Thursday

7th Dec 2023

Opinion

China's innovation, not investments, should worry Europe

  • In 2016 Chinese companies invested €35 billion in the EU - but the country is now pivoting to its own innovation and invention (Photo: EUOBOR)

For several years now China has been increasingly investing in Europe.

In 2016 Chinese companies invested €35 billion in the EU.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Often these investments are in advanced manufacturing sectors or meant to buy certain technologies. Afraid of losing some crown jewels of the European economy, the EU is preparing measures to halt this trend.

But perhaps Europe shouldn´t worry too much about this. After all, the next wave is already coming: Chinese innovation and technology which will conquer the world.

And the first signs are visible. A few week ago, Europe launched two initiatives which are symptomatic and a reaction to the Chinese threat. Europe decided to form an alliance among some top European companies in order to regain lost ground on Chinese electric car battery manufacturers.

And because Chinese high-speed trains and their technology are being sold worldwide, French Alstom and German Siemens have formed a coalition against the Chinese train manufacturing company CRRC, which has recently won several projects in Europe.

Over the past few years China has implemented a policy which focuses on mass entrepreneurship, technology and innovation.

Pivot to private sector

Now the traditional sectors which spurred its economic growth have become weaker - a trend reinforced by increasingly more expensive Chinese labour - the Chinese government hopes that the private sector and innovation will become the new drivers of the economy.

As so many trends in China, big government is the driving force behind this. And that might just work. China has a labour force of 800 million, among whom 170 million have received higher education or possess high professional skills.

Add in the massive number of Chinese students who studied abroad, and return now in increasingly bigger proportion back home, and one can understand that China possesses a critical mass of innovation and entrepreneurial spirit.

The effects of this policy are becoming increasingly clear.

In 2016 China's ZTE Corporation overtook its crosstown rival Huawei Technologies as the biggest filer of international patent applications.

Last year Chinese companies spent 14 times more money on R&D than in the year 2000.

Only US companies spend more on R&D. Additionally China is home of a thriving startup scene which plenty of venture capital and hot money pouring in. In 2016 Chinese venture capital funds tripled their budgets to €320bn. They are responsible for 25 percent of the global venture capital investments.

From 'Made in China' to 'Invented in China'?

Especially in the internet sector Chinese innovation is leaving its global mark. Chinese society is already much more digitalised than western counterparts, but nowadays it's simply impossible to live without a smartphone in China.

Last year alone, 467 million smartphones were sold in China, and there are more than 730 million active internet users. The Chinese e-commerce market is simply gigantic and is predicted in 2020 to be bigger than the Unites States, Great Britain, Japan, France and Germany combined.

WeChat, with its 900 million users, is an absolute marvel of Chinese technology.

It is one platform for communication, marketing, payments and e-commerce. All-in-one and made in China.

Chinese tech companies are also conquering the world with new products and services of superior quality. Baidu, Alibaba, Tencent and Xiaomi belong to the top ten of the biggest internet and technology companies worldwide.

But three of them only entered the rankings since 2013.

In 2014 Xiaomi was the world's most valuable tech startup. Silicon Valley is looking now more and more to China where innovation and entrepreneurship go hand-in-hand.

The focus is especially on Shenzhen with its 30,000 technology companies - and a combined value of more than €200bn.

That evolution is also starting to leave its mark internationally. In the past only big (ie state-owned companies) were expanding globally, but now the second wave of internationalisation is taking shape. Buses from BYD, the global leader in electrical cars, are already driving around in the London city centre.

One third of all 'unicorns' are now coming from China.

Ambitious Chinese startups expand internationally from the very beginning, with increasing success.

Besides famous names like Xiaomi, Mobike or DJI, is Musical.ly - with its 100 million users worldwide - one of those startups which go global form the very start, which is way they are being called micro-multinationals.

It's obvious that China is transforming itself again, and that the next wave of innovation and private entrepreneurship will be the wave of the future, with huge global consequences.

Sven Agten is an author on China, and Asia-Pacific president for a German multinational

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

China's 'new era' means balance with EU

Under Xi Jinping's second term as leader, China wants more equality with the US and the EU, while waiting for Europeans to show their global clout.

Hungary-Serbia railway launched at China summit

The flagship project of China's increased presence in central and eastern Europe was launched on Tuesday, following an EU probe as a summit in Budapest raises questions on Beijing's influence.

EU preparing to screen Chinese investments

The EU is to screen foreign investments to avoid takeovers in sensitive sectors. But the plan, mainly aimed at China, will raise political and technical difficulties.

EU launches five new research missions for 2030 agenda

The European Commission launched five new research missions to deliver on major challenges by 2030 - namely fighting cancer, climate-change adaptation, oceans restoration, smart cities and soil pollution.

Can Green Deal survive the 2024 European election?

Six months ahead of the EU elections, knocking an 'elitist' climate agenda is looking like a vote-winner to some. Saving the Green Deal and the EU's climate ambitions starts with listening to Europeans who are struggling to make ends meet.

Latest News

  1. EU suggests visa-bans on Israeli settlers, following US example
  2. EU ministers prepare for all-night fiscal debate
  3. Spain's Nadia Calviño backed to be EIB's first female chief
  4. Is there hope for the EU and eurozone?
  5. Crunch talks seek breakthrough on EU asylum overhaul
  6. Polish truck protest at Ukraine border disrupts war supplies
  7. 'Green' banks lend most to polluters, reveals ECB
  8. Tense EU-China summit showdown unlikely to bear fruit

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us