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posted on 03 February 2016

How Technology Might Reshape China's Future

from STRATFOR

-- this post authored by Rebecca Keller

Three years ago, most of the world thought "CRISPR" was the name of a refrigerator drawer. Now,the revolutionary gene-editing technique is not only used by researchers the world over but is also widely discussed by the mainstream media.

For Stratfor, technologies like CRISPR are exciting because they could help countries overcome thegeopolitical constraints stalling their development. We create technologies to meet specific human needs, and these advances constantly interact with geopolitics. Nations' particular political, economic and social realities dictate, at least in part, when, where and how technologies develop. In turn, these technologies profoundly affect the developmental cycles of nations.

A Behemoth in Need of Better Technology

Consider China. It is in the midst of undertaking the immense challenge of trying to restructure its economy after 30 years of uninhibited, unsynchronized growth. At the same time, the country is faced with growing resource scarcity in terms of both land and water, on top of a looming demographic crisis during which China's elderly population (those over 65 years old) will balloon to nearly 240 million by 2030. As Beijing moves incrementally away from its export-oriented economic model - the very backbone of Chinese growth - it will have to find a way to both sustain itself and move up the economic value chain. The linchpin of its strategy will be technological advancement.

There are two main drivers behind China's emphasis on technology: national security and future export potential. Beijing does not want to be completely beholden to foreign suppliers to meet internal consumption, especially for vital goods like food and energy. While it cannot realistically afford to forgo partnerships with foreign firms to develop the technology it seeks, China has designed its partnerships in a way that will enable it to gain the knowledge and experience needed to eventually push its economy higher up the value chain. Rapid expansion of Chinese technology sectors, whether in rail, aviation, nuclear power or telecommunications, would push Beijing closer to becoming the global leader it desires to be. China wants to move beyond supplying the world with low-end goods and instead export expertise and high-end products, still at lower costs than its competitors, while relying more on internal consumption to drive economic growth.

Throughout its economic restructuring process, food security will remain a priority for Beijing. Agriculture has been the primary focus of the first policy document released each year by China for the past 13 years - a fact that isn't all that surprising when you take into account the geographic obstacles to Chinese production. Though China's land and water resources may be ample compared to those of other countries, they are nowhere near sufficient to support the world's biggest population. And as this massive group of people increasingly shifts toward the consumption patterns consistent with a rising middle class, the pressure on China's limited resources will only grow. If it hopes to keep its imports of agricultural goods under control, both now and in the future, China will have to help its farmers become more efficient and productive.

In food security, as in other policy areas, Beijing has relied on multiple strategies to achieve its goals, including investing abroad in land and agricultural industries, joining free trade agreements, andconsolidating and mechanizing farming operations. All of these strategies will help ensure the stability of food imports or increase the efficiency of domestic production, but nature can be pushed only so far. Advancing and expanding the capabilities of China's agricultural biotechnology sector will remain an important objective for improving the country's food security and for potentially exporting its newfound expertise to others in the future.

Genetics and Geopolitics

Mankind has been manipulating the genetic make-up of plants and animals since well before we even knew what genes were, let alone how they behaved. For centuries, humans have used selective breeding to encourage the evolution of higher-yielding seeds, more productive livestock, and, occasionally, more attractive lapdogs for the royalty. By the mid-20th century, the Green Revolution had spread some of these prolific crops to the developing world, saving more than a billion people from starvation.

Since then, the sector has begun using more involved methods of genetic manipulation. Transgenic crops, made by inserting the genetic information of one species into another, now dominate the world's corn and soybean markets, and advances in genetics continue to give the scientific community a better idea of which genes control certain plant properties. Meanwhile, new gene-editing techniques such as CRISPR promise to provide a relatively simple and cheap tool for manipulating the genes of plants and animals in the near future.

This is where China comes in. For all CRISPR has done to change biotechnology, there remains room for improvement in the technique, and many applications have yet to be explored. China's domestic biotech sector not only has the potential to play a role in the advancement of the field as a whole. It will also try to take advantage of gene-editing techniques like CRISPR and other technologies, including cloning, to solve some of its looming scarcity issues.

The rise of modern biotechnology was delayed in China, largely because of the false dogmas surrounding the field of genetics that existed under Mao Zedong. But since the 1980s and 1990s, when it finally emerged in China, the field has seen rapid growth. That said, the fact that China's biotechnology program has been almost exclusively supported by government initiatives limited its innovative potential. Now, the tides are beginning to turn. Beijing realizes that its program, still funded publicly to the tune of nearly $12 billion until 2020, will achieve little without the proper scientific training to back it. Consequently, China is making an effort to repatriate scientists in all fields who have been trained abroad through its "Thousand Talents" programs - an effort that is already starting to pay off. Indeed, data compiled by Thomson Innovation show that nearly one-fifth of gene-editing patents granted over the past decade are linked to Chinese organizations.

Compared with many other countries, China's social and regulatory norms will give it an advantage in pushing ahead in biotechnology. As a global entity, the scientific community has traditionally followed a moral compass governed by Western values, which prioritize the worth of the individual. But in China, the state typically takes precedence over the individual. Science and technology are viewed as solutions to problems facing the Chinese state, removing some of the impediments to development that exist in the United States and Europe.

More Production, Less Reliance on Others

And these technologies stand to make a big difference: What impacts China impacts the world. Already, the country is starting to revive its commercial agricultural biotechnology industry for food production. In the summer of 2015, two Chinese companies completed the trials for genetically modified variants of corn, and they are now ready to start the process of gaining regulatory approval, an ordeal that normally takes three to five years but that Beijing could choose to accelerate. Additionally, in November 2015, Chinese biotechnology firm Boyalife Group announced its plans to open a $500 million commercial cattle-cloning operation in 2016.

If applied on a large scale, biotechnologies like cloning and gene editing could make a significant mark on Chinese agricultural and livestock production. Presently, Chinese beef producers - mostly small, backyard operations - cannot keep pace with demand, and domestic cattle breeding is so expensive that it often makes more sense, in terms of both quality and cost, to import cattle instead. But with the help of these new technologies, China could increase the quantity and quality of its cattle more quickly than it could using natural means. Chinese scientists are already beginning to explore the use of gene-editing techniques on other animals too, including goats and beagles. While none of these animals have been produced commercially or for human consumption, and while we have seen the use of gene editing on livestock and fish in the United States as well, the vigor with which China has embraced these applications demonstrates its potential as a future world leader in biotechnology.

Of course, as with its broader food security strategy, China will use other avenues to increase the overall productivity of its livestock sector. Still, it is clear that the country's biotechnology industries are on the verge of a dramatic expansion. Though the impact of these technologies may be limited in the short term, as China's industries develop, they will likely play a greater role in the long term. Alongside mechanization, the domestic biotechnology sector will likely increase the efficiency of Chinese agricultural production enough to keep the country from becoming vastly more reliant on other food producers as its population expands and its resources decline. In other words, over the long term food imports will account for about the same share of China's total consumption as they do now. The Chinese people will likely become far more accepting of domestically produced, genetically modified products, in part because Beijing will make a concerted effort to use propaganda to that end. That said, this will not necessarily translate into a greater acceptance of the same products marketed by foreign producers.

Ultimately, China's biotechnology boom will have an impact abroad as well. Beijing hopes to someday be able to export its cutting-edge biotechnologies, for relatively low prices. If it succeeds, China could emerge as a formidable competitor in the global seed market. This would play into Beijing's view that the development of China's technology sectors is essential to it being a strong and safe nation. One of China's biggest geopolitical imperatives is to appear equal to the West, whether in currency markets or in technology. And Beijing is banking on the development of domestic science and technology capabilities to carry it toward this goal.

"How Technology Might Reshape China's Future" is republished with permission of Stratfor.

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