The city’s innovation ecosystem: how China is making a big impact on the new energy vehicle sector – a key challenge facing the United States
China’s growth in new energy vehicle (NEV) production — a key goal of MIC2025 — shows how rapidly the country can dominate a market. By next year, China aims to have domestically produced NEVs (a category that includes any electrified vehicle, including hybrid, battery-electric and hydrogen fuel-cell vehicles) account for more than 80% of the domestic market. It wants NEV manufacturers to manufacture all of their components in-house. Few cities have responded to this challenge quite like Hefei. The city’s government has established innovation platforms and incubators, such as the Hefei Innovation Industrial Park and the Hefei NEV Innovation Center, which provide funding support to start-ups companies to help them break into the market. The government’s policies also encourage collaboration between enterprises and universities or research institutes. The University of Science and Technology of China, one of the city’s leading universities, has played a pivotal role in transforming scientific achievements into technological innovations. “It’s a city-centred, regional-based innovation ecosystem,” she says.
The United States launched a trade war against China in the form of increased tariffs, sanctions and artificial incentives due to the policy’s emphasis on self-reliant and elevating China to a better position in the global technology market. Such restrictions could make it difficult for China to meet its MIC2025 targets in areas of relative weakness, including semiconductors, high-precision machinery and new materials, says Marina Zhang, an innovation researcher who specializes in China at the University of Technology Sydney, Australia. Some researchers also worry that China’s focus on areas that align with the government’s priorities might stifle creativity among scientists.
China is the leading source of new electric cars in the world and the situation in the region is threatening to undermine its success. The US imposed a 100% tariffs on Chinese Electric Vehicle imports, which was closely followed by a 37.6% tariffs by the European Union, raising concern that China had an overcapacity in the space.
MIC2025 is pushing for renewable energy equipment and energy-storage devices to make up a majority of the Chinese market. Rapid progress has been made in photovoltaic solar cell production, in particular. At the time of MIC2025’s launch, China relied on other countries for key materials and essential components of photovoltaic cells. Today, it’s responsible for 80% of the world’s solar cell exports and hosts the 10 leading suppliers of solar-cell manufacturing equipment globally. The world’s largest solar farm is located in China and is called the Urumqi Solar Farm. A small country can survive on just one year’s worth of power thanks to the large amount of panels at the facility.
Beijing, Beijing, Zhejiang, and Chengdu are the top players in the field of bio-medical research. A popular destination for both local and international scientists, Shanghai has more than 3,000 life-science companies that employ at least 270,000 people, according to LEK research. One-quarter of China’s life-sciences and medicine researchers work in Shanghai, which in 2022 invested $15 billion in R&D. The ingredients for Shanghai’s success are a mix of infrastructure and financial incentives from the local commerce bureau, says Chen, including free lease of land for companies, tax rebates for international talent and support for equipment purchase. Zhangjiang Science City, an area of Shanghai that covers almost 100 square kilometres, hosts more than 400 biomedicine companies, 100 R&D institutes and 40 contract research organizations and is the site of the regional headquarters of several of the world’s leading pharmaceutical companies, including Pfizer, AstraZeneca and Roche.
Restructuring incentives will have to be used to encourage both science and innovation if we are to find a balance between scientific breakthrough and innovation. This would involve developing more clear-cut definitions for intellectual-property ownership in academic–industry partnerships
Regional investment can be used to spark economic growth in times of instability. As the global financial crisis hit China around 2008, the country invested heavily in infrastructure such as the high-speed rail network that now crisscrosses the country. The country has decided to invest in science and technology in order to create new forms of urban development, as China is currently experiencing another bout of economic indigestion. China has a two-tiered economy with coastal provinces getting richer than interior provinces, so balancing the country’s wealth is very important to keep it from reverting to the kind of populism that is happening in western societies. China is aware of the political problems that can be caused by class and regional inequality, and assigning key industries of the future like green energy or electric cars to different cities and provinces, science funding becomes a tool of social equality and stability.
