China fails to diffuse advances in technology thanks to censorship and the strictures imposed by state control. Thus, the productivity benefits are missing. The essay is a bit dated, but state control has not diminished, suggesting that its conclusions are still valid.
prcleader.org
<<<<<Evidence from China’s diffusion of information and communications technologies (ICTs) provides further evidence that China’s diffusion capacity may trail its innovation capacity. While China has been successful at large-scale deployment in a few key domains—consumer-facing applications like mobile payments and high-speed rail— these achievements do not characterize the overall trend in ICTs. Chinese businesses have been slow to embrace digitization, as measured by adoption rates of digital factories, industrial robots, smart sensors, and key industrial software.18 According to a 2020 report on the state of digital intelligentization (i.e., the use of data-based predictions to improve businesses processes, such as personalized recommendations, generative designs, and optimization of supply-chain management), less than one-tenth of China’s small- and medium-sized enterprises have initiated such projects.19
These findings are confirmed by influential indexes that assess national scientific and technological capabilities. The International Telecommunication Union’s ICT Development Index provides a composite measure of the level of access to and use of ICTs in countries around the world. On this metric, China ranks 83rd in the world, trailing the U.S. by 67 places.20 China also significantly trails the U.S. in an influential index for the adoption of cloud computing, which is essential to implementing AI applications. In 2018, U.S. firms averaged a cloud adoption rate of over 85 percent, more than double the comparable rate of Chinese firms.21
Since cloud-based services will serve as important diffusion channels for AI, it is worthwhile to further investigate roadblocks to a more widespread adoption of cloud computing across the Chinese economy. In 2013, only 5 percent of Chinese small and medium-sized enterprises used cloud hosting services.22 While the Chinese government has supported cloud computing development through infrastructure spending, subsidies, and other financial incentives, its cyber-control policies have impeded diffusion. Data localization measures and internet censorship protocols have made it difficult for small businesses to access not only services supplied by foreign cloud computing platforms (e.g., Dropbox cloud storage) but also objects hosted on servers outside China. Also, due to concerns about data security, large state-owned enterprises have been hesitant to outsource data center services to the cloud.23>> |
