Why China must be more tolerant of risks in fostering innovation
- Israel’s embrace of ‘balagan’ or chaos has boosted the nation’s tech prowess, but China considers its equivalent ‘luan’ a risk that must be avoided at all costs
- China’s aversion to risk in fields like generative AI and proposed regulations on reviewing apps are likely to dampen the nation’s innovative spirit
China’s traditional growth model of relying on labour and capital is fast running out of steam. The time has come for the world’s second-largest economy to rely heavily on innovation to extricate itself from a tight spot and reenergise its economy.
But whether China can turn itself into a truly innovative country is up for debate. Few can doubt China’s seriousness in fostering innovation; just look at Beijing’s generous outlay for technological research. But it seems there’s still something missing to turn China into a land of innovators and entrepreneurs. If anything, there are signs the spark of innovation has dimmed a little over the past few years.
Israel is often praised as a land of innovation. Inbal Arieli, the author of Chutzpah: Why Israel Is a Hub of Innovation and Entrepreneurship, articulated the cultural factors behind the vibrant entrepreneurial ecosystem in the nation of 9.4 million people. In a speech to Hong Kong University’s business school last week, Arieli attributed Israel’s success not to its military prowess but to children’s playgrounds, where there are no restrictions and kids are free to express themselves.
The absence of specific instructions on how to have fun, for example, on a slide tacitly encourages kids to face uncertainties and to unleash their creativity, according to Arieli. The embrace of “balagan”, the Hebrew word for chaos and mess, is a key ingredient for innovation, she added.
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While the Israeli lawyer-turned-speaker was not explicitly talking about China, it provides some food for thought in China’s context. The Chinese state, apparently, considers chaos, or luan in Chinese, as something bad that has to be avoided at all cost. It focuses all its efforts to exert control over the process, and consequently, on innovation.
For instance, in the field of generative artificial intelligence (AI), China certainly does not lack investors and talent who are willing to bet big on the technology following the popularity of OpenAI’s ChatGPT.
Big and small tech start-ups alike have rushed to invest in ChatGPT-style services, but in terms of consumer use, China lags far behind because Chinese regulators have not “approved” any ChatGPT-like functions for its 1 billion internet users to access.
In March, Baidu unveiled Ernie Bot, its answer to ChatGPT, sparking a frenzy for the internet giant’s stock in Hong Kong. Fast forward five months to August, founder Robin Li Yanhong informed investors that the company is still awaiting regulatory greenlight before its chatbot can be made available to the general public.
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China has not released any details about the review process. However, according to published regulations, Beijing wants to ensure that AI-generated content complies with the country’s rigid censorship regulations. Confusion, chaos and uncertainty, as is China’s wont, will not be tolerated.
The state’s aversion to risk is likely to ensure AI technologies are applied gradually, methodically and safely, but it will inevitably slow down progress and discourage potential investors and innovators.
Another example of China’s rigidity is the proposed regulation of reviewing apps before they are released on app stores. While the proposal from the information technology ministry shows how China is trying to ensure the safety and reliability of apps for users, it also adds unnecessary compliance risks for independent app developers in the country.
A country’s innovation ability is a result of multiple factors, but the root of the problem is cultural. Any new idea, product or process tends to be disruptive, and it has to be accepted in a tolerant environment so that it can be built into something bigger and better.
Joseph Needham, a British historian and sinologist, had looked into the question of why ancient China, which led the way with many inventions and innovations, fell behind on science after the 16th century. One explanation is that the Chinese state had become less tolerant towards disruptions brought by new technologies.
In this era of AI and big data, that lesson is still relevant today. China’s unrelenting control as gatekeeper must not backfire and suppress its innovative spirit.
