The way China’s ‘innovation machine’ is changing will affect the rest of the world

China has had the world’s fastest growing economy since the 1980s. A key driver of this extraordinary growth has been the country’s pragmatic system of innovation, which balances government steering and market-oriented entrepreneurs.

Right now, this system is undergoing changes which may have profound implications for the global economic and political order.

The Chinese government is pushing for better research and development, ‘smart manufacturing’ facilities, and a more sophisticated digital economy. At the same time, tensions between China and the west are straining international cooperation in industries such as semiconductor and biopharmaceutical manufacturing.

Taken together with the shocks of the COVID-19 pandemic, and particularly China’s rapid and large-scale lockdowns, these developments could lead to a decoupling of China’s innovation system from the rest of the world.