The Economics Show: China wanted western tech. Now, the tables have turned.
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What was the original bargain that drove China’s early industrial development?
Hi, everyone. Rob and I are taking a break from the Unhedged podcast this week, but we wanted to introduce you to another podcast in the FT stable. The Economic Show with Samaya Keynes is a weekly FT podcast covering the biggest issues in global economics, including trade, monetary policy and the AI revolution. In this episode, Sumeya speaks to John Minnick, an expert on Chinese industrial policy at LSE. They discuss how China used tech transfers to absorb Western know-how and become the world's foremost manufacturer. And they ask whether the US and Europe should now do the same to China. If you like what you hear, click the link in the description or search The Economic Show wherever you get your podcasts to find more episodes.
Enjoy the show.
China has moved up the value chain. Its companies aren't supplying basic components anymore. They are global brands in their own right. And Western officials are looking on anxiously as Chinese batteries, cars and drones become increasingly sophisticated. Now, Western policymakers are asking the same question their Chinese counterparts were asking years ago. We'd like to beat them. Should we be joining them? This is The Economics Show with Samaya Keynes. I'm the author of a new book, How to Win a Trade War with Chad Bowne. And in this episode, I wanted to make a sort of spin-off show going deeper into one of the topics that we covered and also speaking to one of the researchers whose expertise we drew on.
So today, I am delighted to be speaking to John Minnick, assistant professor at the London School of Economics, whose super interesting research looks at the history of technology transfer to China and how other countries might learn from that model today. John, hello.
Great to be here. Thank you for having me.
OK, so on a scale of 1 to 10, how strongly would you recommend to Western governments that they respond to concerns about Chinese competition by persuading them to hand over their tech? So 1 is no, don't bother. 10 is absolutely this should be a massive priority for them.
I would say the core idea, I would give an 8 or a 9. You know, one of the things I've learned from my research on China and technology transfer policies in China is that technology transfer policy alone is seldom the only or decisive factor that's going to get you from 0 to 1. But an 8 or a 9 because I think that this should absolutely be an integral part of any policy package that European or the American government in the future pursue. if they want to get technology transfer from China. I'd say where I'm a little bit more skeptical in the case of advanced industrial economies, especially liberal democratic governments, is when it comes to execution, because getting it right, so to speak, requires a real tolerance for waste and efficiency, a lot of failure, but also a capacity to sort of iteratively improve along the way.
And with that, a kind of flexibility that honestly, at this point, I don't know, but I'm not particularly confident in Western government's capacity to do.
Okay, well, starting on a nice upbeat note there. So it feels like this question of, you know, how to do tech transfer, how to deal with investment is really where the debate is right now when it comes to relations with China. I think in the US, there's relative hostility towards inbound Chinese investment, although increasingly there are voices making this point that, you know, if we want to compete, then we're actually going to have to try to draw on some of the Chinese company's technology. I think in the EU, the debate is much less settled. So there is just this question which is open of how far they should embrace partnerships with the Chinese. And in recent policy debates, you've seen the Industrial Accelerator Act, the IAA, which
quote, lays down conditions for large foreign investments which will apply to investments above 100 million euros by investors from countries that account for a 40% share of global production. And that rhyme with Schmeiner, you might as well say.
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Chapters
5 chapters
1
What was the original bargain that drove China’s early industrial development?
0:00–5:02
2
How did China use joint‑venture requirements to acquire Western technology in the 1990s?
5:02–15:51
3
Why is China’s high‑speed rail success considered a model of effective technology transfer?
15:51–27:32
4
What role did local‑content mandates play in China’s wind‑turbine industry boom?
27:32–39:32
5
Why have China’s automotive and aerospace sectors struggled to replicate the rail and wind successes?
39:32–43:29