Smart China

Why Is China Growing So Fast?

In 1978, after years of state control of all productive assets, the government of China embarked on a major program of economic reform. In an effort to awaken a dormant economic giant, it encouraged the formation of rural enterprises and private businesses, liberalized foreign trade and investment, relaxed state control over some prices, and invested in industrial production and the education of its workforce. By nearly all accounts, the strategy has worked spectacularly.

China now also plays an important role in the international development. Chinese trade have expanded largely and opened widely with the world. Trade has become the key element contributing to the rise of China’s economy. After the control of Communist in 1949, China's trade marked a slight transformation into the modernization yet still disorganized. Until 1978, the world observed an incredible improvement in China's commodity and economic transaction. Furthermore, Chinese government aimed to build a socialist market economy which is a combination of planned economy and market mechanisms. The alteration resulted in the expansion of China's trade in both domestic and foreign institutions as well as the more investment in the economic development. Later, multinational companies made their first step in transferring technology by cooperating with Chinese associations in order to develop their businesses in China. The participation of China in World Trade Organization in 2001 has signified a significant change in China’s economy which has brought many opportunities to the country.

Why the Productivity Boom?

The reforms also gave greater room for private ownership of production, and these privately held businesses created jobs, developed much-wanted consumer products, earned important hard currency through foreign trade, paid state taxes, and gave the national economy a flexibility and resiliency that it did not have before.

By welcoming foreign investment, China's open-door policy has added power to the economic transformation. Cumulative foreign direct investment, negligible before 1978, reached nearly US$100 billion in 1994; annual inflows increased from less than 1 percent of total fixed investment in 1979 to 18 percent in 1994. This foreign money has built factories, created jobs, linked China to international markets, and led to important transfers of technology.

How Tech Revolution Begins ?

  • Research and Development

With huge rise of capital investment and productivity, it has made Chinese government to encourage 'Research and Development' (R&D) in the country. Many multinational companies have constructed R&D centers which functions as a model to motivate Chinese companies and creates skilled labors. The Chinese rendition of Quantitative Facilitating (QE) produced gigantic assets to be directed toward growing Research and development; hiring overseas Chinese and foreign experts, importing high-tech capital goods as well as buying out foreign technological patents and licenses. In 2018, China’s total spending on R&D rose a robust 12.3% last year to a record 1.76 trillion yuan ($254 billion), according to a government report released yesterday. Already second in the world in R&D spending behind the United States, China has narrowed the gap.

  • Intellectual property and innovative technologies

Especially, the intellectual property has become more important in the development of Chinese trade. In 2015, the budgets China provided to pay for intellectual property were 22 times higher than those it received from the rest of the world. These government initiatives are matched with the unprecedented amount of fiscal and financial resources made available in the post-2008 period. Statistically, China became the nation with the highest number of filed patent applications in 2011. Furthermore, the percentage of patents applications in China registered by Chinese companies rose from less than 52% in 2006 to nearly 73% in 2010. Chinese government aims to transform the economy from "Made in China" to "Designed in China" and from contract manufacturing to having profitable brand name companies. Especially, Made In China 2025 is the lead program to tackle the trade barrier which refrain China from accessing to important foreign technology.  China’s internal market, now with 1.4 billion consumers and a per capita income of $8,000+ in nominal U.S. dollars and $15,000+ in PPP U.S. dollars, is also a blessing to innovation in many ways. The huge market size and the potential size enable China to acquire foreign technology as well as pursue the expensive technologies such as CPU chips, nuclear energy, and aviation and space technologies. In many years, the electronics were copied in China which contributed to the unfriendly image of Chinese products and China is called “copycat” nation. However, “Designed in China” becomes the main aim of the government in order to build the better commodity in the country. The local government is trying to build the better image of China’s economy. Many of the cheap electronics dealers packed up their boxes, while new technology businesses moved into refurbished office spaces: startups, investors and even patent lawyers.

With the remarkable development, China is predicted to surpass America in the future. Can they achieve their dream to be the most leading cutting-edge technological country? However, at the moment, China deserves the recognition as a Smart China and as a leader in the technological revolution over the world.


Larson, Christina. "From Imitation to Innovation: How China Became a Tech Superpower." WIRED. February 12, 2018. Accessed March 26, 2019.

Unknown. “Trade War To Accelerate China’s Technology Development.” FITCH SOLUTIONS. July 26, 2018. Accessed March 26 2019.

Li, Yanfei. “Understanding China’s Technological Rise.” THE DIPLOMAT. August 3, 2018. Accessed March 26, 2019.

Yee, Lee. “China tops U.S, Japan to become top patent filer.” REUTERS.  December 21, 2011. Accessed March 26, 2019.