China and the US Competing for 'Tech Supremacy'? ... In Reality, Obsessed with Technology Purchases [Reading Science]

Heritage Foundation Report: "Recent Surge in China's Purchases of U.S. Intellectual Property"

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[Asia Economy Reporter Kim Bong-su] China invested about 60 trillion won in Tsinghua Unigroup and Wuhan Hongxin Semiconductor Manufacturing (HSMC) to achieve a 'semiconductor rise.' However, having failed to develop proper technology, these companies recently faced bankruptcy threats, and their founders were detained by authorities and are under investigation for corruption charges. Although China has 'voluntarily' engaged in a technological hegemony war with the United States, analyses suggest that it has actually failed to achieve technological independence and remains heavily dependent on advanced technologies from the US and Europe.

According to the Ministry of Science and ICT on the 20th, the US Heritage Foundation released a report last month analyzing China's dependence on US and European technologies, concluding as such. The report pointed out that although the Joe Biden administration views US-China competition as a technological rivalry, in reality, China heavily relies on US technology. For example, China's trade deficit in the electronics sector, including semiconductors, has significantly increased over the past 20 years. This indicates a high dependence on foreign products with high technological intensity. In fact, when the US recently tightened export controls to curb China, China quickly imported and stockpiled US semiconductor manufacturing equipment before the restrictions took effect.

In particular, in recent years, Chinese companies have been relentlessly spending huge sums to acquire advanced technologies from US companies. The amount spent by Chinese companies to obtain US intellectual property rights has more than tripled over the past decade. This is the highest in the Asia-Pacific region, surpassing South Korea and Japan.

Even after the US strengthened intellectual property license acquisition requirements in 2020 to counter China, China's purchases of US technology licenses have significantly increased. In 2020, China filed 3,747 license applications for US software and technology purchases, but last year this surged to 5,923 applications. The amount also skyrocketed from $106 billion (about 140 trillion won) to $545 billion (about 722 trillion won), more than a fivefold increase during the same period.

The level of licensed technology purchased by Chinese companies has also greatly increased. The payment per license rose from $28 million (about 3.7 billion won) in 2020 to $92 million (about 12.2 billion won) last year, and the average processing time increased by 19 days.

The report stated, "The Chinese leadership expected that massive budget investments would enable technological independence, but the expansion of government-led research and development (R&D) spending, including in state-owned enterprises, has not led to meaningful technological breakthroughs," adding, "Capital investment is only one of the important means for technological advancement, and the lack of regulations protecting intellectual property rights in China, along with the autocratic government operation, suppresses innovation in the private sector, indicating that factors for technological development beyond capital are weak."