China trails the United States on research and development, but it is getting a phenomenal bang for its buck, says David Fickling for Bloomberg Opinion.
File photo of a worker at the production line of lithium-ion batteries for electric vehicles at a factory in Huzhou, Zhejiang province, China . SYDNEY: In trying to block China ’s climb up the ladder of technological sophistication, the United States may inadvertently be giving its rival a hand up.“We need to confront the growth predicament of the world economy,” he said, citing the International Monetary Fund’s forecast that global output is heading toward its slowest growth pace in decades.
This investment is genuine and significant. The 500 billion yuan facility that the People’s Bank of China established in April to encourage lenders to make more loans to upgrade equipment, on top of an identical 200 billion yuan facility in 2022, leave that programme not much smaller than what the PBOC has dedicated to bailing out the housing market, which currently amounts to about 1.08 trillion yuan.
That ratio has held pretty constant for several years. Given the support for R&D in the Inflation Reduction Act, it’s possible that America’s lead over China is, if anything, widening.What’s clear, however, is that China is now able to get a phenomenal bang for its buck with this spending. China may not quite have made it to the World Bank’s club of high-income countries yet, but it’s clear that it’s barely a sliver away.There are fundamental national security reasons behind Washington’s determination to prevent China from catching up on semiconductors and artificial intelligence. That’s understandable, given the geopolitical tensions between the two nations.
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