The Banking Executive - Decemebr 2021, Issue 156

ISSUE 156 DECEMBER 2021 the BANKING EXECUTIVE 9 China’s Silicon Valley A decade ago, China was widely per- ceived as an imitator in technology and not an innovator. That view is now changing as Beijing is catching up in the tech race. President Xi Jin- ping has made the nourishment of technological capacities a key prior- ity, not only to regain China from its dependency on foreign supplies, but also to turn it into a leader in inno- vation, and sure enough China is gaining ground on its rivals in the tech realm. The country has achieved significant achievements during the past few years in this field, including its development in hyper- sonic missiles, human gene editing trials and quantum satellites. Of the many emerging technologies China is assisting in further develop- ing, artificial intelligence (AI) is per- haps the most significant for Beijing as well as its adversaries. What makes AI fundamental is that much like Aerospace technology or the in- ternet before it, AI will have applica- tions in the military and civilian life, and will likely revolutionize both. In the civilian world alone, AI has prac- tically unlimited uses. The technol- ogy already helps power smartphone applications such as visual and audio recognition software and digital per- sonal assistants. As global data collection rates con- tinue to grow exponentially, AI algo- rithms will inevitably have to take over processing and managing the glut of information. While research and development on AI continues, it will eventually work its way onto the battlefield in industries such as self- driving vehicles, autonomous tanks and perhaps even robotic soldiers. To gain an edge in the research and development of build technologies, China is looking to construct its own Silicon Valley. The Beijing govern- ment has pledged to turn the Pearl River Delta, also called the Greater Bay Area, which contains 11 cities in Southern China into a global hub for innovation and technology. The Pearl River Delta is already the coun- try's most economically dynamic re- gion containing the tech hub of Shenzhen, the financial center of Hong Kong and the leisure Hub of Macau. The initiative and the Pearl River Delta are part of China's over- all push to shift away from low-end manufacturing and build an econ- omy driven by consumption and in- novation, which is a necessity if the country is to escape the middle in- come trap. Moreover, the initiative is also going to bring together the two former European colonies of Hong Kong and Macau (now semi-au- tonomous territories) into closer eco- nomic integration with the rest of China. To turn the area into a Chinese Sili- con Valley, the cities and the Pearl River Delta must be integrated into one giant web of urban clusters -a megacity-, with mega infrastructures as well (as shown in the pic below) As these infrastructure projects get implemented, the Chinese govern- ment believes that in the next 15 years the cluster of cities and the Pearl River Delta will transform into a world-class region that would rival Western counterparts such as San Francisco and New York. Home to 70 million people, the Pearl River Delta has 10 times the popula- tion of the San Francisco Bay area and more than six times that of the New York Metropolitan area, but a much smaller GDP per capita of 1/5 and 1/4 respectively. All that will change by 2035 as the Chinese gov- ernment pours national resources into the Pearl River Delta and its tech sectors in order to achieve rapid growth. However, a place like Silicon Valley exists not only due to infrastructure. Innovation comes from people, and the attraction of a skilled, educated and talented workforce which re- quires an open and free environ- ment. One cannot simply construct a Silicon Valley, it must be nurtured. On that note, there are several crite-