At the heart of the clash is the role of government. Washington isn’t a bystander: For decades it’s provided the tech industry with legal guardrails to foster competition, and risk capital for long-term research. Still, no bureaucrat told Steve Jobs to change the paradigm for mobile computing, or the founders of Uber to disrupt taxi services. Many U.S. entrepreneurs, when they look at federal agencies, mainly see a source of red tape.
In China too, the most successful names had humble beginnings: Alibaba (a combination of eBay, PayPal and Amazon) started out in the Hangzhou apartment of founder Jack Ma. Search giant Baidu and social-media hybrid Tencent also started small. While they benefited from state-imposed barriers blocking entry of their U.S. counterparts, these companies grew up in the private sector, often having to skirt government control to do so.
The next wave of technological innovation is shaping up differently. China’s rulers have identified the industries they want to dominate this century, from robotics to biotechnology and artificial intelligence or AI. Chinese firms with a project in those fields don’t have to sweat through pitches to venture capitalists: government coffers are open. They get protection from foreign competitors, and encouragement to borrow (or steal, depending which side of the Pacific you’re viewing from) their ideas. About one in five U.S. firms in China said in a survey last year that they’ve been asked to transfer technology.
It sounds like a classic state-versus-market standoff — except something’s changing. American tech companies are starting to urge their government to take a leaf out of the Chinese book, and steer the industry over the long run.
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