World Geostrategic Insights interviews with Dr. Mei Gechlik on the growth of homegrown innovations and pursuit of disruptive technologies in China, and the progress made in the regulatory approach to the stock market and the protection of intellectual property rights.
Dr. Mei Gechlik is the founder and CEO of SINOTALKS.COM (focus: China law & policy). Formerly a tenured law professor in Hong Kong and the Founder and Director of the China Guiding Cases Project at Stanford Law School, Dr. Mei Gechlik is an expert with a 28-year-old track record of excellence in promoting understanding of Chinese law and policy. Dr. Mei Gechlik is admitted as a barrister in England, Wales, and Hong Kong and is a member of the Bar in New York and the District of Columbia.
– In the wake of House Speaker Nancy Pelosi’s visit to Taiwan, a new U.S. bill, called the Chips and Science Act (CHIPS Act) that aims to invest more than $52 billion in the semiconductor industry, places semiconductors on the front lines of the U.S.-China competition. The Chinese trade associations claim the new U.S. law will trigger ‘unfair competition’, while Beijing sees, in the words of Wang Wenbin, spokesman for the Chinese Foreign Ministry, a ‘geopolitical overtones’ behind the move. What is your opinion?
Semiconductors determine the development of high tech, which is obviously one of the top priorities of any powerful country. Ultimately, this is a political issue, which is now presented as a legal issue. Neither country wants to lose this race and we will likely continue to see various measures introduced by each country to ensure that it gains an upper hand over the other.
– The Chinese Ministry of Science and Technology plans to launch another nationwide search for ‘disruptive’ innovations, or technological breakthroughs, inviting companies and research institutes to submit applications in areas such as semiconductors, artificial intelligence, biotechnology and high-end manufacturing equipment. In a similar competition in 2021, the Chinese government selected 36 projects from nearly 3,000 entries. What is your opinion? Is it already possible to assess the relevance of the ‘disruptive’ innovations resulting from last year’s competition? And in general terms, what is China’s conception of ‘disruptive technology’? And why is China placing so much emphasis on disruptive technologies of national origin?
With reference to last year’s competition, it is too early to draw conclusions at this stage. It usually takes some time for “disruptive technologies” to transform industries and markets and, once these technologies take off, the impact will be significant. But it is quite likely that China’s quest for homegrown disruptive technologies will produce results because of extensive efforts jointly contributed by the public and private sectors.
In today’s business world, the term “disruptive technology” is generally understood as a new technology that has the potential to significantly change an existing market or even create an entirely new market. However, China’s understanding of “disruptive technology” is not completely the same. China emphasizes not only the industrial transformations brought about by “disruptive technologies” but also their technological breakthroughs (i.e., these technologies are not just “new”; they need to be so advanced that they are perceived as “breakthrough” technologies).
The rules of a “disruptive technology” competition currently run by China explain “disruptive technology” in this way: “Disruptive technology is an innovative technology that ‘can change the rules of the game’. […] From a technological point of view, [disruptive technologies] are breakthrough, innovative technologies produced on the basis of new principles, new combinations, and new applications of science and technology that have led to the creation of new technological tracks. From an industrial point of view, [disruptive technologies] should be tightly integrated with industries. Through the formation of new processes, new products, or new models, the technological innovations can be used to drive the upgrading of industries, change the mainstream products and market structures of industries, and promote revolutionary and disruptive progress in related industries and even the global economy.”
Through the organization of these “disruptive technology” competitions, China has already mobilized its innovative teams across the country to jointly solve problems affecting the future of China and, probably, that of the entire world. The growth of homegrown innovations will be a strong driving force for the establishment of better mechanisms for protecting innovations and for tracking their performance in the markets. Ultimately, these mechanisms will likely benefit innovators and investors inside and outside China.
More details on China’s Approach to Its Search for Select Disruptive Technologies and the terms of 2022 competition can be found in my piece recently published on SINOTALKS China’s Quest for Homegrown Disruptive Technologies.
– You are the founder and CEO of SINOTALKS.COM, which aims to help practitioners, policymakers and other stakeholders develop evidence-based strategies for their China-related issues. In your opinion, can foreign investors still have good reasons to feel optimistic about the Chinese market? Can they be confident about economic recovery and the proper functioning of some crucial areas, such as the stock market and the protection of intellectual property rights?
Whether one feels “optimistic” or “confident” is rather subjective, depending on various factors, including how risk averse the person is and what type of business s/he is running, etc.). I strongly believe that it’s more helpful to use objective parameters. For example, despite various economic challenges facing China, the country’s cross-border e-commerce stands out to show rapid growth. So the prospects for China’s cross-border e-commerce are promising. However, these prospects may be weakened if disputes arising from this type of commerce cannot be handled properly and efficiently.
If the question is: has China made progress in its regulatory approach to the stock market and its protection of intellectual property rights? The answer is yes!
China shows strong determination to bring about positive changes in crucial areas, like the stock market. China does have regulatory tools to combat irregularities in the stock market, and a number of cases and sentences prove that the tools created by the Supreme People’s Court of China in Guiding Cases have been used effectively and all interested parties, including foreign investors, can gain greater awareness of this fact. More details can be found in my piece “Irregularities in China’s Stock Market and Sentencing”.
Concerning intellectual rights, in the Plan for the Judicial Protection of Intellectual Property Rights in People’s Courts (2021-2025) (the “Five-Year Intellectual Property Plan”), the Supreme People’s Court sets forth a goal, among others: “by 2025, […] the state of judicial protection of intellectual property rights shall have evidently improved, and judicial credibility, influence, and authority shall have evidently increased […]”. The Supreme People’s Court’s release of more than 30 significant intellectual property-related Guiding Cases, over the past 10 years, does give hope that Guiding Cases have the potential to be a means to this important end: unifying the application of law in a vast country that has been increasingly advocating for treating like cases alike. Whether Guiding Cases can help China construct an intellectual property protection mechanism premised upon uniform application of law depends very much on individual judges’ commitment to the use of Guiding Cases. With adequate support and proper incentives set up within the judiciary, these judges’ commitment will increase. More details in my piece “China’s Intellectual Property Plan: A Potential Confidence Booster Amid COVID Concerns“.
Dr. Mei Gechlik – Founder and CEO of SINOTALKS.COM