Near-Collapse of ZTE May Be China’s Sputnik Moment

Near-Collapse of ZTE May Be China’s Sputnik Moment

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“The recent ZTE incident made us see clearly that no matter how advanced our mobile payment is, without mobile devices, without microchips and operating systems, we can’t compete competently,” Pony Ma, chief executive of the Chinese internet giant Tencent Holdings said last month at a science forum.

China feels new urgency to increase its technological abilities. Its current push — called Made in China 2025 — lies at the root of worsening trade relations between the United States and China. But the problems with ZTE, which had $17 billion in revenue in 2017, will only spur Chinese leaders to push ahead.

“Self-reliance is the foundation for the Chinese nation to stand firmly in the world, while independent innovation is the only way for us to climb the peak of the world’s science and technology,” Xi Jinping, China’s leader, told its top scientists late last month.

As Chinese ask how they can keep up, many are also wondering why they didn’t realize they were so far behind to begin with.

“The best students always think they performed poorly in exams,” said Ding Jichang, founder and chief executive of Mobiuspace, a Chinese mobile app developer, “while the bad students always think they aced it.”

For starters, the idea of China as technology powerhouse isn’t wrong. As Mr. Ding pointed out, Chinese companies early on figured out the power of the smartphone in daily life. ZTE and others are competitive in many areas, like mobile data technology.

But many in China — and many cheerleaders of the Chinese tech scene — also found themselves in a feedback loop of their own making. The powerful propaganda machine flooded out rational voices, said Ms. Dong of Tsinghua University. The tech boom fits perfectly into Beijing’s grand narrative of a national rejuvenation. Innovation and entrepreneurship are top national policies, with enormous financial backing from the government. Even now, some articles critical of China’s lagging semiconductor industry have disappeared from the internet there.

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