Davos one year on

By James Pennington | chinadaily.com.cn | Updated: 2018-01-23 11:14

Attendees take part at a reception event after the Crystal Award ceremony during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 22, 2018. [Photo/Agencies]

The opinions expressed here are those of the writer and do not represent the views of China Daily and China Daily website.

One year ago President Xi Jinping made a landmark speech to an audience in Davos. In it he outlined his views on the major trends and challenges affecting the world today, from slow growth and climate change to rapid advances in technology, inequality and inadequate and unrepresentative global governance. In the year following, China has doubled down on a number of core policy goals outlined in the speech including increasing its innovation base, stepping up its environmental commitments while also, with the ramping up of the Belt and Road Initiative, unveiling a new framework for how it will engage on the world stage. How does the last year hold up to the rhetoric in Xi's speech?

Innovation

"First, we should develop a dynamic, innovation-driven growth model [...] Unlike the previous industrial revolutions, the fourth industrial revolution is unfolding at an exponential rather than linear pace."

Some will remember 2017 as the year the world started to take China seriously as an innovator, finally shedding its reputation for product imitation. This has been especially notable in advances in AI capabilities and technology hardware innovation.

Becoming a technology leader and moving up the value chain towards higher quality jobs has been a long-term ambition for the country. In the mid-2000s, international companies were encouraged to set up R&D facilities in China in exchange for market access, but to borrow a Chinese expression, these were largely paper tigers built for show. This is no longer the case. In 2017 Google — a company with next to 0 market share in China's lucrative internet search industry — opened an AI research lab in Beijing to get closer to the world-class talent in the country. It has also announced the opening of an R&D facility in Shenzhen, to work on its growing hardware offerings.

China is fast becoming a global leader in AI, with all the major Chinese tech companies bolstering their ranks of machine learning specialists. Earlier in the year, Chinese search giant Baidu was able to attract Microsoft's top AI talent Qi Lu to become their COO in a symbolic move that could show the centre of AI gravity moving eastward. Baidu also tested its first self-driving cars on the roads of Beijing and doubled down on AI as the core of their strategy.

In the global race for ever more useful and profitable AI, some have pointed out that laxer rules on and attitudes toward data privacy will give Chinese companies an edge over their US and European counterparts. This is coupled with unflinching government support for the industry, compared to some in Europe and US who remain circumspect about the potentially damaging effects of the technology.

The city of Shenzhen in southern China has become the global hub for tech hardware innovation. The vast parts markets — which started as a place to make patent-defying copies of products designed elsewhere — have transformed into the world's most advanced and dynamic hardware innovation hub giving rise to disruptive startup companies inventing new products and industries such as DGI (consumer drones), and Royole (flat foldable screens).

China as a Climate Leader

"The Paris Agreement is a hard-won achievement [...] All signatories should stick to it instead of walking away from it"

Although China remains the largest emitter of greenhouse gases, it has made substantial progress on climate action domestically in the past year and has also taken a greater leadership role on the world stage. In 2017 China announced a high-profile partnership with the EU, launching the world's largest carbon market. This political leadership may have endowed China with a sense of moral authority and soft power which had been previously lacking. But through installing more renewable capacity, improving air quality and building the largest renewable energy production base, China has also shown that going green pays in a number of ways.

Coal still remains the dominant energy source in China and 2017 saw a slight increase in coal use after three years of flat growth. This was caused by an uptick in economic growth as well as regional droughts, which sapped capacity from China's large hydroelectric sector. However, when it comes to transitioning to renewable energy, China is the world leader and the numbers speak for themselves. According to Bloomberg New Energy Finance, in 2017 China invested $132.6 billion in renewable energy, 24 percent more than in 2016 and accounting for 40 percent of global investment in clean power. As part of its Belt and Road Initiative the country also made big investments abroad, spending $44 billion on renewables projects, mergers and acquisitions. Coupled with a number of factory shutdowns, this mitigation strategy is paying off. Greenpeace reported a year-on-year decline in pollution in Beijing of 53 percent; they estimate that this led to 160,000 fewer premature deaths in the country during 2017.

China's strategy on renewable energy has also been paying dividends for domestic companies, who have developed a strong lead in the manufacturing of clean tech, producing some 60 percent of all solar panels in 2017. In a December meeting in Beijing, China's environment minister reported there were now over 2.7 million jobs in renewables in China and the National Energy Administration expects this to grow to 13 million by 2020.

The Belt and Road

"Emerging markets and developing countries already contribute to 80 percent of the growth of the global economy. [...]. However, the global governance system has not embraced those new changes "

"Reform or replace" was the message to the global governance system. 2017 saw a strong push behind Xi's signature foreign policy, the BRI. The plan consists of a series of infrastructure projects in Asia, Africa and Europe with an estimated price tag of $1 trillion. In May, leaders descended on Beijing for a forum on the topic and as the year went on the first round of projects was announced. Much of the funding for the initiative will come from three new multilateral banks set up by Beijing with international partners, the Asian Infrastructure Investment Bank, The Silk Road Fund and the New Development Bank.

The need for such a project is huge. The World Economic Forum calculates there is an annual infrastructure gap of $1 trillion. But perhaps more significantly, the initiative provides an alternative framework for multilateral collaboration which puts the emerging world at the center. This will put pressure on current international institutions to reform, or risk seeing their influence wane in key fast-growing geographies.

Xi's speech outlined a considered Chinese view of the major trends affecting the world, and a series of recommendations to deal with it. As in many Chinese policy-making enterprises, these take the long view. But in the last 12 months, the themes set out in Xi's speech have seemed to guide China's major policy decisions and transformations. China's ever more active role in global affairs and from a new platform as an innovator, climate leader and builder of institutions should give established powers food for thought and continue to usher in a multi-polar and indeed, multi-conceptual global system. What is certain is that wherever others are willing to cede global leadership, China stands ready and willing to fill the gap.

The author is project specialist of the World Economic Forum's Circular Economy initiative, leading the work on policy engagement in emerging markets with a key focus on China and the African continent.