial intelligence, smart, connected technology (the internet of things), high-speed networks, and the digitisation of everything.
They’re shifting from a low cost, manufacturing giant toward having their economy and global influence rooted in high-knowledge, cutting-edge, revolutionary technologies.
And they’re doing this through sheer weight of numbers.
China’s most innovative company
Take for instance something I heard during this week’s Sibos banking and finance conference in London. One of the speakers had lived in China for more than 20 years, working with some of China’s most innovative and high-tech companies.
He was talking about China’s most innovative company. And it’s a company you’ve likely never heard of. It wasn’t Baidu. It wasn’t Tencent. It wasn’t Alibaba or their offshoot Ant Financial.
No, China’s most innovative company is Meituan-Dianping.
Who? It had me stumped too. Meituan is the Chinese connected services company. They are like Deliveroo, Uber Eats, Booking.com, Airbnb and more rolled into one. They have a hand in bike sharing, ticket sales, food delivery and they serve over 350 million customers.
They use cutting-edge AI in their distribution centres and automated robotics. They are the definition of innovation and technology…and you’ve never heard of them.
That’s not to say that Baidu, Alibaba and Tencent aren’t innovative. They consistently rank as some of the world’s most innovative companies. Just that Meituan has been designated (at least in 2019) the most innovative company in China, and arguably, the world. Just no one knows of them outside of China.
It’s no great surprise though. After all, when you think about the talent pool that China has to choose from, it was inevitable they would eventually become world leaders in revolutionary technologies.
The speaker at the conference made another point about why China has every chance of leading the world in innovation within the next decade. Think about it like this, every year there are around five million Chinese graduates in STEM subjects. That’s science, technology, engineering and mathematics.
That’s no coincidence. The country has been planning for years to ramp up their ability to produce the kinds of workers that will push the country into the modern era.
I once heard a fascinating take on China’s long game towards innovation. The concept was that over several decades the Chinese had been heading outside of China, all over the world, to the best universities in existence. Universities in the US, the UK, Europe, Australia and more.
A mass transfer of knowledge
The idea was for these people to learn and become expert academics in their field. The long game was they would come back to China into the Chinese university system to educate the next generations of Chinese graduates with the knowledge they had picked up from the best universities in the world.
This is like a mass transfer of knowledge from the ‘Western world’ to China to build their future innovators, inventors, entrepreneurs and technologists. And it’s working. As we say, five million new STEM graduates per year are going into giant, innovative companies like Baidu, Tencent, Alibaba, Ant Financial, and Meituan-Dianping.
They are all working on the next level of tech, AI, robotics, automation, biotechnology and augmented biology, genetic engineering, connected devices, quantum computing, blockchain and crypto assets. This is the new China. This is the sleeping giant that is slowly but surely setting up to take the global lead across all revolutionary technologies.
With that will come a period of worry for US based and listed companies. There’s a threat their market will be cannibalised by these Chinese giants as they extend their reach around the world. But there’s also opportunity as these Chinese giants and their offshoots begin to hoover up other companies that add to their bulging portfolios of technology.
If China does become the technology leader of the world, it won’t be the end of us, but could be the catalyst needed for the rest of the world to up their game again.
A good way to think of it is the way in which Tesla through their technology leadership forced the hand of the rest of the car industry to lift their game. Today companies like Daimler are completely abandoning their combustion engine development programs and going ‘full EV’.
China may very well do the same. Their technology leadership may just force the hand of the rest of the world to sit up, act and push revolutionary technology opportunities to the next level.
Editor, Money Morning
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