The Banking Executive - Decemebr 2021, Issue 156

China’s Silicon Valley ria for a Silicon Valley to emerge and flourish such as distance, funding, political freedom and education. The first is distance: Being far from a country's power centers, both politi- cal and financial, allows thoughts and ideas to develop freely. This is why Silicon Valley sits on the oppo- site side of America far away from both Washington and New York. Going by this criterion, the Pearl River Delta is remote enough to function independently. The city of Shenzhen is almost 2,000 kilometers from the political hub of Beijing and over 1,200 kilometers away from the financial Capital Shanghai. That dis- tance has played a part in the success story of Shenzhen, which has pro- duced many startups that have gone on to become successful tech power houses, including Huawei, Tencent and DJI. The second criterion is to having enough investors: investors must be able and willing to assume risks. In the United States in 2019, the ven- ture industry deployed over 136 bil- lion dollars in American based companies. No other nation comes even remotely close to that figure. Even when measuring the Venture Capital Investments per capita, the United States America hits $282 while China sits at $20. So to keep pace, Beijing must employ its hybrid model of capitalism to stimulate in- vestment, growth and competition. The way the Chinese system works is that the government outlines areas of priority and then provides state owned businesses with incentives to encourage competition. This is the reason why Baidu, Tencent, and Al- ibaba compete with one another to push the boundaries in AI, Auto Tech, biotech and other relevant fields. Based on the above criterion, China seems to be doing sufficiently well with its funding schemes. The third criterion is the ability to vi- sualize the future that the technology might bring. When envisioning things that are outside our everyday experiences, there is little that can be expressed with words. Visual input is necessary to trigger the imagination. To promote a Silicon Valley on the public consciousness, China needs a cultural Hub in the proximity of the Pearl River Delta. That's why Holly- wood and Silicon Valley sit near each other and maintain close links. Beijing needs to replicate that rela- tionship. The progress here is mixed; Chinese films are performing de- cently on the domestic box office but find little global success, that said, Chinese video games and particu- larly mobile games are embraced around the world. The fourth and fifth criteria are more serious, and are related to freedom of speech and the quality of universi- ties. Here, China falls behind. This has had a bad effect on the quality of scientific output; despite a popula- tion of 1.4 billion. By these measurements, China still has a long way to go if it is serious about nurturing a sustainable Silicon Valley of its own. Nevertheless, Bei- jing also has crucial advantages that might help in the long term. The de- mographics size of the nation could make it an even match for the United States in terms of developing and adapting emerging technologies. Given that the country's population is almost 1.4 billion and that data pri- vacy is a low priority for Beijing, China offers its AI companies a tremendous benefit over their Amer- ican counterparts by giving them ac- cess to a massive pool of data. No other country provides its tech indus- try with such an advantage. In light of this, China is advanced enough in its tech industry which could give Silicon Valley a run for its money in terms of market share, but this re- quires certain measures on several fronts to enhance innovations in the tech industry. the BANKING EXECUTIVE 10 ISSUE 156 DECEMBER 2021