Organizer: Kathleen Hartford, University of Massachusetts
Chair and Discussant: Denis Simon, Tufts University
China, aspiring to move into the front ranks in the world economy, cannot succeed without developing a high-tech sector able to match the world's best in innovation, quality, and competitive energy. In its drive for high-tech development, the country has relied on three major types of players: the state (in the form of incentive policies and guiding institutions), Chinese firms (under various different forms of ownership and management), and, increasingly, Western firms or their joint-venture offshoots. This panel examines the interaction of these players as they have shaped the evolving structure of China's high-tech sector. Individual papers will approach the issue either from the "state" end or the Chinese firm end, but, all, taken together, lead to analysis of certain central questions: What are the complementarities and contradictions of policy and entrepreneurship in high tech? What is the proper role of the state in promoting high-tech development, and how well has the Chinese state played that role? As a late-late starter in high tech, how much is China constrained by global developments, and what are the implications for national strategies in one of the most internationalized of industrial sectors?
High Technology Development in Post-Deng China: An Overview of the Policy Issues
Richard P. Suttmeier, University of Oregon
In May, 1995, China convened a major national science policy conference to map out Chinese scientific and technological development for the coming decade. The conference reflected the many changes in the S&T system wrought by the policies of the Deng era. This paper examines those changes and the policies discussed at the conference in order to assess how high technology fits into the overall pattern of science and technology policy in the post-Deng era. The ongoing domestic policy development will be examined in the context of China's involvement in global and regional flows of technology, investment, and S&T manpower.
China's High-Tech Zones in Historical Perspective
Erik Baark, Technical University of Denmark
Since the late 1980s, a large number of zones for the development and commercialization of new technology have been established in China. New firms established within these zones receive a number of specific incentives such as tax breaks, and many zones are located in the vicinity of major research centers or universities in order to facilitate links with academic research. The ostensible policy goal of the Chinese government has been to foster the production of high technology goods and services, but the administration of some zones also appear motivated by the desire to control the new-fangled entrepreneurs. In many respects the Chinese government's policy in this area reflects long-standing dilemmas of technology policy: to what extent should the state provide extra incentives for technological innovation? Can state-owned firms develop the necessary entrepreneurship? What is the role of semi-private and private firms, especially vis-à-vis the government administration? How do foreign technology transfer and cooperation fit into the processes of technological change and should the state interfere in such processes? This paper looks at some of these issues in terms of legacies of interaction between the state and technological entrepreneurs, drawing on the experiences of state-sponsored technological development in China since the nineteenth century.
Commercialization Without Privatization: Government Spin-offs in China's
High-Tech Sector
Corinna-Barbara Francis, Brown University
China's reform experience is unusual: China has implemented market reforms in the absence of a program of systematic privatization, and has built a booming market economy despite a still relatively small private sector. How has it done so? This paper focuses on a frequently advanced explanation: the proliferation of government spin-offs-firms set up by, or with the assistance of, and vaguely owned by, a unit of government. Despite the proliferation of such firms, we still lack information about how they operate, who exercises property rights over them, and how it is that they have been a key to China's economic success. This paper examines these issues through a case study of high-tech and computer spin-offs in Haidian district's high-technology zone, dubbed "electronic alley." The paper argues that China's government spin-offs offer an alternative to privatization as a mechanism of market transition, and that their relative success challenges fundamental assumptions of neoclassical economics, particularly regarding the relationship between states and markets, the need for clear property rights, and the importance of private enterprise as foundations of an ideal type market system.
Between Devil and Deep Blue Sea: State Enterprises' Race for Survival in China's
Computer Sector
Kathleen Hartford, University of Massachusetts, Boston
Sun Jianmin, People's University, Beijing
China's state enterprises jumping into the market sea have encountered rough waters, and nowhere more so than in the computer sector. This paper examines the experience of state-owned hardware and software companies in the context of state policies that have increasingly forced them to confront competition from both private and "people-managed" Chinese firms and foreign firms. It analyzes state enterprises' adoption of various tactics including establishing joint-venture and cooperative arrangements with foreign and Chinese firms, attracting state project-specific funding, reorganizing internally and adopting new incentive systems, developing new products, and reorienting their relationship with users. How successful have such tactics been, and what explains their success or failure? How have state firms' responses shaped the rapidly changing structure of the computer industry? What role can they play in China's drive for high-tech competition in the world economy? The paper addresses these questions against the backdrop of the global computer sector's shifting structure and technological advance and the rapidly changing nature of the internal Chinese market and state economic reform initiatives.