In recent weeks, one line has been repeated often: China is the nation of engineers, while the United States (or Europe) is the realm of lawyers. One side loves contracts and fine print; the other develops and builds. That’s how narratives form. They do not always reflect reality. Influence and reality can diverge. In any case, the educational backgrounds of members of the Chinese Communist Party’s Central Committee offer little in the way of empirical proof for such a neat dichotomy.
In fact, the story is more interesting. In a few days, the National People’s Congress in Beijing will formalize the guidelines for the next five years. This plan – like all its predecessors – is the result of intensive, lengthy consultations. Anyone who wants to understand its social and economic dimensions, or its industrial-policy, technological, and innovation implications, needs to take a closer look at the “ecosystem” that ultimately sustains such plans. And anyone trying to contextualize the coming Five-Year Plan (FYP) should keep China’s far broader ambitions in view – as well as its internal challenges.
China is aging rapidly – faster than Germany. By 2040, the median age will be between 48 and 49. In many Chinese cities and provinces, the birth rate is – sometimes markedly – below one child per woman. Measures and incentives intended to reverse this trend have not proven effective; often, the opposite. By 2040, around 30% of the population will be older than 65 – more than 400 million Chinese citizens.
Beyond the social, societal and family implications, this also has serious consequences for the country’s economy (and the same is true for Germany and other European states). Consumption and innovative capacity, entrepreneurial spirit and willingness to take risks will be affected – possibly constrained. “Old societies” have a different mindset.
China is responding, for example, by deliberately expanding humanoid robotics. The economic challenge for Germany and Europe is, above all, industrial-policy in nature. But the relevance of these developments goes further, reaching into the care of older or ill people. Robotics is pars pro toto.
Trial and error, rapid correction and iteration, taking first steps and “perfecting” along the way – this is how a dynamic innovation system emerges. In the future, such developments will be supported even more by funds that finance long-term projects and are geared toward rapid scaling and dependable, i.e., sustained commitment. Germany and Europe should get better at this as quickly as possible. Citation counts and patent filings in artificial intelligence indicate an urgent need for action.
The foundations are also being strengthened in education – through a reorganization of universities and vocational training, both of which are being oriented even more strictly toward performance and innovative capacity. At its core, this is both innovation and science policy and a structural response to demographic change. A shrinking population with a growing share of older people may also leave oversized capacities in parts of the economy or the education system.
The examples I cite here illustrate an ecosystem that is not fully captured even by the various economic or financial “work conferences.” If you travel through China in late autumn, you do not only encounter these conferences – which abroad often receive attention far below their true significance. You also see how scientists, entrepreneurs, advisory bodies of all kinds, and “politics” are engaged in intensive exchange – incidentally also in competition with one another. This complex process of information, assessment and proposals; of directives, feedback and debate; of experimentation and conclusions (for example in individual cities or special economic zones); of consensus-building and ultimately binding decisions at the state and Party level takes time – but above all, it has impact.
One example: “Made in China 2025” was – let’s put it this way – an arduous birth up to 2015, but with enormous consequences. Of course, it was adjusted; enormous efforts followed. In this respect as well, China’s trajectory since reform and opening has few parallels in economic history. Less obvious is that China has learned a great deal – also from Germany, and from the conditions that made the German “economic miracle” possible, from industrial and economic-policy coordination to the external value of the Deutsche Mark.
Germany (and Europe) should draw “learning conclusions” from this. The principle of reciprocity is a good guide. For instance: If China classifies foreign investment as preferred, neutral or impossible (via a negative list that has steadily shrunk), Germany and Europe could design something similar – and thereby avoid procedures that are costly in legal, time and administrative terms.
Or: If you want to sell in Europe, you must also produce in Europe. These two examples are sufficient. Because even amid fundamental differences in political systems and in concepts of freedom and democracy, one thing remains true: Global challenges require joint answers; and there is also “homework” no country can afford to fail – or allow itself detours on.
Rudolf Scharping heads Rudolf Scharping Strategy Consulting Communication AG (RSBK), a consultancy with a strong focus on German-Chinese economic relations. From 1991 to 1994 he served as Minister-President of Rhineland-Palatinate, then from 1994 to 1995 as SPD chairman and leader of the opposition in the German Bundestag. After the SPD’s election victory in 1998 under Gerhard Schröder, he became Federal Minister of Defence (1998–2002).
Editor’s note: Discussing China and Asia today means, more than ever, engaging in controversial debate. We aim to reflect a diversity of viewpoints, so readers can gain insight into the breadth of the discussion. Opinion pieces do not reflect the editorial board’s position.
Opinion pieces reflect the views of their authors and do not necessarily represent those of the editorial team.