The available studies are based on data from at least two years old and likely underestimate how quickly China is leaping into the developed world as a technological powerhouse. It has more than tripled research and development over the past decade for 440 billion dollars per year, more than in all of Europe. Today, nine of the world’s 20 largest internet companies are Chinese (with 10 from the United States and one from Canada).
The explosive growth of online banking is helping fuel a 20% annual growth in consumer lending and lagging behind from export manufacturing to domestic consumption as the main engine of economic growth. Created in 2015, Alibaba’s MYbank has grown loans to 16 million customers, including “3-1-0” microloans which require three minutes to apply, one second to approve and no human involved.
Automation kills jobs. In the Hema grocery stores, owned by Alibaba, little white robots work at the lunch counter instead of the waiters. Gym customers follow the steps on a giant video screen integrated into the floor, no trainer required. Shenzhen residents claim that the criminals were driven from the streets by surveillance cameras.
Yet overall, technology is probably creating more professions than it destroys. A recent International Monetary Fund document estimates that after subtracting the jobs it sheds, digitization accounts for up to half of total job growth. Alibaba platforms alone are home to millions of small businesses, which over the past decade have created 30 million jobs – more than what China has lost in heavy industry.
China’s technological revolution was made possible by two of the forces that were to slow down the economy. The population may be aging, but it still provides a large market in which tech start-ups can thrive. And although growth normally slows down when countries reach middle class income, in China the new middle class provides the main customers for new mobile internet services.
No other country has this combination. India has the people, not the income. Brazil has the income, not the people. And these democratic societies are also much more wary of government surveillance than China. Witness the widespread controversy over the deployment of biometric identifiers in India.
In China, at least outside of Xinjiang, relatively moderate concern over personal data has helped fuel the boom in digital payments and e-commerce. China is by far the world’s largest e-commerce market, and fleets of motorcycles painted in the colors of online delivery companies park five to six rows outside malls and office towers.