Editor's note: Noting that 2023 is the first year for fully implementing the guiding principles from the 20th National Congress of the Communist Party of China, the ongoing "Two Sessions" will grab the world's attention. To better understand China's development blueprint, CGTN has curated the "Towards China's Modernization" series, and this is the sixth piece. Edward Tse is the founder and CEO of Gao Feng Advisory Company, a strategy consulting and financial advisory firm with roots in China. The article reflects the author's opinions and not necessarily the views of CGTN. 

Chinese President Xi Jinping underscored the strategic importance of what he called Chinese modernization last October, signaling the continued pursuit of high-quality and inclusive growth, as well as opening-up and technological innovations.

During the past few decades, many entrepreneurs are creating versatile and customer-friendly products catering to the emerging needs of Chinese consumers, particularly in the wireless internet sector. WeChat, for example, has become the "super app" that the Chinese use almost 24/7.

There are two streams of innovation in China. One is driven by the state, in areas like space missions, solar fusion, supercomputers, deep water exploration, high-speed railways, central bank digital currency and the like. The other is driven by entrepreneurs whose powerful innovations have changed the way people live and work, mostly leveraging the wireless internet as a technology platform. Areas like e-commerce, social commerce, Mobility-as-a-Service, online payment and food delivery are some prime examples.

As opportunities to innovate on the wireless internet have started waning, new opportunities have surfaced in disruptive technologies like AI, quantum computing and blockchain. At the same time, Chinese entrepreneurs have begun to shift focus on areas of hard technology, such as new energy vehicles, sustainability, biomedicine and security. These have now become new lanes for innovation and in some of these areas like electric vehicles and renewable energy, China is already taking a leadership position in the world.

Another boost to innovation has come from the need to be self-sufficient in high-end semiconductors, because of Western sanctions. Notwithstanding the challenges, industry experts believe self-sufficiency in semiconductors is possible in the not-so-distant future.

President Xi has said that China would target to double its GDP by 2035 and shall build a great modern socialist country in all respects by 2050, implying GDP growing at 4 to 5 percent. Along the way, China's per-capita GDP would also grow and is targeted to be on par with that of a mid-level developed country by 2035.

For this China shall have to beat the so-called middle-income trap. World Bank economists believe countries who were able to tread through the "middle-income trap" were able to innovate. China is doing exactly that.

However, the Chinese modernization concept goes beyond economic development and includes harmonious coexistence between man and nature, a basic principle of ecological civilization construction, a distinctive feature of a society that had agrarian roots for over several millennia.

Several Western senior politicians, prominent business leaders, journalists and well-known academics have asserted in the past that the Chinese cannot innovate. A common reason cited was China's "rote-learning" culture and practices.

However, Graham Allison of the Harvard Kennedy School and Eric Schmidt, former Google CEO, and some think tanks have all said China is already at par or ahead of the U.S. in critical technology areas, especially in AI. Bill Gates of Microsoft fame, has repeatedly praised China's ability to rapidly develop technological innovations.

In the past decade, China's technological strength has increased significantly as research and development (R&D) expenditure has grown three-fold and the country now ranks first in the number of R&D personnel and international patent applications, with substantive breakthroughs in core technologies and strategic emerging industries.

Nevertheless, innovative scientific and commercial applications notwithstanding, China has to do more in basic research. China's unique strength is a large number of STEM (science, technology, engineering and mathematics) students. A report by Washington D.C.-based Georgetown University says China surpassed the U.S. in the number of STEM PhD graduates in 2007 and its number shall be nearly double the U.S. by 2025. A governance approach that drives results and generates resilience will give China an edge in the continuation of innovation.

Recently, China's State Council has announced its plan to reform and restructure its departments to focus on optimizing and adjusting the responsibilities of institutions in key areas including science and technology and intellectual property rights. This structural reform will help China better and faster realize its goals in technological innovation.

Chinese modernization is the manifestation of how China is pursuing its own version of modernity. Against the backdrop of an ancient and rich civilization and culture, the Chinese have continuously experimented, learned and adapted since its reform and opening up. This pragmatic yet ideologically rich approach buttresses technological innovations. While not everything will be perfect, that China will keep moving forward is pretty clear.

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