Recent unfolding trade disputes between China and the USA appears to be primarily targeted to China's re-innovation strategy spelled out in 'Made in China 2025'. But the genesis of introducing and absorbing the best of the foreign breed innovations, and re-innovating them by taking advantage of large domestic demand appears to have a far longer history. In 1978, the Chinese leader Deng Xiaoping was greatly impressed by Japan's high speed rail 'Shinkansen' (called Bullet Train in English), which was the first of its kind in the world. As opposed to commercial train service in China running at snail's space (average only 48 km/hour even in 1993), Shinkansen running at a speed of over 200 km/h was sufficient enough to impress the Chinese leader. Chinese "high-speed rail dream" was conceived after his visit to Japan. Policy planners then debated the necessity and economic viability of high-speed rail service. To deal with overcrowding on existing rail lines and highways through higher speed and more frequent railway services, Premier Li Peng announced in 1995 that preparatory work on the Beijing-Shanghai high-speed railway (HSR) would begin during the 9th Five Year Plan (1996-2000). But China's dream was expanded from just operating high-speed train through imports to innovating next generation higher speed trains. Within a span of mere 20 years, China has not only built the largest network of high-speed trains, but also, most importantly, has reached a position to claim that 'China's bullet train is better than Japan's Shinkansen'. After being impressed in 1978, China has now surprised Japan with the rapid acquisition of technological capability to re-innovate.
In recent times, China has achieved success in earning foreign currency by engaging in labour-intensive manufacturing trade. Like China, many other countries like Malaysia, Thailand, Bangladesh, Saudi Arabia and Indonesia have also earned foreign exchange by trading raw materials and labour. Many of these countries have opted to use that wealth for contracting out infrastructure development projects to foreign firms, and have chosen the option to operate and use them only. But unlike these countries, China carefully undertook re-innovation strategy to uplift its economy from labour and raw material-centric to a knowledge-based one. In addition to converting raw material and labour into wealth, China took the conscious decision of developing the economic capacity to absorb and generate knowledge, and convert it into new wealth through imitation, innovation, invention, and substitution. China looked into high-speed trains as the strategic opportunity for ascent in the technology value-chain over the past couple of decades. As a result, today, the country dominates the global railway market, particularly for high-speed train systems.
In the mid 90s, China started experimenting with high-speed train. A notable example is the Guangzhou-Shenzhen Railway, which in December 1994 became the first line in China to offer sub-high-speed service of 160 km/h by using domestically produced diesel locomotives. China continued its domestic R&D activities of high-speed train development, leading to a domestically made DJF2 train set with a record speed of 292.8 km/h on the track, in June 2002. The line supported commercial train service at speed of 200-250 km/h. Despite setting speed records on test tracks, domestically produced high-speed trains were insufficiently reliable for commercial operation. Although these experimentations of high-speed trains using domestically developed technology did not lead to commercial roll-out, but they provided the growth of internal capacity to digest and assimilate foreign technology-a precursor to re-innovation.
To benefit from foreign technologies, China purchased turnkey Maglev Trans-Rapid train system from Germany for the 30.5 km railway link connecting Shanghai's Pudong International Airport and the city itself. After adopting the technology, the Chinese raised the speed of this Maglev track to a record 431 km/hour, which was the highest in the world, thereby making the 30.5 km trip in less than 7.5 minutes. Due to the reluctance of Germany to transfer Maglev technology and the reliability issue of domestically developed high-speed demonstrations, China favoured Japan's Shinkansen technology, especially the 700 series. The Japanese government touted the 40-year track record of the Shinkansen and offered favourable financing. Due to political economy and other considerations, eventually China opted to offer contracts for building high-speed trains to Alstom of France, Siemens of Germany, Bombardier Transportation of Canada and a Japanese consortium led by Kawasaki.
It was not just about procuring advanced transportation technology from the world's best performers; rather achieving the indigenous high-speed rail technology had been a major goal of Chinese state planners. Japan's Shinkansen maker, Kawasaki's cooperation with China South Locomotive & Rolling Stock Corporation Limited (CSR) did not last so long. Within two years of collaboration with Kawasaki, CSR began in 2008 to build high-speed trains independently without assistance from Kawasaki. According to CSR president Zhang Chenghong, "CSR made the bold move of forming a systemic development platform for high-speed locomotives and further upgrading of its design and manufacturing technology. Later, we began to independently develop high-speed CRH trains with a maximum velocity of 300-350 kilometres per hour, which eventually rolled off the production line in December 2007."
As reported by Japan Times in 2011, within less than 6 years of partnerships with foreign technology providers, China claimed to have achieved superior high-speed train capability compared to Japan's Shinkansen. It was also reported that by that time, more than 1900 technologies used in China's high-speed railway were granted China's national patents, while the applications of 481 other technologies were under review. The report also mentioned about China's claim of domestically developed CRH2 train's performance. It was claimed that in many indicators, CRH2 was superior to Japan's Shinkansen, like 380 kmph speed was higher. After building the world longest high-speed train network in the domestic market, consisting of 25,000 km in total length as of 2017 - accounting for about two-thirds of the world's high-speed rail tracks in commercial service - China embarked on the pursuit to become a global player. To deal with intellectual property issues, it had also been reported that China had already filed high-speed train technology patents applications in at least 5 countries. As reported by Financial Times, when Japan lost out to China on a $5bn deal to export high-speed rail to Indonesia, the nation despaired at the rejection of its beloved Shinkansen. In just over 20 years, the re-innovation strategy has empowered China to become a globally competitive player in the $180 billion global railway industry.
Question may be asked: Did China infringe upon Japan's Shinkansen technology? This contentious issue could drag us into a lengthy debate. But Kawasaki Heavy Industries (KHI), the maker of Japan's legendary Shinkansen (bullet trains), backed down from suing CSR recently (as reported by Fortune) on intellectual property issue. With careful planning, China's success in imitations leading to innovating better bullet train within a span of just 20 years is commendable. Such success of China offers many lessons for other developing countries. Instead of just contracting out mega projects to foreign firms, developing countries should craft out smart strategies to acquire competence along with capacity to implement those projects. Such attainment of capability is vital to acquiring higher value productive competence to move up in the ladder of technological value chains for increasing per capita income and reaching higher income status.
M. Rokonuzzaman, PhD, is an academic, researcher and activist on Technology, Innovation and Policy.
