Dirigism, Chinese tech’s singular competitive advantage

In France and China alike, cryptocurrencies are deemed major challenges for the future. But while French MPs are striving to set up a tailor-made regulatory framework that is both balanced and attractive, China is not entangling itself with such thoroughness. It bans ICOs and cryptocurrency transfers, blocks foreign transaction platforms and specialized information websites, and is paving the way for the PBoC (the People’s Bank of China) with a firm grip. With legal goldsmithing competing against a bulldozer strategy, this case illustrates China’s odd conception of innovation… and the benefits that are singularly derived by its tech ecosystem.

As new technologies develop, they raise countless ethical and moral questions and cause upheavals that must be anticipated and supported. In China, these delicate issues are clearly sidelined by the government, which pursues a twofold objective with technology: to tighten its grip on society and build a cutting-edge digital economy. Under the guise of a gentle form of paternalism that is concerned with ‘living together in harmony’, the regime thus places innovation at the service of systematised morality control and surveillance.

As a giant Orwellian lab, the country has taken refuge behind ‘The Great Firewall of China’, which allows it to block access to foreign websites it considers subversive, such as The New York Times, the BBC, Twitter, Facebook and many others. In China, the only fake news that exist are those that the regime would choose to distill. From A.I. to biotechnology, all fields are concerned. For instance, electric car manufacturers are forced to integrate an irremovable geolocation system into vehicles in order to track their route in real-time. Always, of course, for the sake of safe and efficient public action… As it awaits its famous ‘Social Credit System’, the government is refining its Big Data infrastructure and its experiments to bring closer the physical (facial recognition based on 200 million remote surveillance cameras, geolocation of motorists) and digital (data from telecom operators, search engines, and social networks) paths of its citizens. To ensure a healthy education for everyone and good governance for all.

Naturally, this mass civic-mindedness is primarily imposed on Chinese companies, guiding them as much as stimulating their innovation efforts. In many areas, this leads to advances in technologies and practices that put China at the forefront of Europe and the United States. With 50% of the world’s electric car fleet and 99% of electric buses, China is not waiting for the next UN climate change summit to tackle pollution. With more than 100 cities of more than a million inhabitants, the Chinese State distributes the registrations of thermal cars in droves (1 for 200 applications in Beijing) and sponsors the electric “made in China” by imposing quotas on each manufacturer.

‘Augmented authoritarianism’ goes as far as to infiltrate homes. This is the case with parental control, delegated to the Party. Summoned to set up a system capable of limiting the time spent playing, Tencent, the world leader in video games ahead of Sony and Apple, is for example now a master in facial recognition. Combined with A.I., this makes it possible to verify the player’s age and recognize him/her regardless of the platform and account used, in order to control access.

As debatable as it is in substance and form, this dirigism offers Chinese tech companies an unlikely albeit genuine competitive advantage. For them, it dispels the fog of questions specific to new technologies, which, on the contrary, slows down their Western competitors. Meanwhile, the latter oscillate between free will and free trade, between ethics and the monetization of data, between the right to be forgotten and forgotten rights in favour of consumerism. In Europe, the search for a certain balance is slow, and often leads to solutions that are as bold as they are binding, such as the GDPR. In the United States, companies are more open-minded, but the scourge of filter bubbles, fake news and uncontrolled traffic of personal datashows every day what it costs.

Everywhere, the digital ecosystem forces us to raise the same questions. Would you prefer to see your data in the hands of a government or of a myriad of private ‘little brothers’? Would you agree, in order to preserve democracy or privacy, to give up the convenience or free access to certain services? At a time when the Silicon Valley giants are talking on an equal footing with States (to such an extent that Denmark has officially assigned them an ambassador), these questions are becoming crucial. How, then, can we not wonder about the ambivalent stance of Western companies in the face of the attractiveness of the Chinese market precisely? Google is thus considering to relaunch a search engine that is compatible with Beijing’s requirements, namely filtering 1% of requests and attaching them to a mobile number, so that they can be traced back to their author. Today, we must realize that using technology means making choices. The Chinese regime, as the sole decision-maker, has fully understood this.

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