It is no accident that China is stealing a march on the rest of the world in many manufacturing sectors. It is not just enough to have a cheap and plentiful supply of factory workers. Nor is it enough to have a currency that isn’t floated. There is a history that explains China’s growing world dominance in producing TVs, radios, engineering tools, home ware, factory machines, office supplies, electrical equipment and so on. A big part of this history is to do with reverse engineering.
The story goes back to the Sino-Soviet Alliance that started shortly after the end of World War Two. Stalin and Mao were initially on good relations and Russia was prepared to be China’s only friend in the world. During this time the Red Army relied on military equipment from Russia. In many sectors Russian technology was used to secure China as a viable state and continuing ally against the capitalist West.
By 1958 it became clear to the leaders of China that the Sino-Soviet Alliance was destined to soon fall apart. It was then that the leaders made the important decision to make every effort to ‘stand alone’. This meant copying Russian machine guns, rockets, fighter jets etc.
By the time the inevitable split between Russia and China occurred in 1960 Chinese engineers were already busy pursuing a policy of reverse engineering or guochanhua. Virtually from scratch engineers figured out methods for taking soviet technology apart and replicating it.
It was a long process, no doubt partly because the Cultural Revolution had destroyed the intelligentsia of the country. Historians studying military parade footage and other sources estimate that the Chinese army did not reach the 1960s levels of soviet military hardware until 1984. This capability included jet fighters and warships.
Now that Chinese engineers and scientists understood reverse engineering Deng Xiao Ping issued directives to import foreign goods to China such as machinery, electronics and other hi-tech products with the aim of copying them.
The rest really is history. In a very short time TVs, washing machines, tape recorders etc. were being made entirely in China without any foreign imports. Chinese factories helped by authorities that turned a blind eye to copyright issues and that actively promoted overseas trade soon started to take a huge market share in several areas of consumer products.
By the early 1990s China could make everything itself bar integrated circuits and engines for passenger carrying aircraft. Computers, helicopters, cars, solar panels, large generators were all well within China’s manufacturing capability.
The gap now between the West and China in terms of technology is very small. In certain fields they lag slightly behind, but in others they are leading the way. China is now the world leader in new engineering patents.
It is perhaps possible in the future that Chinese companies will innovate important new technologies that emerging economies like Indonesia will effectively ‘steal’ through reverse engineering. No doubt they will hypocritically complain about this and initiate legal proceedings.
For the time being the real challenge for the Chinese manufacturing economy that is progressing at a blistering pace thanks to guochanhua is to secure enough natural resources to keep going, and also to keep wages low and costs down.