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This chapter focuses on the country's telecommunications equipment manufacturing industries, and assesses the way industrial policy shaped them. It considers both Chinese and foreign-invested companies, as well as state-owned and private domestic corporations. It includes case studies of several key companies — such as Alcatel Shanghai Bell, Huawei, and ZTE — to see how well they have satisfied domestic needs, whether the companies have achieved technological advances, and how competitive they are in the international marketplace. The chapter uses some of the more traditional tools of assessing industries, taking into account sales profits and losses, and the impact of China's WTO entry on industries that have been both shielded from international competition, and benefited from foreign direct investment. It concludes that, overall, the government played a significant and positive role in shaping the industrial sector.

Chapter 2 examines the growth of technological capabilities in the telecommunications industry in China, with a focus on Huawei and ZTE. These companies grew rapidly by localizing the production of fixed-line telephone switches, which were earlier imported or produced by foreign joint venture (JV) companies. While the market used to be completely dominated by foreign products in the 1980s, four locally owned companies caught up with the foreign companies in market shares and became absolute leaders by the end of the 1990s. The catch-up can be explained by three factors, namely, (1) the famous Chinese strategy of technology transfer called “trading market for technology,” (2) the knowledge diffusion from the first foreign JV, Shanghai Bell, to the local R&D consortium and then to other locally owned companies including Huawei, and (3) the government’s explicit promotion measures.

Chapter 8 explores how Huawei was able to emerge as the leader in the telecommunications system sector, overtaking the incumbent Swedish giant Ericsson. It answers this question by focusing on whether a latecomer firm trying to catch up uses technologies similar to or different from those of the forerunners. The study investigated patents by Huawei and Ericsson and found that Huawei relied on Ericsson as a knowledge source in its early days but subsequently reduced this reliance and increased its self-citation ratio to become more independent. The results of mutual citations, common citations, and self-citations provided strong evidence that Huawei caught up with or overtook Ericsson by taking a different technological trajectory. Huawei developed its technologies by relying on more recent and scientific knowledge; in terms of citations to scientific articles and citation lags, Huawei extensively explored basic research and up-to-date technologies to accomplish its technological catch-up. This study suggests that leapfrogging by exploring a new technological path is a possible and viable catch-up strategy for a latecomer. Moreover, Huawei’s case re-confirms the hypothesis that catch-up in technological capabilities tends to precede that in market share. Huawei overtook Ericsson in terms of quantity and quality of patents before annual sales. In summary, the results suggest that Huawei’s catch-up with Ericsson in the telecommunications equipment market is owing not only to its cost advantage, the large domestic market, or the Chinese government’s support but also more importantly to its technological leapfrogging based on its technological strength and independence.

This chapter traces the evolution of mobile communications as a site of China’s “home-base” industrial strategy and, after the 2008 global economic crisis, as part of intensified geopolitical struggle in the techno-economic realm. This chapter, first, historicizes telecom development through successive network generations, starting from fixed-line networks to second-generation and then third-generation mobile networks. As the business ecosystem includes network-equipment production, handset production, and content development and distribution, this chapter, then, explores market-specific trajectories, dynamics, and challenges so as to make sense of varying state actions and the obstacles they faced under the general 3G developmental framework. Lastly, to underscore the state’s diluted interventionist capacity, the coda explores how the 3G mobile communications development has affected state strategies and competitive structures in the 4G era.

This chapter examines China’s large IT industry firms backed and even created by the state in its bid to create a Chinese equivalent of the very large firms in Japan and Korea. It argues that, with the exception of Huawei, these firms have proven to be technological paper tigers. These firms’ technological capacities suffocate in the warm embrace of the Chinese state financial system and have been unintentionally further undermined by the tremendous but nearly unconditional support through China’s state procurement system and other subsidies. The chapter focuses on two large subsectors of IT, personal computers and telecommunications equipment, and contains case studies of Lenovo and Huawei. The chapter argues that Huawei is the exception among China’s state-favored firms in escaping the blandishments of state favor to pursue international markets and upgrading.

Information warfare is part of the technology-based challenge by China and Russia to the post–World War II liberal order. Russia uses traditional and social media in a long-range, systematic, worldwide disinformation campaign to undermine Western democracies and alliances and the idea of objective truth. China seeks to dominate the technology, management, and policy of the future Internet through its competitive 5G technology, so as to surpass the United States politically and technologically. It exports the techno-authoritarian system of mass surveillance and artificial intelligence that it developed to control its Uyghur minority. Like a nuclear attack, a large-scale cyberattack could spiral out of control into a cyber-apocalypse in the absence of agreed guidelines. But to authoritarian governments, the free flow of information is also a form of cyberattack, complicating negotiations. It is critically important to develop internationally agreed norms for cyberwarfare, building on the Tallinn Manual and similar efforts. This will take time.

This chapter shows how much China caught up in the global innovation race, using international indices of innovation performance, and data on R&D expenditures, higher education, scientific outputs, and patents. Frameworks such as ‘windows of opportunity’ are used to explore how China catches up in innovation and is changing policies from importing innovation to developing ‘indigenous innovation’. The bottlenecks confronting China’s catch-up and leadership are examined using the case of semiconductors, Huawei, and 5G, and the chapter poses the question whether the country can overcome such bottlenecks in core technologies. To do so, it is argued that greater investment is needed in basic research, especially by enterprises.

One major flare-up between the Trump administration and China was the role of networking company Huawei, which has developed cutting-edge equipment in a number of areas, especially 5G mobile communications. However, Huawei’s CEO is a former People’s Liberation Army member, and is suspected by many to be acting in the interests of the Chinese government. This chapter describes this difficult situation, where there is little evidence that Huawei is acting in such a way directly, but such is the Beijing Paternal Internet that it will certainly have to align with government policy. Despite the quality of Huawei’s products, many Western governments have refused to use them, or have given in to American pressure, citing national security considerations. The Trump administration worked to push Huawei out of business, but it remains a key player in China’s Belt and Road Initiative and central to Chinese technology strategy.

The Internet of Things is created by giving Internet connections to objects embedded in the environment, including wearable items. When IoT devices are connected and coordinated in an urban environment, smart cities are created, which can allow control of the environment, for example to improve carbon emissions or traffic flow. Instrumentation of the environment creates problems of consent, privacy, security, safety, and trust. The status of the IoT with respect to Internet ideology is discussed. The Silicon Valley Open Internet supports citizen-centric development, but may lack coordination at scale. The DC Commercial Internet creates great power for platforms. The Brussels Bourgeois Internet values rights and privacy, which may suppress innovation. In China, India, and elsewhere, smart cities are seen as key to developing a paternal social vision under digital modernity. Given its key role in the IoT, this is where America’s battle against Huawei may be most consequential.