What can the EU learn from Chinese innovation?

The European Union has a problem with innovation. Of the fifty largest global technology companies, only four are European. The sector that leads the European economy is not software, nor artificial intelligence, but the automotive industry. While the EU has stagnated technologically in recent decades, China has gone from being an economy that needed to absorb foreign innovation to being the power that leads in areas such as green technologies. Seeing this process of divergence, could the European Union learn something from China in technological innovation?The big challenge for the EU is how to create large technology companies. Many startups and SMEs flourish on the European continent. But when they want to scale up and become giants, they encounter several barriers. Often the problem is financing: many nascent European companies move to the United States to grow, as there is a strong venture capital market there. The EU believes, in this regard, that it should develop a strong private venture capital in the American style to be able to compete in the league of the big ones.In other countries, however, the state has played the central innovative role. In China, the national government and local governments have created public venture capital entities to finance risky, cutting-edge, and ambitious technological projects – those that tend to generate reluctance in the private sector. In South Korea or Japan, governments have also played a similar role. The state has positioned itself not only as a financier but as the first buyer and user of emerging technologies, acting as a driving force. It has also played the role of bringing together the technological and military sectors, co-financing dual-use civil-military technologies.Large-scale bets

In China –but also in the United States– there is a cult of large scale that generates discomfort in Europe. We often prefer small businesses over giant ones. In the technological world, however, scale is decisive: as China does, the EU should focus its investment on large innovative projects, with a high level of risk, disruption, and technological advancement. Perhaps many of them will fail. But to create large European giants we must be willing to play a long-term game, where the stakes, the risks, and the profits are on a large scale.On the other hand, the EU should increase its commercial soul. The European continent has good results in research. The problem we usually have is when we want to bring university innovation to the market. The Chinese are experts in this: for decades, they have been able to take technologies created by others, incorporate slight improvements, mass-produce them, and bring them to market at competitive prices. In fields like quantum and industrial AI applications, perhaps Europe would still have opportunities to create a market for itself.Finally, the EU must commit to science and technology with strategies spanning decades, in the long term, while maintaining sufficient flexibility and iteration in the face of technological changes. Again: countries like China, Japan, or Korea are examples of positive strategies. We do not need to be a Communist Party regime or an economic giant to apply the positive lessons that have worked in China.