Jia Jun, et. al., On China's High-Tech after Globalization

Jia Jun, Wen Juan, and Shi Dong “Two Charter Planes, one from Jiangsu-Zhejiang, the other from Taiwan, Paint the Grimmest Metaphor of the Next Thirty Years”[1] 

Introduction and Translation by David Ownby

Introduction
 
The Biden administration’s decision to mount a world-wide alliance to deny China access to the most advanced semiconductors is a key element in American efforts to contain China, and may well be prove to a major blow to China’s high-tech plans, and thus to Xi Jinping’s China Dream.  Since the decision was announced in October 2022, I have kept my eye open for Chinese reactions to the policy in the publications I follow, and the text translated below is one of these.  There is undoubtedly a great deal more published by think tanks, government agencies, etc., but much of this is highly technical, and might not be meaningful to me or my readers, or highly predictable, i.e., denunciations of American hegemonism.  If you are interested in such issues, Jordan Schneider, host of the ChinaTalk podcast, is much more knowledgeable than I am and follows these issues closely.
 
The text was authored by Jia Jun, Wen Juan, and Shi Dong, none of whom has an Internet footprint (which is perhaps slightly strange).  The authors are identified as being have specially invited by the Longway Foundation (修远研究中心) to address the issue at hand.  The Longway Foundation was established in 2009, and is the organization that produces the Beijing Cultural Review, the publication in which the translated text appears, and from which I draw many of the pieces I choose to translate.  The website suggests that the foundation also serves as a think tank that produces reports and books on a variety of important issues (although if the web site is up to date, the foundation seems slightly less active in recent years).  Had I solely looked at the web site, without having read Beijing Cultural Review, I would have assumed that Longway was committed to cultural nationalism, as research themes tend toward familiar tropes having to do with the uniqueness of Chinese civilization.  At the same time, the foundation’s advisory committee, made up of well known experts, seems quite diverse.
 
The text itself is interesting, although I confess that I have no idea where to situate it in debates on the topic within China.  The authors note fairly straightforwardly that the golden age of globalization is over, and that a new “Warring States” era will take its place—the Warring States era was of course the centuries-long period preceding the first unification of China by Qinshihuang in 221 BCE.  There is some pro forma language taking the United States to task for killing the goose that laid the golden egg, but that is not the point of the article.
 
The point of the article is instead to argue that if a new Warring States era is appearing on the international scene, China’s domestic response must be to put an end to the Warring States ecology that currently defines China’s world of high-tech innovation.  If the world is going to unite against China, then China must unite against the world, and competition within China must give way to cooperation.
 
Such a proposition is in some ways predictable, I suppose, but it is interesting that the text is basically apolitical, and does not employ the Party-State’s language of struggle and ultimate victory.  Instead, the language is somewhere between tech-speak and management consultant-speak, and the focus is on synergies, regional high-tech innovation clusters, and ever expanding concentric circles of collaboration and innovation.  One can certainly read the text as a call for greater state intervention in the nuts and bolts of high tech innovation, but the piece seems to pitched more at industry than at China’s political system.
 
Whether collaboration and synergies can propel China toward the innovations it needs to achieve its high-tech goals is anybody’s guess.  Of course, the same is true of U.S. efforts to bolster its own semiconductor dominance through a renewed state industrial policy.     
 
Translation
 
Farewell to the "Warring States Era:" Shared Innovation and the Strategic Reorganization of Chinese Technology 
 
The year 2022, full of surprises and inevitabilities, has finally come to an end amidst wars, crises, and epidemics.  While this may feel like the end to a turbulent moment, the signs behind it all point to the start of a new, more competitive, and grimmer era.
 
At the end of 2022, two charter flights heading in different directions captured the world’s attention: one was an American initiative in which Taiwan Semiconductor Manufacturing Company (TSMC) employees flew from Taiwan[2] across to the Pacific Ocean to Phoenix, Arizona; the other was a Chinese initiative in which employees from Jiangsu and Zhejiang companies flew across the Eurasian continent, landing in Europe on a mission to “fight for business.”  The two different routes did not intersect in physical space, but conveyed nonetheless the same metaphor: the new era of competition is destined to be a time of disintegration, conflict, and reorganization of the globalized world we have known, and the most fundamental competition is destined to be the struggle for development rights and the effort to take the initiative on issues of technological innovation, thus reshaping industries among countries throughout the world. 
 
If there is competition there must also be cooperation, even if the context and conditions for cooperation are changing profoundly, and in the short run the trend seems to be one of competition overwhelming cooperation. In terms of China's science and technology innovation and industrial reshaping, the results of internal and external competition and cooperation over the past decades are plain to see:  starting from the most basic manufacturing setup, we have developed and upgraded step by step in science and technology innovation, achieving the historic change of moving from playing catch-up to competing as equals, from learning from others to creating our own, from being backward to becoming advanced.

That said, today’s situation marks a fundamental change.  In the face of tremendous present and future pressure, particularly the technological and industrial blockade put in place by the United States and others, as well as the blockage this entails in terms of the mobility of global technological talent, information, knowledge, and equipment, it is imperative that we reexamine the internal and external changes affecting China's technological innovation and how China competes and cooperates, with an eye toward conceiving a strategic response for the next thirty years, or even longer. 

Going it Alone[3] and Sharing: The Two-Way Movement of Science and Technology in the "Warring States Era"
 
 (1) Science and technology innovation throughout the world returns to the "Warring States era," and international cooperation shifts toward going it alone and jockeying for position 
 
In the post-pandemic era, the U.S.-led global system has gradually drifted apart, and the global innovation chain formed over the past decades has, to a certain extent, reverted to the stage of going it alone and jockeying for position. With the emergence of the "tripartite division" between North America, Europe, and Pan-Asia, strategic autonomy has become a core concern, and science and technology innovation, which is directly related to strategic autonomy, has returned to the rivalry of the Warring States era. 
 
In the North American realm of the tripartite division, American elites have already laid the psychological groundwork for an extended period of competition with China, the key to which is competition over innovation.

In 2020, the White House Office of Science and Technology Policy (OSTP) was elevated to the cabinet level to strengthen the government's role in coordinating and promoting science and technology innovation. In 2021, the U.S. passed the Innovation and Competition Act, promising to invest more than $200 billion in science and technology innovation; in 2022, the U.S. passed the CHIPS and Science Act, which on the one hand injects massive subsidies into the semiconductor industry to maintain the security of domestic industry chains and supply chains, and on the other allocates huge funds to transform the U.S. National Science Foundation and establish a new technology innovation department, focusing on supporting semiconductors, artificial intelligence, high-performance computing, advanced manufacturing and other fields, with an eye toward maintaining global leadership.

At the same time, in the context of the Russian-Ukrainian war, the United States is restructuring global industrial alliances, and actively promoting the return of manufacturing to the United States; that the world's largest semiconductor foundry—TSMC—is investing in the United States by setting up factories is a clear signal of this. In addition, the United States also launched various "chip alliances," "supply chain alliances," "key minerals alliances," "nearshore outsourcing “and other multifaceted initiatives to compensate for the shortcomings of its own innovation chains, industrial chains, and supply chains, the point of which is to build a high wall of joint containment against China.
 
In the European realm of the tripartite division, under the strong stimulus of American decoupling from China's technology and frequent American pressure on European allies to exclude Huawei equipment since 2018, Europe has come to realize the fragility and external dependence of its own "technological sovereignty" and gradually shifted its science and technology policy from one of being "open to the world" to a stance of  "open strategic sovereignty," which is more inclined to protect Europe's scientific and technological autonomy and economic security.

“Openness” now means that Europe does not want to become a battlefield in the Sino-US science and technology war and prefers to avoid taking sides; "strategic autonomy" means that Europe will chart its own science and technology innovation as a participant, occupying the middle ground between China and the US. In light of this it is not hard to understand why, with the introduction of the U.S. Competition Act of 2022, Europe also followed up with the introduction of its own Chip Act, charting a similar path as that of the United States in the semiconductor field.
 
In the pan-Asian realm of the tripartite division, Japan, South Korea, India, and Australia, as links in the restructuring of the U.S. industrial chain, hope to profit from U.S. and Chinese competition in order to boost their own innovation and manufacturing industries. Since the CHIPS and Science Act and the Inflation Reduction Act promote the return of manufacturing to the United States, enterprises such as Sony and Sumitomo Chemical in Japan, Samsung Electronics, SK Hynix, and LG New Energy in South Korea—as well as a host of other companies—are required to build factories in the United States, which triggers concerns in Japan and South Korea about the hollowing out of manufacturing, and ironically prompts them to seek technological and industrial autonomy.

India, for its part, has gone to great lengths to support local industries and technology companies by directly suppressing foreign companies, with hundreds of Chinese-backed applications, including WeChat and TikTok, being blocked on security grounds. Australia has not only benefited from both sides of the U.S.-China dispute based on its advantage in key minerals, but has also proposed to develop seven key manufacturing sectors such as semiconductors, agricultural chemicals, and telecommunications equipment, and made a list of 63 "key technology" transfer restrictions taking aim at China. 
 
To sum up, under the cover of “alliances,” the United States puts America first and tries to hold China down. While strengthening industrial cooperation within its circle of allies, it also inspires countries to maintain strategic independence and improve their own scientific and technological capabilities as a hedge against the strong demands of gravitational pull of the United States.  This means that in terms of international technology innovation and industrial development, the situation is one in which the U.S. and China compete and many countries engage in “messy battles 混战.”  In such a situation, all countries’ policies are at risk of instability, which is bound to increase the fragility and complexity of transnational cooperation.
 
(2) China needs to bid farewell to its domestic Warring States scenario and promote strategic restructuring through shared innovation 
 
The Warring States era of global science and technology clearly exerts enormous strategic pressure on China. It is against this backdrop that the U.S.-China science and technology competition has come to exhibit a particular "two-way movement" in which the United States focuses on strengthening its own industrial and supply chains to consolidate its control over innovation chains. At the same time, it erects high walls in the field of science and technology, objectively exacerbating the Warring States and “go it alone” nature of global technological innovation.

China, based on its long-term accumulation in terms of industrial and supply chains, actively attempts to compensate for deficiencies in its innovation chains and attempts to solve stranglehold problems in key technologies, at the same time further expanding its openness and creating favorable conditions for seeking a wider range of international cooperation. In the two-way movement, both sides have their own strengths and weaknesses, but the essence is to reorganize and optimize resources, and to focus on accomplishing great things. This is the first time in human history that strategic competition between major powers is not localized in a natural geographical territory, and neither China nor the United States has sufficient experience or history to know where to go. 
 
For China, the real problem of science and technology innovation is still internal. We have relatively complete industrial chains, abundant human resources, strong technology transformation capability, and a mega market, but we have been in  Warring States mode within China in terms of the science and technology innovation ecology for a long time. First, over the course of the past few decades, local enterprises in China have often been integrated as assemblers in the production network dominated by multinational enterprises. 

This has resulted in a lack of interaction among local enterprises, and mutual competition has become increasingly homogenized, involuted, and low-end. Many scientists, entrepreneurs, and technical experts are aware that it is not difficult to make a one-off breakthrough in key technologies, but due to the lack of a good industrial ecology, in many key areas it has proven difficult to nurture a local product technology system. Once a stranglehold occurs, local enterprises often wind up fighting on their own, in a passive posture.
 
Second, we still lack relatively mature resource integration mechanisms, which is highlighted by the fact that a large national unified market has yet to take shape, cases of talent and labor mismatches are frequent, the financial venture capital model is still developing, positive interactions between capital and science and technology are slow to evolve, and mechanisms of social support and management related to science and technology innovation remain incomplete—among other issues.  Hard-hit by the pandemic, many enterprises and industries have even slipped back into the stage of struggling to survive.

For example, the tertiary industry, which is an important part of the economic ecology, and the producer service industry that supports the manufacturing industry have both suffered significant setbacks, which in turn also affect the secondary industry, weakening the technological innovation effect of manufacturing. This means that the entire socio-economic environment is in need of repair, not only to restore original industrial capacity, but more importantly to cultivate the entire innovation ecology.
 
Third, compared with the past, China's science and technology innovation is today facing a new scenario: on the one hand, the industrial division of labor chain is lengthening, meaning that teamwork is more demanding. A product often contains dozens or even hundreds of patents, which requires the aggregation of various innovations, and each application requires multi-disciplinary collaboration before it can be implemented on the ground. On the other hand, science and technology innovation in China is entering a "no man's land;" in the past, we copied and played catch-up, and the current need to “define the future” is much more difficult.  How do we break through the original science and technology innovation? How to grasp the uncertainty of original innovation? For unknown innovations, how do we invest huge amounts of money and who will share such a huge risk? All these questions need to be solved in an integrated manner. 
 
It is better to cooperate than to struggle alone. In the face of the Warring States era of global science and technology, China's science and technology innovation must leave its internal Warring States behind and engage in shared innovation so as to break down various barriers, revitalize existing resources, and reshape the innovation ecology. “Shared innovation” means bringing about the synergy of innovation chains, industry chains and supply chains through orderly linkage and regionalized cluster-sharing inside and outside the system. The most crucial among these is to implement strategic reorganization around three main elements of innovation, namely strategic innovation systems, strategic innovation hubs, and strategic innovation enterprises. 
 
The strategic innovation system: positive interaction between a benevolent government and an efficient market
 
The starting point for promoting the strategic reorganization of scientific and technological innovation through shared innovation lies in orderly linkages inside and outside the system. Surveying the historical experience of major countries throughout the world, good government and effective markets are the two “legs” of science and technology innovation, and if one is missing, walking is problematic. The source of power for China's innovation development comes partly from the state system and partly from the market ecology, and both are complementary. Building a strategic innovation system means forging a closer model of government-market interaction under the pull of the overall science and technology strategy.
 
(1) Exploring a model of industrial policy oriented toward shared innovation 
 
Over the past few years, there has been an ongoing debate on industrial policy. But history and current reality show that industrial policy is not unique to China, and is instead a standard feature of all countries; the market is the hotbed of science and technology innovation, but without government support and promotion, innovation breakthroughs are difficult. In this respect, the United States is typical. The United States promotes the concept of free market abroad and has long condemned the industrial policies of other countries, but in its own industrial development, the government is never absent.

In the U.S. semiconductor industry, for example, the U.S. government intervened at a critical moment in international innovation competition, which illustrates precisely an indispensable link in the U.S. national innovation system. The rise of Silicon Valley at the time was not merely the result of the entrepreneurial spirit of the technology and business elite; in fact, U.S. military procurement played a very important role in pushing things forward. In the 1990s, when the U.S. semiconductor industry was challenged by Japan, the U.S. government rained heavy blows on the Japanese semiconductor industry through trade sanctions and other means, after which the U.S. semiconductor industry experienced a revival.

It must be clearly noted that the most successful industrial policy experiences of the United States involve the state’s making clear commitments and signals concerning cutting-edge technology research and development, thus fully mobilizing huge industrial forces and scientific resources to occupy the high ground of innovation, and thus maintain the hegemony of science and technology through the creation of new industrial sectors with first-mover advantages and huge profits resulting from technological monopolies. Thus it is easy to understand why, in recent years, the U.S. government has been so eager to introduce a large number of innovation bills and subsidy policies. 
 
In this regard, China has already put together a relatively mature industrial policy model, which will certainly continue in the future. It is worth noting, however, that in the past, as a latecomer country, we could refer to the models of the developed economies to set industrial planning and other measures. Today, however, as we face the "no man's land" of science and technology innovation, there are few or no models to turn to. Under such circumstances, industrial policies need to be crafted with particular caution. Considering both innovation efficiency and innovation risk, it is necessary to explore a shared innovation-oriented industrial policy model in the coming period, meaning, on the one hand, to shape the basic ecology of shared innovation through various industrial policies.

For example, further optimizing infrastructure and improving the institutional environment to reduce enterprise innovation costs, opening up a large national unified market to promote economies of scale, creating regionalized clustered innovation hubs, and encouraging innovation resource sharing over competition so as to improve innovation efficiency and avoid repetition and involution. On the other hand, we should also pay more attention to precision and multi-party participation in industrial guidance.

Under the premise of encouraging freedom of innovation, we should take solving practical problems as the starting point, adjust some sloppy policy measures, project mechanisms and fund placements, thus moving toward more precise support for innovative research and production technology. This requires the full mobilization of forces from all walks of life, the formation of a comprehensive, objective, and effective innovation evaluation mechanism, and the promotion of precise allocation of policies and funds.
 
(2) Government and enterprises should work together to promote innovation resource allocation and collaborative sharing
 
Due to the pandemic, China’s domestic innovation chains and industrial chains have been damaged to different degrees in recent years, and it is difficult to effectively integrate large numbers of innovation resources. The primary issue facing both the government and the market at present is make greater efforts to promote the reallocation and synergistic sharing of innovation resources, so as to create the necessary conditions for reshaping innovation and industrial chains.
 
First, we should plan the regional coordination and division of labor layout of the innovation chain as a whole, and develop the leading role of planning. The advantage of innovation in large countries lies in the economies of scale and division of labor due to their size. In view of the huge long-term investment and risks of uncertainty associated with original innovation in the "no man's land” we are entering, it is imperative to carry out overall design and task break-down at the national level, and further develop the role played by urban clusters and industrial cluster planning. In particular, it is imperative to develop several urban clusters into hubs of scientific and technological innovation, and to build collaborative bridges among various urban clusters, avoiding a situation where urban clusters fall into localism or zero-sum competition.
 
Second, the key to promoting the optimal allocation of resources is to correctly understand and handle their relationship with capital. The purpose of promoting capital self-regulation through policy instruments is not to suppress capital, but instead to lead market resources away from a state of disorderly competition, further optimize the direction of resource allocation and the mode of investment, and stimulate new market vitality and willingness to innovate.
 
Third, do a good job in the construction and layout of major scientific and technological infrastructure, thereby attracting a concentration of high-tech industrial parks. Foreign science and technology infrastructure development has produced Nobel Prize-level results, which is one of the reasons for the formation of Silicon Valley in the United States and Tsukuba Science City in Japan. The China Spallation Neutron Source located in Dongguan has now become the most important scientific platform to support the comprehensive national science center in the Guangdong-Hong Kong-Macao Bay Area, which illustrates the traction it generates. However, there is currently a problem of overheated construction in some parts of the country, and rational planning at the national level is urgently needed.
 
Strategic Innovation Hubs: Sites of multiple competition and overall planning in shared innovation
 
In promoting the strategic reorganization of scientific and technological innovation through shared innovation, the difficulty lies in regional clusters and sharing.  In April of 2022, central authorities issued the “Opinions on Accelerating the Construction of a Unified National Market,” emphasizing the need to break down local protectionism and market segmentation so as to truly bring into play the competitive advantages of a mega-state.  Article 29 specifically proposes to prioritize the construction of regional market integration in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, the twin-city Chengdu-Chongqing regional economic circle, and the urban clusters in the middle reaches of the Yangtze River. 

In fact, these cross-regional city clusters are also current concentrations of China's science and technology innovation, and it is worth thinking deeply about how to turn them into sites of multiple cooperation and overall planning in shared innovation. Due to space limitations, this paper will only make a few suggestions in the hopes of stimulating further discussion. 
 
(1) Multiple Competition Sites : Analysis of the current situation of innovation in five major city clusters 
 
Looking at highly developed innovation sites throughout the world, it has become a global consensus that cities should group together for innovation. For example, the San Francisco Bay area and Tokyo Bay area have played an important role in helping the United States and Japan to occupy advantageous positions in the information industry and in advanced manufacturing, respectively. In China’s 14th Five-Year Plan, the five major city clusters of Beijing-Tianjin-Hebei, the Yangtze River Delta, the Pearl River Delta, Chengdu-Chongqing, and the Middle reaches of Yangtze River are listed as the first echelon in optimization and upgrading, and are also important spatial carriers of science and technology innovation in China.
 
1. The Yangtze River Delta city cluster is distinguished by the scale of its economy and by outstanding vitality in science and technology innovation. In recent years, regional science and technology collaborative innovation has become a signature feature of integration in the Yangtze River Delta. With the support of the central and local governments, a number of major science and technology innovation projects and R&D platforms have gradually taken shape, and the trend of agglomeration around the core cities of Shanghai, Nanjing, Hangzhou, Suzhou, and Hefei has been continuously strengthened. Driven by leading enterprises such as SAIC, Ali, Geely and certain science and innovation platforms, a large number of high-quality science and innovation factors, enterprises, and talents have been aggregated in the Yangtze River Delta, and the industrial innovation network has become more and more densely woven, illustrating the clear utility of innovation resources.
 
However, further integration of Yangtze River Delta runs up against the difficulties of excessive competition and "industrial isomorphism." Although the existing plans have clearly positioned the industrial division of labor and development among the cities in the Yangtze River Delta, how to coordinate the allocation of resources and sharing of innovation factors among the cities, and promote the differentiated competition and industrial complementation among different cities, still needs to be rationalized.
 
2. The Guangdong-Hong Kong-Macao Greater Bay Area is characterized by strong scientific and technological innovation capabilities, a vibrant economy and a complete industrial system. Healthy government-enterprise interaction, a strong digital economy, a rich set of industrial clusters and a diversified field of innovation subjects are the outstanding highlights of the shared innovation ecology in the Guangdong-Hong Kong-Macao Greater Bay Area. With Huawei, Tencent, China Electronics, GAC, BYD and other enterprises as leaders, the Greater Bay Area has formed a concentric circle of science and technology innovation in which the policy chain drives the capital chain, large enterprises drive small enterprises, leading enterprises link research forces, and intelligent manufacturing drives manufacturing upgrades.

It is worth noting that large digital technology enterprises in the innovation ecology of the Greater Bay Area are both suppliers of innovation capabilities, as well as demanders of innovative technologies and application scenarios. For example, Huawei has accomplished the joint solution of smartstations and smart operations and maintenance through its urban rail Wotu digital platform, facilitating the digital transformation of traditional infrastructure; Tencent has set up an industrial Internet base in the Guangdong-Hong Kong-Macao Greater Bay Area, opening its technology and ecology to the majority of small and medium-sized enterprises, helping the industrial chain to operate collaboratively.

This kind of multi-directional interaction has shaped the industrial innovation ecology of the Greater Bay Area, fostering embeddedness and mutual interaction. Of course, the Guangdong-Hong Kong-Macao Greater Bay Area is a heterogeneous city cluster covering two systems, three customs zones, and three legal systems, and still faces a series of problems such as how to break through cross-border administrative barriers, how to establish coordination mechanisms, and how to improve the business environment to attract international high-end resources.
 
3. The Beijing-Tianjin-Hebei city cluster is characterized by the density  of its intensive innovation resources and by abundant scientific and technological innovation achievements. Based on the concentrated resources of large scholarly institutions, the sharing of innovation in the Beijing-Tianjin-Hebei city cluster is mainly driven by knowledge and technology spillover. With the in-depth promotion of Beijing-Hebei cooperative development strategy, the synergies characterizing the Beijing-Tianjin-Hebei innovation chains, industry chains, and supply chains have been continuously enhanced, collaborative innovation platforms such as Binhai-Zhongguancun Science and Technology Park and Beijing-Tianjin-Hebei National Technology Innovation Center have been established, and cross-regional industrial innovation activity has been significantly enhanced.

Among these, the strong radiating quality of Beijing's innovation ecosystem is obvious, presenting a synergistic ecology of industry-university-research, with Beijing's scientific and technological capabilities supporting the industrial development of the three regions, and the industrial development of the three regions facilitating Beijing's scientific and technological breakthroughs. At the same time, we should also note that the structure of Beijing-Tianjin-Hebei cluster needs to be optimized, that the siphoning effect of large cities is especially prominent, and that development imbalances are even more obvious. How to establish a genuine shared ecology in which the head drives the whole and the overall cycle of the region, rather than having highly concentrated resources in one or two large or super-large cities, remains a challenge.
 
4. The Chengdu-Chongqing Economic Circle region is a typical example of a the pairing of two important cities. Compared to the other three city clusters just discussed, shared innovation in Chengdu-Chongqing Economic Circle is still in the process of development. In recent years, with the support of national strategies and policies, Chengdu and Chongqing have strengthened the integration of science and innovation resources and established regional innovation synergy platforms such as Western Science City, the Chongqing Science and Technology Resources Sharing Service Platform, the Liangjiang Collaborative Innovation Zone, the BIT Chongqing Innovation Center, in addition to eight industrial alliances, and has made efforts to promote science and technology synergy and innovation.

At present, the degree of industrial chain synergy in Chengdu and Chongqing is not yet high, and large-scale industrial competitiveness is still developing. In the future, there is still a need to explore how to better integrate the resource endowment of the southwest region and extend innovation-driven effects to the border areas.
 
5. The Middle Yangzi city cluster is the largest city cluster in China, an important force in promoting the construction of the Yangzi River Economic Belt and a key region in implementing the strategy of developing central China. Historically, this region was the main front in the construction of the third line, but today, compared with the Yangtze River Delta, Guangdong-Hong Kong-Macao, and Beijing-Tianjin-Hebei city clusters, this region is at a disadvantage in terms of total resources.

Although Wuhan's opto-electronics and automobile manufacturing dominate the region, the Chang-Zhu-Tan [i.e., the area around Changsha] construction machinery and rail transportation are important on the national science as well, and Nanchang's large aircraft components and electromechanical equipment also have certain advantages, but there are still fewer core competitive industries in the region, and there still remains the problem of homogeneous competition among the central cities in the region (such as Wuhan, Changsha and Nanchang). How to strengthen the industrial synergy and resource synergy in the region and with the Yangtze River Delta and Pearl River Delta in the future will require overcoming numerous difficulties.
 
(2) One game of chess: imagining shared innovation in the five major city clusters 
 
The five key science and innovation city clusters discussed above are different in terms of geographical location, resource endowment, scientific research base, economic level, and local social customs, among others. According to the principle of shared innovation, each urban cluster should give full play to their respective advantages according to their regional endowments, and carry out multi-regional and differentiated competition in innovation; however, the goal is not competition, but rather synergy and complementarity, and the sharing of development results. For this reason, it is imperative than different city clusters encourage cross-regional interaction among industry, academia and research, with the goal of creating nationwide shared innovation patterns in a synergistic and complementary way.
 
On the one hand, giving full play to the role of each city cluster as a regional innovation hub and encouraging the formation of innovation solutions with their own characteristics is a prerequisite for the creation of the chessboard under discussion here. The Yangtze River Delta is good at promoting the interaction and cooperation of market players with a service-oriented government and at using elite groups to popularize the use of successful models, and also has rich financial resources that can radiate out to other regions; the Greater Bay Area has rich experiences in innovating and setting up pilot operations, possesses trade access to advantageous industries as well as a positive ecology of government-enterprise interaction, and a solid foundation in digitalization; Beijing-Tianjin-Hebei have rich institutional resources and vast experience in integrating resources and organizing and mobilizing experience and social foundation, and the deepest achievements in the field of high technology; Chengdu-Chongqing has a unique natural endowment and is situated in a border area, and has made considerable progress in metallurgy, machinery and electronics, with good synergistic development of the three industries; the Middle Yangzi has deep base in heavy industry and is expected to open up new innovation space while upgrading its industry.

Within these regions, science and innovation subjects of various types and backgrounds are encouraged to actively compete to produce different innovation solutions in terms of R&D and application; between regions, there should be moderate competition in innovation technologies, innovation effects, and economic results, but each should focus on avoiding competition that might lead to involution. 
 
On the other hand, it is important to enhance the foresight of national-level planning and local policies, strengthen cross-regional and multi-regional innovation coordination, and develop the sharing effects that come from playing on a single chessboard. The national level needs to take a holistic approach, incorporate innovation hub construction and regional innovation synergy into industrial policies and development plans as key matters, develop feasible and effective incentives that create synergies, carry out regional shared innovation pilot projects, and guide city clusters and localities to develop innovation synergy mechanisms.

Local governments need to grasp national industrial and science and technology development trends, dovetail their efforts with overall national planning, and locate differentiated innovation paths; at the same time, they should overcome regional localism, integrate various innovation resources in the region while actively carrying out cross-regional and cross-domain innovation cooperation and resource sharing around science and technology innovation matters in key  and urgent areas, compare and learn from each other's innovation solutions, and gradually refine and optimize the division of labor in industrial chains and in the inter-city and inter-regional division of labor, ultimately shaping a shared innovation ecology for the nation as a whole. This means that the innovation dividend can no longer be completely monopolized or siphoned away by big cities or economically developed regions as in the past, an unbalanced approach that may facilitate local progress without driving national breakthroughs. We need a relatively reasonable distribution structure to promote the extension and sharing of the innovation dividend on a larger scale. 
 
Strategic innovative enterprises: a shared innovation vehicle the goes beyond the system 
 
The strategic reorganization of science and technology innovation is promoted by shared innovation, and the key point is to cultivate a number of strategic innovation enterprises, so that they can become dynamic vehicles of shared innovation. In the past, we put more emphasis on nurturing strategic industries, but seldom talked about nurturing strategic enterprises. In fact, strategic industries should eventually evolve into a group of strategic enterprises, because strategic enterprises directly face market competition, understand on the ground demands, and possess a strong will to innovate; more importantly, they have the ability to drive the overall operation of the industrial chain.

From a global perspective, the science and innovation capabilities of key enterprises can often help a country occupy a leading position in science and technology.  SpaceX and Silicon Valley’s large Internet companies are the birthplace of advanced technology in the United States; Deep Mind's winning technology in the field of artificial intelligence puts the UK on the global technology map; and core manufacturing technology is also in the hands of major enterprises in countries such as Germany, Japan, and South Korea. In China, this trend is also gradually emerging: major Internet companies have obvious advantages in AI; In the new energy and automobile manufacturing industries, many emerging technologies are in the hands of a group of transformational companies; in the semiconductor and electronics industry, we also see emerging a number of technology-based enterprises with strategic value.
 
(1) Re-conceptualize strategic innovative enterprises: transcending “inside and outside the system”
 
Although the understanding of strategic enterprises remains controversial, development trends illustrate that today’s strategic enterprises are not limited to the system but instead have expanded beyond it. 
 
For a long time, large enterprises within the system have played the role of "the pillars of a great power 大国重器."[4]  As part of the national “team,” these enterprises are often huge, resource-rich, highly organized, with deep reserves of technology, and are capable of undertaking ultra-large, ultra-complex, and ultra-advanced science and technology innovation projects. From aerospace technology to rail transportation infrastructure, from energy to strategic materials, from communications to military industry, a large number of central enterprises constitute the foundation of China's science and technology innovation.  An important change underway in the 21st  century is that many private science and innovation enterprises have also developed strong innovative strengths, some of which have great strategic value.

For example, Huawei has been recognized by the market for its innovative capabilities in communications, chip design, and operating systems; DJI has reached a global leadership level in drones and camera devices to the extent that it has been suppressed by the United States; and large Internet companies such as Tencent have not only developed a global leading Internet technology ecosystem, but have also conducted innovative explorations in industry cloud platforms and artificial intelligence. 
 
For this reason, it is necessary to go beyond the institutional perception of strategic enterprises and consider enterprise development from the national level. For example, digital enterprises and new technology enterprises have become important actors in international technological competition. These enterprises not only have the strategic attribute of acting as the "infrastructure" of the science and technology society, but also can become an important link in the technological innovation of the "pillars of a great power"—this is also the meaning of the strategy of military-civil fusion.  If these enterprises can be made into important vehicles of shared innovation, it will undoubtedly help cultivate the overall innovation ecology.
 
 (2) Reassessing the Strategic Value of Innovative Enterprises: Breaking through the Controversy between the Real and the Virtual
 
In addition to the dispute about being inside or outside of the system, the debate between real and virtual has also been a focal point of China's industrial and technological development for some time. However, with the accelerated integration of digital technology and the real economy, the old understanding of "virtual" and "real" can no longer accurately interpret the characteristics and trends of the industrial economy in the new era.  Virtual and real, instead of existing in an either/or relationship, are now deeply integration, the one completing the other.   The most typical example is the deep cooperation between traditional manufacturing enterprises and digital science and innovation enterprises. 
 
In the global digital era, industrial upgrading and technological innovation in all countries need to use digital means. In the process of transformation and upgrading of traditional manufacturing enterprises, digital science and innovation enterprises can use new technologies to help manufacturing industries implement digital and intelligent precision manufacturing; they can use big data and cloud computing to improve traditional management and enhance decision-making and efficiency execution; they can use data to identify user needs and better capture market opportunities.

In fact, today more and more traditional manufacturing enterprises are buying service solutions from digital science and technology enterprises, which greatly promote the application of digital products, and digital science and technology enterprises are deeply embedded in the whole process of production, management, sales and service of traditional manufacturing enterprises. Digital science and innovation enterprises like Huawei and Tencent have injected new genes of digital capabilities into traditional manufacturing industries by providing artificial intelligence, cloud computing, big data, the Internet of Things, digital twin and other technologies.
 
This partnership is a vivid embodiment of the shared innovation between traditional manufacturing enterprises and digital science and innovation enterprises. In this sense, digital science and innovation enterprises have transcended the stereotype of being a virtual economy or a consumer platform and now make up an important part of the real economy, becoming a powerful assistant driving industrial innovation. Not only that, digital science and innovation enterprises also constitute support elements for key areas involving the operation of the national economy, such as energy, communication, transportation and logistics, and play an important and positive role in preserving employment, stabilizing growth and preventing risks. 
 
This example fully illustrates that we need to break through the debate over real versus virtual and re-evaluate the strategic value of innovative enterprises in order to promote shared innovation. Only when we get rid of the simplistic and labeled view of virtual and real can we give more play to the role of innovative enterprises in driving industrial and technological innovation, and help upgrade and transform the manufacturing industry, at the same time creating an innovation community with the manufacturing industry.
 
(3) What direction for strategic innovative enterprises?  Making bigger "concentric circles" 
 
The reason why strategic innovative enterprises have strategic value is mainly based on their size advantages, core technology advantages, and strategic influence. However, for shared innovation, the real value of these enterprises does not lie in their own scale and advantages, but in whether they can play a leading and boosting role as a platform to drive the development of the entire innovation chain and industrial chain, transforming their scale and advantages into the scale and advantage of the overall innovation ecology, and forming a regional or even national innovation cluster effect. 
 
Therefore, the core strategic goal of strategic innovation enterprises is to enlarge the "concentric circles" of shared innovation: on the one hand, providing technical support and building innovation platforms externally, and on the other hand, providing innovation resources for the society by forming technological innovation momentum through their own needs.  This is the only way to bring together enterprises of different levels, types and sizes to form a strong synergy for innovation breakthroughs. 
 
At present, large central enterprises such as Aerospace Science and Technology, Aerospace Science and Technology, China Electronics, COMAC, CNR and Dongfang Electric have organized and driven upstream and downstream enterprises in their respective industries and related enterprises to stimulate cutting-edge innovation; BYD, GAC and Geely have driven the formation of a regional industrial ecology of new energy equipment, materials, and supply chain paths; Huawei has played a leading role in science and innovation and driven a large number of secondary enterprises, while Tencent provides an open source sharing platform for IT developers and helped the "China Sky Eye" discover 22 pulsars through cloud plus artificial intelligence technology; KDDI has opened 496 AI capabilities and scenarios, linking more than 5 million partners…These companies have played an important role in promoting regional and even national science and technology innovation, and have taken the first steps toward forming an ecological network of shared innovation.
 
What is important to emphasize is that shared innovation, in the final analysis, should be people-centered. For strategic innovation enterprises, the core of a good corporate structure and the effective operation of innovation mechanisms lies in talent allocation and workforce cohesion. Talent is about the long-term development of the enterprise, and cohesion is about the innovation environment of the enterprise. In recent years, some large innovative enterprises have encountered bottlenecks on both the talent and the cohesion front, which not only affect their own technological innovation, but also are not conducive to the innovative development of the industry.  

Strategic innovative enterprises are unique in that they occupy an important position in the overall ecology of the economy, and their internal talent environment has a certain directional impact on the larger innovation environment. Therefore, how to treat talent well, use talent well, and shape a people-oriented innovation "microclimate" is the only way to arrive at an innovation-sharing “macroclimate.” Innovative companies should be fully aware of their strategic mission, rather than relegating themselves to a purely profit-seeking existence outside of the national strategy, otherwise they will not be able to achieve workforce cohesion and will not be conducive to the formation of a healthy ecology of shared innovation. 
 
Concluding remarks
 
At this moment of once in a century change, and in the face of international competition and domestic development over the next 30 years or perhaps longer, China's science and technology innovation must make strategic and proactive plans, not just strategic and passive responses. Under the general trend of global science and technology innovation returning to the "Warring States Era," China needs to swim against the stream, which means, in the outside world, supporting the opening up of international science and technology cooperation, and internally, bidding farewell to the past Warring States style of unilateral, self-serving behavior and advance into the "no man's land" of originality, following the road of shared innovation. In this process, what is most important is that the nation, society, enterprises, and talent reach a strategic tacit understanding in this new historical era, shaping a strategic innovation system with positive interactions between a benevolent government and an efficient market, and jointly coping with the unprecedented innovation challenges coming our way.

The biggest difficulty will be how to establish shared innovation city clusters and play their roles as a strategic innovation hubs. In this regard, in addition to strengthening regional coordination, we need to transcend the distinction between inside and outside the system and the debate between virtual and real, and make efforts to cultivate a number of strategic innovation enterprises as both powerful fulcrums of strategic industries and dynamic carriers of shared innovation, and encourage them to lead the construction of concentric circles of shared innovation.
 
The discussion of shared innovation and the strategic reorganization of China's science and technology innovation in this paper is still directional and framework-oriented. We sincerely hope that knowledgeable people from Chinese policy, industry, science and innovation and related fields will join this discussion to further deepen and refine the strategies, models, paths and implementation methods of shared innovation.

​The reason why this issue is worth discussing is not only that it is related to the fate of China's technology and industry in the future, but also because it is related to the future of scientific and technological innovation in the world; not only because it helps to solve the fundamental problem of optimal allocation of innovation resources, and more because it ultimately points to the balanced development of regions and the common development of people—and we need to work together to advance in this direction. 

Notes

[1]贾筠, 闻鹃, 史东, “从江浙和台湾起飞的两架包机, 折射未来30年最冷酷的隐喻,” published online by Beijing Cultural Review/文化纵横 on December 11, 2022.

[2]Translator’s note:  In the text, Taiwan is identified as “Taiwan, China” as in customary on the Mainland.

[3]Translator’s note:  割据, which literally means, according to Pleco, to “set up a separatist regime by force of arms; carve out a (vast) tract of land and establish an independent regime.”  Obviously, this is of a piece with the “Warring States” metaphor, but I cannot come up with an appropriately clever English translation.

[4]Translator’s note:  This is the name of a CCTV television program that explored the development of Chinese industry.