Manufacturing Innovation

ABSTRACT

(ProQuest ... denotes non-USASCII text omitted.) The annual Global Innovation Index released in September 2021 ranked China twelfth, surpassing developed economies such as Japan, Israel, and Canada and raising fears in the United States amidst sluggish growth in North America and strong growth in the Asia Pacific region.1 Interestingly, the United States government responded by boycotting the Beijing Olympic Games, citing human rights abuses as the main reason.2 A tech war between China and the United States brewed beneath the diplomatic rancor over the attendance at the Olympic Games. Part I documents how the United States has assisted China's tech and intellectual property domination through President Nixon's historic visit to China, giving China Most Favorite Nation (MFN) status and ascending China to the World Trade Organization (WTO). [...]under Deng Xiaoping's leadership during the reform period, China rapidly developed its special economic zones (SEZs), laying the foundation for subsequent tech innovation and production. [...]broadcasting, telecommunications, office machines, computers, integrated circuits, and cell phones are among China's notable exports to the world.9 China dominates in commodities and raw materials, exporting refined petroleum, cotton, plywood, and tea.10 For agricultural products, China occupies the perch as the world's largest producer. Shenzhen rose as the largest among the four.18 Shenzhen, a small fishing locale in the southern part of China's southern province, Guangdong, served as the pioneer of Deng Xiaoping's embrace of economic reforms.19 A market-oriented economy took root in Shenzhen, allowing foreign companies and entities from Hong Kong and Macau to operate and allowing Chinese talents the freedom to leave their hometowns and move into the SEZs.20 Cheap labor proved to be another significant factor facilitating China's rise as a global manufacturer.21 In the 1980s, multinational corporations from Taiwan, Japan, and South Korea, as well as domestic Chinese companies, opened their factories in the SEZs and other cities in China to take advantage of the cheap and plentiful labor force.22 Indeed, when Deng Xiaoping began his pilot SEZs, China's young workers who wished to lift themselves out of poverty descended into the economic zones in search of better opportunities.23 Shenzhen grew from a population of 59,000 in 1980 to a population of 12,357,000 in 2020.24 The new migrants became the workers, participants, and stakeholders in the global manufacturing frontier.25 Because of the abundance of cheap labor, manufacturers in China have no difficulty keeping production prices low and pleasing consumers and businesses worldwide.26 China's currency manipulation is another factor propelling China to its domination in global manufacturing.27 The United States Congress attempted numerous times to introduce legislation to combat China's currency manipulation.28 China artificially devalued its currency through government control of the exchange rate and refused to let the Chinese Renminbi (RMB) float.29 Despite strong criticisms from the United States, China refuses to allow its currency to freely float.30 China's currency manipulations, according to critics, caused the widening of trade deficits between the United States and China.31 China's currency manipulation allows products to be manufactured at lower prices, hampering competitors and thereafter replacing them.32 In order to cope with China's currency practices, United States manufacturers facing their own existential crises must decide to either outsource jobs overseas or face large risks, including financial ruin.33 The United States lost millions of manufacturing jobs due to massive job outsourcing as the trade deficits between the United States and China continued to persist.34 Geopolitically, in shaping post-Cold-War powers, the United States decided to assist China in its transformation from a poverty-stricken country to a global manufacturer.