OPINION: How data, engineers and state power drive China's tech rise

[전병서 중국경제금융연구소장]

Views of China tend to split neatly into two camps. One dismisses it as a country of imitators. The other fears it as an unstoppable technological juggernaut powered by a vast market and a disciplined state. Both views miss the same point.

China’s defining advantage is scale.

In a country of 1.4 billion people, even meaningful technological progress can appear underwhelming when measured per capita. But scale has a way of turning incremental gains into structural power. What looks modest in isolation becomes formidable when multiplied across an economy large enough to test, refine and deploy technology at speed.

That is the context in which China’s scientific and technological rise should be understood. Its domestic market functions as a giant test bed, allowing ideas to move from lab to factory floor to mass adoption faster than in most advanced economies.

China’s strength ultimately comes down to people. It is often described as a nation of engineers, and not without reason. President Xi Jinping, like several of China’s past leaders, was trained in science and engineering — a detail that reflects a broader technocratic tradition at the top of the system.

Through gifted education tracks and an engineering-centered university pipeline, China produces millions of science and engineering graduates every year. While South Korea and the United States wrestle with a steady drift of elite students toward medical schools, China has continued to train talent in artificial intelligence, semiconductors and aerospace at a national scale. The strong presence of Chinese universities in global AI rankings is no accident.

Many Chinese students who once went abroad have returned home to start companies, while manufacturing expertise accumulated over three decades as the world’s factory is now feeding domestic innovation. The skills honed in producing goods for Apple, Nike and Louis Vuitton are being repurposed to build Chinese brands — and increasingly, Chinese technologies.

Unlike Western democracies, where science and technology policy can swing sharply with electoral cycles, China’s one-party system enables long-term planning. Beijing directs national resources toward a set of “emerging” and “future” industries designed to strengthen what it calls “new quality productive forces.”

Local governments from Hefei to Shenzhen compete fiercely to build advanced industrial clusters, experimenting with policy models that are later replicated nationwide. Massive state investment, often tolerant of failure, allows firms to take R&D risks that would be politically or financially difficult elsewhere. At a time when South Korea is trimming or reallocating research budgets, China is still writing large checks to close strategic technology gaps.

Critics often argue that socialist systems struggle to sustain creativity under heavy ideological control. In technology, China again complicates the stereotype. In practice, its tech sector can be brutally market-driven: if something makes money, capital and talent rush in.

China’s much-maligned “shanzhai” culture — a phase of copying and imitation — was less a dead end than a training ground. The supply chains, tooling expertise and manufacturing discipline built during that period now underpin innovation in electric vehicles, batteries and consumer electronics. Few countries illustrate more clearly how markets, not ideology, ultimately shape technological outcomes.

The same dynamic is visible in China’s digital transformation. During and after the pandemic, the country accelerated toward what officials describe as a “five-no” society: no cash, no cards, no wallets, no face-to-face transactions and no waiting in lines. The result has been an explosion of real-world data.

Under its “AI+” strategy, Beijing is pushing artificial intelligence into manufacturing, healthcare, education and finance. The goal is not simply efficiency gains, but the redesign of social and industrial systems around digital tools. Smart factories, AI-assisted medical services and personalized education platforms are no longer pilots — they are being deployed at population scale.

In the AI era, data is often likened to oil. Here, China holds a clear advantage. Unlike Western countries constrained by strict personal-data protections, Chinese companies and authorities operate in an environment where population-scale data can be used with relatively few barriers. Combined with aggressive investment and a deep bench of engineers, this gives China a powerful edge in applied AI.

Within years, industrial AI trained on data from factories, hospitals and transport systems could challenge — or surpass — Western capabilities in areas that matter economically, not just academically.

U.S. restrictions on advanced semiconductor exports have slowed China’s access to cutting-edge equipment. Beijing’s response has been pragmatic rather than dramatic: squeezing more performance from legacy processes, investing heavily in advanced packaging, and using its vast domestic market to scale homegrown solutions. At the frontier, technologies tend to converge. China is betting that patience, capital and labor will eventually deliver self-sufficiency.

For South Korea, the danger lies in complacency. Treating China as merely a “knockoff country” is no longer skepticism — it is self-deception. China has become a system-level competitor, pressing directly into South Korea’s core strengths in semiconductors, batteries and advanced manufacturing.

The response should begin with governance. South Korea needs a stronger national science and technology control tower capable of setting and executing long-term strategy beyond a single five-year administration. It also needs to restore its test-bed capacity through bolder deregulation, expanding regulatory sandboxes so emerging industries can prove themselves without being smothered by incumbent interests.

Focus matters, too. South Korea cannot compete with China on volume. Its advantage lies in bottleneck technologies that are hard to copy, such as high-bandwidth memory and processing-in-memory chips. Concentrating national capabilities on these areas is not optional — it is existential.

Finally, there is a social challenge. A country that wants to stay technologically relevant must reward engineers. Unless South Korea finds ways to reverse the rush into medical schools and offer top-tier compensation and status to scientists and technologists, no strategy will hold.

China’s scale is not something to fear abstractly. It is something to understand, adapt to — and compete against with discipline. In technology, survival belongs not to those who shout the loudest, but to those who execute the longest.

Jeon Byeong-seo is head of the China Economy and Finance Research Institute. He holds a master’s degree from Tsinghua University and a Ph.D. from Fudan University, and has served as a semiconductor and IT analyst and adjunct professor at Sungkyunkwan University.

* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
Jeon Byeong-seo 중국경제금융연구소장 bsj7000@hanmail.net

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