China lacks the technology industry to lead the world in global high-value exports. To strengthen its position, Beijing will have to double down on intellectual property theft, and America will be the primary target.
I note this in light of President Xi Jinping’s trip to Shenzhen on Wednesday. Celebrating the 40th anniversary of the Shenzhen Special Economic Zone, Xi called on the city’s residents to redouble their commitment to innovation. Just outside of Hong Kong, Shenzhen now represents Xi’s best hope for an innovation revolution. The need for that innovation is critical for two reasons. First, because the United States is now denying China access to high technology software and hardware. Second, because Hong Kong’s continued political instability means that the former British colony is likely to play a declining role in China’s “socialism with Chinese characteristics” economy.
