61th MUMEI-JUKU (18/05/2022)
Theme: China’s Digital Platforms and Policies: Advantages and Task of the Chinese Model
【Takeda’s Opening Remarks】
Has A New Era of Common Sense Arrived
Next week, it will be three months since the Russian invasion of Ukraine. We tend to focus on the cruelty of the attack and whether Ukraine can win the war. There is also a lot of media coverage of these issues, which makes it even more difficult to discern. Some of the world’s thought leaders are suggesting that the world is beginning to transform into the next phase. This is the view that the world is undergoing a Ukrainian transformation (UX), not DX.
I think it is time to think about what kind of new normal will emerge in the future and how we can respond to it.
For example, Finland’s and Sweden’s application for NATO membership will definitely bring about a “new normal” in the European security system. This will not be limited to Europe, but will have implications for the security of East Asia, including Japan. Moreover, it will also have implications not only for security or economic security but also for economic security, including the development of digital technology, cyber and digital industries, and new management, including the establishment of supply chains.
Stand Out Events in China
Today, Senior Specialist Okano, a management researcher, will talk about China’s digital technological development and its advantages, which are of great interest to us. I believe that Senior Specialist Okano’s talk will help us to create a new common sense in Japan’s economic security, digital and industry. Here I would like to present some preliminary materials for your consideration.
First, China has rapidly become a digital superpower.
China has become a digital superpower, with Internet giants show up such as Alibaba and Tencent, Huawei leading the way in 5G, and more than half of the world’s PCs and other IT products now manufactured in China. Although China has become such a digital superpower, the Internet only became widespread around 2000, which is only about 20 years ago. With one or two exceptions, these companies were also launched after 2000.
Second is China has experienced rapid economic growth. China is now the world’s second largest economy and is expected to overtake the U.S. by the late 2020s. 20-odd years ago, the size of the Chinese economy was $1 trillion in nominal GDP, about 1/5th the size of Japan. In 2010, it surpassed Japan, and by 2020 its GDP was about $15 trillion. This is a 15-fold increase over the past 20 years.
The third is the role played by China’s leadership in bringing about these changes.
First, they have held that economic growth and technology (science, technology, and innovation) are identical. Deng Xiaoping positioned technology as the country’s most primary productive force. The same is true of the current Xi Jinping, who has repeatedly and continuously stated that “technology brings economic development, wealth, and strength. Xi also states that the Chinese Communist Party is at the center of the leadership, and that the country should operate under its guidance. This has been the practice of successive Communist Party leaders, but under the Xi administration, this tightening has become particularly severe, and is said to be the same as during the Cultural Revolution under Mao Zedong. Xi’s tightening has extended to the management details of private companies and even to the R&D system. In the latter case, after assuming office, Xi totally inspects China’s previous technology policies, and then launched an innovation-driven development strategy, or IDDS as it is commonly referred to. He has since steadily introduced China Manufacturing 2025, China Standard 2035, and the 14th Five-Year Plan (FIP), among others.
The New Normal in Japan’s Economic Security
We believe that it is time for Japan to start thinking seriously about its own economic security policy, and this will require a serious, data-driven study of China. This is by no means “for the sake of confrontation with China.” But rather because the future of China has a great deal to do with Japan’s economy, innovation, industry, armaments, and advanced technology. That is the problem for us. Again, for serious China research, data-driven considerations, as Senior Specialist Okano has done today, are indispensable.
Senior Specialist Okano is a person who knows China firsthand, having worked as a project manager of the China Postal Savings System in Urumqi, and Xinjiang Uygur Autonomous Region, as well as managing a local subsidiary in Beijing. He is currently teaching at Chuo University and Waseda University. The moderator was Mr. Miyake, a fellow of NTT Data Advanced Technology Corporation. Fellow Miyake is one of Japan’s leading experts on cyber and is a visiting professor at the University of Tsukuba and other universities.
◆Summary remarks By Takeda
Thank you very much for your platform theory based on very rich data and actual experience, and for the lively discussion. We learned a lot. I believe that the participants will use this as a reference for creating a new common sense. My personal opinion is that, as Advisor Sugiyama pointed out, “China is getting close to a different limit to growth” and that the Xi Jinping administration itself is aware of this and is formulating policies accordingly. This is a point that has been made recently by Western intellectuals as well. Of course, the theory of China’s limits has been raised many times in the past, and China has promoted digitalization and achieved economic growth in the midst of such a situation. However, with the invasion of Ukraine and the blockade of Shanghai by the Zero Corona policy, the fear that China may be on a hard landing seems to have become more real (note: Hal Bruns of SAIS, Dan Rosen of the Rhodium Group Rhodium Group, etc.). However, it is not mean a discussion that China will dismantle.
Expectations for everyone
My request to Senior Specialist Okano and those participating today is to think about how to promote economic security policy coordination under the comrades and allies of the democratic system. Of course, there have been many attempts to strengthen this between the US and Japan, the G7, the Quad, AUKUS, or the EU’s Indo-Pacific partners and governments and specialists, but I fear that in reality, we are inferior to Russia and China in authoritarian regimes. In order to accelerate this, we believe that it will require grassroots, or rather sharing as a matter of concern among a larger number of people, rather than leaving it solely to governments and experts.
The scope of the new common sense is very broad
Based on a survey among U.S. businesspeople doing business in China and elsewhere in the world, two CSIS researchers (Michael Green and Ascott Kennedy) last week have reported that management’s mindset may not yet be that advanced, even though black swans can occur at any time. According to the report, it seems that new common sense is needed in management also, and collaboration may be necessary in these aspects as well.
Regarding the “role of universities” I think Japanese universities need to challenge themselves regarding new common sense. At the start of digitization, U.S. universities were quick to teach data science to undergraduate students. This was a major gateway to digitalization, including the U.S. digital industry. In fact, U.S. universities are also among the first to set up courses for undergraduates and consider a QuSTEAM (science, engineering, engineering, arts, and mathematics) curriculum, there is a movement to enlighten students about the value of the quantum revolution for the future of business as well.
The quantum revolution is not just about quantum computers and quantum cryptography; everything today will be replaced by something new again. This is the gateway to the great transformation and form the core of Japan’s economic security. Unless new common sense to these movements is established in Japanese universities ahead of the rest of the world, I believe Japan will not be able to lead the world in this field.
