Technology: From Chaser To Maker

Wang Dongsheng adjusts his glasses and gazes at the tiny computer chip lodged in a green plastic board. Emblazoned on the chip's casing is the word THUMP, an acronym for Tsinghua University Microprocessor. Wang, a 37-year-old computer scientist at the university, drew on "100 percent Chinese talent" to build the chip, which could serve as the brains of a personal computer or server made in China. The project is part of an ambitious effort to kick-start China's electronics industry, with an eye to supplying a good portion of the potentially vast home market. "We can't just rely on technology from other countries," says Wang. "We have to develop our own talent."

Intel executives probably aren't losing sleep over the THUMP chip just yet--it's roughly comparable to Intel's Pentium II, introduced in 1998 and since surpassed by several later models. But the electronics push is yet another example of how China is putting itself in the driver's seat in key industries. "One of China's strategies is setting standards," says Adam Segal, an expert on Chinese research and development at the Council on Foreign Relations. "They're tired of being a technology chaser and want to be a technology maker." From fuel-cell technology to the farthest frontiers of medical research, China is establishing norms that, by sheer dint of its size and prosperity, may one day have to be adopted worldwide.

The main factor behind this growing influence is money. For the first time in a quarter century, China has become something more than merely a dream of vast markets. According to the American Chamber of Commerce, a survey of U.S. companies working in China showed that the profits of 42 percent exceeded worldwide averages in 2002. "China is suddenly the profit earner for many of them," says a Western diplomat based in Beijing. "That means they'll focus more and more on the requirements of the Chinese market." China's preference for freely available Linux software over Microsoft's, for instance, has already bolstered the cause of Linux in the West. Motorola's newest A760 smart phone--featuring Linux OS and Chinese- handwriting recognition--debuted recently in China, the world's biggest cell-phone market. A vast homegrown chip industry could shape the development of semiconductor technology and computer-design tools.

But nowhere is China's influence being felt more keenly than in automobiles. In the next decade the number of autos on Chinese roads is slated to quintuple to 100 million. Beijing is preparing to impose minimum fuel-economy standards that are far more stringent than those found in U.S. cars by July 2005--which could affect the design of cars elsewhere. Because of rampant air pollution and a fearsome dependence on Middle East oil, Beijing is also pouring money into research on fuel cells and other alternatives to combustion engines.

Imagine the jolt that Beijing would send to carmakers in Detroit and Tokyo were it to leapfrog the combustion engine entirely and embrace hydrogen-powered automobiles. It's not totally farfetched: China isn't saddled with the large network of gas stations that make hydrogen cars prohibitively expensive in Western nations. In November General Motors brought two hydrogen-powered concept cars--the Hy-wire and the HydroGen3--for a lavish unveiling at the Great Wall outside Beijing. "China has a prime opportunity to take the lead in the introduction of fuel-cell technology and the development of a hydrogen infrastructure," said Phil Murtaugh, CEO of GM's China Group.

China is also pushing the frontiers of biotech with a zeal that Western companies can't match. Without religious or animal-rights lobbies, "many people don't make moralistic or religious judgments about what's right or wrong," says Beijing-based management consultant James Brock. In the past decade the number of biotech firms operating in China has mushroomed from a handful to more than 300. Beijing's scientists generally adhere to fewer restrictions than their Western counterparts, particularly when it comes to research on stem cells, cloning and infertility. In October, a team of U.S. and Chinese scientists triggered a controversy when they reported that they'd created the first human pregnancy using a DNA-swapping technique--akin to human cloning--known as nuclear transfer. The world may not always like where China is taking it. But it would do well to pay attention.