Independent Think Tank - China Market Reform Initiative

Unirule Highlights
About Us
Biweekly Symposium
Support Us
Contact Us

You are here:Home>Unirule Highlights

The rule of law is the core technology
 Author:Sheng Hong  
Time:2019-04-19 18:32:29   Clicks:


The US allegations against Meng Wanzhou and the entire HuaweiCompany are a major blow to Huawei. But its nature should not be exaggerated.For example, some people say that this is a "technical war" betweenChina and the United States. Because Americans do not want to see China'shigh-tech surpassing the United States, it is against China's most successfulhigh-tech enterprise, Huawei. If you think about it, if all these"crimes" of Huawei are established, the most serious consequence isthat the sale of Huawei products is prohibited in the United States and some ofits allies, but it does not prevent Huawei from being in China - this is theworld's largest market, and others, to sells products. If you say that thisbreaks the path of Huawei's research and development, it is even more bizarre.Is Huawei's technology really stolen from the United States? Can it be aworld-leading company by "stealing"? Conversely, if the purpose ofthe Americans is to suppress China's high-tech development by suppressing Huawei,it seems to be very It is ridiculous. This is to assume that Americans alsobelieve that by stealing technology, they can become the world's leadingtechnology power. If the Americans really think so, there will be no Americantechnology today; if the Chinese think that the Americans think so, then Chinahas indeed no hope to catch up.


The development of science and technology is not based on stealing,which is very clear. Because stealing always has something to steal, it isoriginal. So original things are better than stealing things, and the way tocreate original things is better than that of stealing. The reason why originalscience and technology can develop rely on the environment for growing. Thismainly refers to the institutional environment. For a society, this includesuniversities and research institutions for free discussion, fair debate andopen communication, including the sharing and dissemination of publicknowledge, as well as the intellectual property system. For an enterprise, itis in this institutional environment to establish a R&D team, which iscalled "going concern" by Commons. For this concept, I said in anarticle entitled "Intel's Success and Operational Institutions","It seems to be more appropriate to use it to describe a steady stream of'production' knowledge.... The production of knowledge is a dynamic traditionis like a river that stays up all night and flows. It must exist for a longtime, and there will be enough opportunities to try and error; it must have atradition of accumulation, in exchange for the fruits of knowledge by the costof trial and error, and avoid the try and error from scratch again; it must beopen to the future, and there will be constant innovation."


If the team that produces knowledge and its mechanism is a bigriver, "relative to this constantly flowing tradition, any so-calledknowledge product, whether it is academic writing, drug formulation, softwaresource code, or computer microprocessor, is nothing but like a freezed crosssection of the river; any individual with innovative ability is just a wave inthe river; and the production process of knowledge is just a by-product of theexistence of the river, much like a ditch excavated by a large river. "So,the true technological ability or source of innovation is this "in-serviceorganization", and the knowledge products that have been formed areactually only the most end of this technological capability. If you stealtechnology, you can only steal the last thing, but you can't steal the"running organization" and its scientific research capabilities. Thiswill not only form your own R&D team and its mechanism, but it will neverbe able to go ahead. Because it is inevitable that it can be stolen, it isalready outdated. The individuals in this team are not that important. Even thebest people, if they leave the team and the mechanism, lack the knowledge tocomplement and promote them, and the probability of success will decrease.


Therefore, between enterprises and between countries, the competitionof science and technology ultimately depends on institutional competition. Inthis case, the most important thing for a company or country is to refine itsinternal strength, that is, the establishment and improvement of owninstitutional environment and of scientific research organizations. In thisway, external pressure is not worth mentioning. The question is, is Huawei acompany like this? Is China such a country? If so, the US government said thatHuawei and other Chinese companies are mainly relying on stealing technology todevelop it. Is it not a dirty lie? It should be said that the problem is morecomplicated. Since the reform and opening up, China has been fully open in thefields of thought, scholarship and culture. It has established a system ofuniversity and scientific research institutions that have exempted frompolitical interference, and has gradually established an intellectual propertysystem. This provides a preliminary institutional framework for China'sknowledge "production", including public knowledge andsystem-protected knowledge, and is also the main cause of China's science andtechnology development. In 2017, the number of patent applications in Chinaranked first in the world, accounting for 40% of the world. Huawei is developingin such a big environment. That year, its number of invention patentsauthorized was second in China, reaching 3,293.What is superior to otherChinese companies is that Huawei has created its own excellent R&D team. Itis a “going concern” with its own rules, traditions and people, so that newtechnologies can flow out continually.


However, while the new institutional framework for knowledge“production” was formed, the old system of our country did not withdraw. Itredistributes the wealth that flows out of the market through financial means,and transfers a large amount of funds that have been used in the market tonon-marketized uses. This is the distribution system of scientific researchfunds in China. Originally, basic research produced public knowledge andrequired a certain degree of funding from the state. Countries around the worldhave similar mechanisms. European countries established the National Academy ofSciences in the 17th and 18th centuries, and now countries such as the UnitedStates also have National Science Foundations. Then there is the applicationresearch with strong externalities, and sometimes it needs state funding. Forexample, the British Parliament has offered a reward for determining thelongitude technology. The Internet is also developed on the basis of the USmilitary network. The problem is that China's distribution system of scientificresearch fund  is not onlyultra-large-scale, with more than 800 billion yuan per year (compared to about200 billion yuan in the United States); and the direction is wrong, China'snational research fund uses only 11.6% for basic research (2017, According tothe Ministry of Science and Technology data estimates), while 90% of theNational Science Foundation of the US federal government is used in basicresearch.


Even the part used in basic research has a relatively low efficiencyin input and output because there is no good identification and evaluationmechanism. Because the distribution of such huge amounts of money is not basedon academic rules, market rules or intellectual property systems, but on thedistribution rules of administrative agencies. The procedure is that the fundis applied by various research organizations or personnel and is determined bythe judging committee. Due to the lack of constraint on power of theauthorities in charge of the fund, the judging committees are mostlyfurnishings, and the competing research organizations and personnel do not relysolely on the superiority of their own research projects to obtain funds, butmore to rely on their own resources in the officialdom. Prof. Rao Yi of PekingUniversity and Professor Shi Yigong of Tsinghua University criticized that“doing good research is not as important as having good relationship withofficials and experts they appreciate”. Some researchers have analyzed thescientific research situation of colleges and universities in China, and theconclusion is that, overall, “the scientific research performance of collegesand universities is not ideal, only 38.7% of the regions have reached the beststate, and most of the rest are in the stage of diminishing returns.” (ZhongJie, Chen Jingwei, “Empirical Research on the Output Efficiency of UniversityScientific Research Inputs”, China Science and Technology Resources Guide,January 2016).


On the surface, the number of papers in China in 2016 has surpassedthat of the United States, ranking first in the world. But Professor Shi Yigongwarned that there are too many "garbage" papers in China. The reasonis that China's scientific research system relies on government funds and usesquantitative indicators as evaluation criteria. As Professor Steven Cheungproposed "the law of fulfillment", when the unit of measurement ofthe price is determined, the seller will try to fulfill the requirements of theunit of measurement, ignoring other aspects. For example, if the diamond ispriced only in carats, the seller will not pay attention to color, cut, andflaws. If you only use the number of papers as the standard of hero, there isdefinitely a problem with quality. The evaluation system can of course befurther evaluated by the “impact factor” of the publication, but this is justanother “pricing standard” and a new round of “law of fulfillment” effect willemerge. Not only can a large number of academic journals in China be able tocite each other to improve the “impact factor”, but it will also damageinternational journals. Since publishing a paper in an international academicjournal is an evaluation criterion, it can bring bonuses as well as job titleevaluation, as well as research funds. The idea of playing internationaljournals is a natural result.


Mu Yunqiu and Jiang Xiaoyuan pointed out that the trend of"open access" in academic journals that has emerged in recent yearsis essentially a benefit of academics. Although it cannot be completely denied,it is combined with China's scientific research system, but it has formed acycle of "willing of both." Under this trend, international journalssuch as Nature, Scientific Data, Science Report, Lancet and Cell have alsocreated “Open Access” sub-publishes to absorb silver of low-quality papers canbe as high as $5,000 each. The biggest source of funding is China. It isestimated that “Chinese authors published a total of 69,051 open access papersin 2017, ... the total cost of contribution is about 760 million yuan.” Theypointed out that the proportion of Chinese papers in the notorious TunorBiology is as high as 65.5%. Oncotarget is as high as 80.3%, and theInternational Journal of Clinical and Experimental Medicine has reached anastonishing 95.3%. It is simply a US journal tailored for Chineseauthors!" ("Science Publishing Utopia: From Open Access to PredatoryJournals (Second), "Reading", No. 10, 2018)


If the national research fund for basic research is not ideal, thenit will be even worse for commercial purposes. This is because basic researchhas theoretical ambiguity and uncertainty, and it is difficult to judge theadvantages or disadvantages of scientific research. Commercial research has aclear purpose, and it is easy to evaluate from the market point of view.However, if it is distributed mainly with power and relationship, it willdeviate more from the optimal configuration. According to the National Bureauof Statistics, in 2017, the government research funds of China's scientificresearch institutions were about 202.6 billion yuan, accounting for 83% of alltheir expenditures; the government research funding of universities was about80.5 billion, accounting for 63%.Due to a large part of government funds, 82%of research institutions and 33% of universities are used for applied researchand product testing, but adopt a attitude toward basic research, that is, nopractical effect, resulting in people after the publication of a paper orpatent application. , no longer care; and because of the lack of marketlinkages between scientific research institutions and enterprises, a largenumber of scientific research results are more hidden behind the surface of theresults, and cannot enter the enterprise and the market. Therefore, the problemof transformation of results has always been a difficult problem for scientificresearch institutions within the system of China. According to the “ChinaPatent Investigation Report 2017” issued by the State Intellectual PropertyOffice, the patent application rate of scientific research institutions inChina is about 35.4%, and the ratio of colleges and universities is only 22.6%.


Enterprises are directly facing the market, and should rely more onthe intellectual property system. In this respect, the performance ofstate-owned enterprises is far less than that of private enterprises. In 2016,although the original value of fixed assets of state-owned and state holdingindustrial enterprises accounted for 45% of all industrial enterprises abovedesignated size, the human resources and funds invested in research anddevelopment accounted for only 7.4% and 2.6% respectively. What is even moreshocking is that in the context of the growing R&D investment of mostChinese companies, the R&D investment of state-owned enterprises has beensignificantly reduced year by year. From 2011 to 2017, the manpower inputdecreased from 148,871 person-times to 55,692 person-years (see chart below);R&D expenditure decreased from 467,934,400 yuan to 213,367,000 yuan. Thereason that can be guessed is that, first, state-owned enterprises rely more onthe research and development of state-owned scientific research institutions.Second, state-owned enterprises have no incentive to research and develop. Inother words, state-owned enterprises do not rely on the intellectual propertysystem and market. According to the National Bureau of Statistics, in 2016,state-owned enterprises only accounted for 3% of all valid patents. That is tosay, non-state-owned enterprises are the main force in using the intellectualproperty system. In 2017, the turnover of China's technology market was 1342.4billion yuan. The funds from the market far exceeded the funds from thegovernment. According to the above ratio, these funds mainly support theresearch and development of non-state-owned enterprises.



But this does not mean that state-owned enterprises are moresuitable to use government funds. In an article entitled “Does governmentsubsidies promote the improvement of corporate patent quality?”, the authorconcludes that “government subsidies have a significant role in promoting thequality of private enterprise patents” but “failed to effectively upgrade thequality of the patent of state-owned enterprises, on the contrary, has acertain inhibitory effect." This is because “state-owned enterprises andthe government have a natural connection”. Because “the government controls thepricing and distributing power of key elements such as land, capital, labor,etc., state-owned enterprises are more inclined to choose to establishrent-seeking links with the government to obtain excess profits. Orrent-seeking income." The authors also found that “in areas whereintellectual property protection is more perfect, government subsidies have amore significant effect on the improvement of corporate patent quality; on thecontrary, in areas where intellectual property protection is less perfect,government subsidies have an inhibitory effect on corporate patent quality”(Kang Zhiyong, Science Research, No. 1 of 2018).This conclusion can also beapplied to different types of businesses. Compared with private enterprises,state-owned enterprises are less dependent on the intellectual property system,and there is also no incentive mechanism for technological innovation withinthem. A large number of inventions are regarded as service inventions, and onlya small number of rewards are given.


This seems to be different from people's impressions. Isn't there alot of state-owned enterprises that have created leading technology?State-owned enterprises have an advantage, that is, monopoly power to thedomestic market. When foreign companies want to enter the Chinese market, thesemonopolistic state-owned enterprises use the huge domestic market as abargaining chip to force foreign companies to submit. The key is that when theyacquired foreign technology at low prices, they claimed that this was a technologyof “independent innovation”. One of the most typical examples is high-speedrail technology. On the Internet in China, it is full of words that"high-speed rail is China's independent innovation technology", butan article entitled "On the promotion in independent innovation of China'shigh-speed rail technology by government procurement  " said, "the railway departmentrepresents the government as the procurement entity. China's huge railway equipmentprocurement market and railway sector are the largest and most powerful singleconsumers in the domestic market. These factors have strong attractions andcompetition to Western companies such as Siemens, Bombardier and Alstom","finally led to the introduction of advanced high-speed rail technology ata lower price" (Xu Wei, Pan Lei, "Kehai Story Expo Science andEducation Forum", 2011).Among them, “single consumer” "introducingadvanced technology" seems to have explained the issue.


It can be argued that the claim that a certain imported technology isChina's independent innovation technology is the greed of the relevantadministrative departments or state-owned enterprises in the absence ofinnovative capabilities. According to industry insiders, in the presence ofnational leaders and foreign experts (he can't understand Chinese)the former railway minister LiuZhijun announced that China's high-speed rail technology is independentinnovation .However, after Liu Zhijuns fall, there was a controversy over his approach. Regardless of thepros and cons, it is acknowledged that the high-speed rail technology wasintroduced from Germany, France, Japan and other countries, but the pro-Liufaction affirmed his introduction, while the anti-Liu faction slammed him forsuppressing domestic independent research and development for the purpose ofintroduction. Pro-Liu faction said, "In order to obtain more orders,Japanese, French, Germans and Canadians are competing to push pricesdown."The price is lower and lower." "After three years, theMinistry of Railways bids for  trainswith true speed of 350 kilometers per hour, the price quoted by Siemens ischeaper than the 250-kilometer train three years ago, and promised to sell thewhole vehicle manufacturing technology for 80 million euros, so that Liu Zhijuncan announce 'having independent intellectual property rights' to themedia." (Kato Kato, "How does Liu Zhijun succeeded a high-speedrailway in China?") If we understand the institutional background ofstate-owned enterprises in technological innovation, know that they can neithereffectively use the intellectual property system nor even effectively usegovernment subsidies. The probability of introducing technology called“independent innovation” is great.


If the above discussion is correct, we can know that the developmentof science and technology in China over the past few decades has mainly reliedon the promotion of private enterprises in the context of the intellectualproperty system and the market system; and the technological Innovation of thestate-owned sector in our impression is more likely to be the result of“low-cost introduction of foreign technology” + “propaganda for independentinnovation”. The reason why they do this is to maintain the traditionalscientific research system. It consumes more than 800 billion yuan of nationalfinancial resources each year. The actual effect is very poor, but it is thecake of interest groups. Although this phenomenon has been noticed by thescientific and technological circles and the government, and it is said thatthe national research fund is like "Tang Seng meat", there have beensome minor reforms, but this system still stands, perhaps the result of suchfalse propaganda. However, although this has deceived society and the peoplefor quite a long time, it happened to give foreigners a strong impression thatChina’s technological development mainly relies on government subsidies anduses the Chinese market as a bait to force foreign companies to transfertechnology at low prices. Take a look, this is one reason why the United Statescomplains about China’s “unfair trade”.


However, the issues of the intellectual property rights andgovernment subsidies presented by the Sino-US trade war can make us think aboutwhat is the problem of the government-led research system. In short, that isthat it needs the result without the process, the end product without themother machine, and the short-term visible results without long-terminstitutional basis. Under this dominant concept, apart from the achievementsbased on statistics and self-propaganda, China will never be able to advance tothe forefront of science and technology; on the contrary, it will be criticizedby other countries on the basis of misunderstanding. The solution is to reversethe concept of putting the cart before the horse. This is a traditional Chineseview. There is an old saying in China that "it is better to teach fishingthan to give a fish." This sentence can also be said in reverse. "Itis better to learn fishing than to eat a fish." Fish is only the result offishing, and intellectual property is only the result of the institutionalstructure that makes it. Broadly speaking, this "institutionalstructure" is the rule of law. Why? Because it provides all theinstitutional conditions for knowledge production and intellectual property.Such as personal freedom, freedom of expression, freedom of communication,property security, judicial justice, academic tolerance, open information, freeenterprise operation and intellectual property protection.


The most characteristic of the "all institutionalconditions" of the rule of law is that it has nothing to do with anyparticular purpose, and it is naturally seems that it is not directly relatedto technological innovation. However, this is the biggest advantage of it. AsHayek said, the core of the rule of law is a set of “rules of just conduct”.One of the conditions for the working of this set of rules is that it does nottarget any specific purpose, so it is abstract, universal, and generally fair, andcan also become an environment of environment for technological innovation .Hesaid, "The 'values' which the rules of just conduct serve will thus not beparticular but abstract features of an existing factual order which men willwish to enhance because they have found them to be conditions of the effective pursuit of a multiplicity ofvarious, divergent, and unpredictable purposes.” It is precisely because ofthis characteristic that the function of the rule of law, in the overall andlong-term perspective, is the nature that best promotes all aspects ofhumanity’s purpose, and easy to be ignored by the utilitarian. To compete inscience and technology by means of violating the rule of law is to win smallgames at the expense of losing big games. It is their violation of the rule oflaw that makes our science and technology will never lead. If the human wiseman has already told us this connection, if we are still dull and ignorant,then we cannot always blame the ancestors.


Law in English means natural law, including the rules of nature, aswell as the rules of human society. Scientific and technological innovationmust also follow natural law, otherwise it will be inefficient. In short, thebasic resource of technological innovation is the human brain, and the mostfundamental mode of technological innovation is to form an institutionalstructure that can maximize the spark of wisdom in the human brain. The humanbrain is the most unpredictable resource. We don’t know what kind of whimsy itinspires from whose head. However, this is the original intention of"innovation." If this is the case, this institutional structure mustbe the most inclusive, allowing exploration in all directions; the mostimpartial, the most accurate match to the contribution; the most efficient, allpotential brains have the opportunity to burst inspiration. This is an academicsystem with fair exchange and without restriction on discussion, a marketsystem that allows innovators to work according to usefulness, and an intellectualproperty system that allows innovators to get a fair return. Under thisinstitutional structure, people don't know who will be the next Newton orEinstein, Edison or Jobs; but people are convinced that the innovators emergingunder this institutional structure will certainly go far beyond the imaginationof planers based on existing knowledge.


However, as mentioned above, the problem of China's science andtechnology innovation system is precisely that there are too many resourcesallocated by the government, and too few resources are allocated by means ofacademic rules, markets and intellectual property systems. This is not only aproblem of inefficient resource allocation, but also corrupts scientificresearch groups, allowing them to focus more on power and relationships than onscientific research itself. One more problem is that the system itself becomesa cake for those who have the power to decide. They may know from the beginningthat it is ineffective, but it will bring huge benefits to themselves. Thesepeople are the ones who have power. They will not only promote the reform ofthis system, but also reduce the proportion of resources allocated by power,but will continue to expand it. If there is no restriction on power, and poweritself is naturally expansive, this distorted scientific research system willbe difficult to reform, because once the size of the national research fund isto be reduced, the power role in the science and technology evaluation systemwill be constrained. The boycott of the relevant power department. The rule oflaw is intended to limit power. Because "rule of law" is the rule oflaw, and rule by men, that is, everyone, including the most powerful, must obeythe law, and the rule of law is the panacea for healing this ailment.


To rule the rule of law, it should not be used as a tool to achievethe current purpose, but to pay attention to the generality of the rule of law,the impartiality guaranteed by legal due process, and the predictable long-termstability. The so-called "general" refers to the full exercise ofintellectual property rights, relying on the complete system and comprehensiveenvironment related to the protection of intellectual property rights. This isthe institutional structure covering all aspects of society. This is because acitizen or enterprise is the main body of intellectual property. If thepersonal safety of the citizen or the property rights of the enterprise are notprotected, the benefits of invention and innovation will not be protected. If wesee that personal freedom or corporate property rights are not protected, wealso think that intellectual property is virtually unprotected. Evenaccidentally, this lack of protection of human rights and property rightsdirectly hurts the scientific research itself. For example, Li Ning, anacademician of the Chinese Academy of Engineering, is suspected of embezzlingpublic funds. No matter how the judicial decision is made, the most importantthing is that the case has been dragged on for a long time. Since 2014, Li Ninghas been detained and has not been released on bail according to law, so thatthe defendant can bear the cost of judicial inefficiency. It is a violation ofpersonal freedom. Therefore, when we saw that the Chinese government responded tothe Meng Wanzhou case and the two Canadians arrested were not on bail pendingtrial, they must think that this is actually the same as Li Ning’s experienceand damaging China’s technological innovation.


Second, the purpose of the rule of law is a fair ruling. Althoughthe Coase Theorem assumes that when the transaction cost is zero, the judge'sarbitrary ruling will lead to the optimal allocation of resources, but Coasepointed out in his famous paper "Social Cost Issues" that in the realworld where the transaction costs are positive, the fair ruling by the judgehas an important impact on resource allocation. Thus, a fair ruling is also animportant factor in ensuring the optimal allocation of research resources.T oensure a fair judgment, the most important thing is to ensure that the legaldue process is followed. In China's reality, these due process are often notimplemented. If the court ruling is often made in advance by the “Political andLegal Committee”, it violates the principle of the judge’s independent andunintervined trial (Article 113 of the Constitution); and as the “TVconfession” that is not uncommon in China, it violates the principle of  “no forcing any person's self-incrimination”(Article 50 of the Criminal Procedure Law).Article 33 of China's CriminalProcedure Law stipulates that criminal suspects “have the right to appointdefenders” from the very beginning, but after the Chinese government detainstwo Canadians, for a long time their family members have not  been allowed to visit them and they are notallowed to hire lawyers. In connection with the case, that the outstandingscientists and technology entrepreneurs, Chu Jian, he was in the detentionhouse for nine months, "it is stipulated that he cannot meet anyone,including lawyers", we can know that this is just a part of violation ofthe general phenomenon of legal due process, this is the harm to the Chinesepeople through hurting foreigners. It goes without saying that this includesthe destruction of China's technological innovation and its environment.


Third, the rule of law needs to give people long-term and stableexpectations. Only making people believe that law is still valid in the future,people will use it as the standard to decide the current action. Some economichistorians attribute one of the reasons for modern economic development to“detour production”, that is, the cycle of production becomes longer, includingthe innovation cycle, which requires longer-term investment decisions. Thesignificance of statute law lies in the fact that the basic rules are announcedin advance, giving people a general expectation. In our courts, people can'tsue for unconstitutional behavior, and the Constitution cannot supporteveryone's long-term expectations of the Chinese legal environment. Article 35of the Constitution stipulates freedom of expression, but in reality thecreation and publication of academic journals are severely restricted, and thebook box is still subject to review and licensing. Article 41 of theConstitution stipulates freedom of communication, but unconstitutional Internetfirewalls block platforms like Google Scholar. Academic journals that I havesubscribed to abroad have also been lost for four consecutive issues.Therefore, not only the written Constitution can not give people a stableexpectation, but also directly damages the information environment ofscientific research. The government often replaces the law with opaque policiesfor the current purpose, regardless of the long-term stability of the law, therebymaking things that undermine the expectations of the law. When we see suchproblems as pointed out by the US Government's Article 301 InvestigationReport, we will not be unfamiliar for its involving infringement only to UScompanies, Chinese companies also seem to have known the case.


With such an understanding of the Meng Wanzhou and Huawei cases, thecorrect approach should be to fight under the rule of law. We must strive forthe rights of Huawei and China, while we must respect the principle of the ruleof law. The so-called "rule of law" refers not only to the principlesof common law, but also to the principles of Chinese law. From the point ofview of the text, there is no big difference between the two. The onlydifference is the implementation aspect. On the principle of bigness, there areindependent trials, presumption of innocence, no doubts, no self-incriminationand other principles. In the procedural, there are defendants who have theright to hire defenders, have the right to be released on bail, and so on.However, the Chinese government’s move is basically an action outside the legaldue process, attempting to win a single game through extra-legal pressure; andthe Canadian and American governments' moves are within the legal due process,which will experience procedure verification and win a long-time victory. Theresults will be very different. The so-called "technical war" in theway of violating the rule of law actually destroys the basic environment forthe development of science and technology, and ultimately leads to the failureof the "technical war." Therefore, putting Huawei's efforts into thelegal due process will not only increase Huawei's chances of winning, but alsoimprove the institutional environment for China's technological development. Wehave seen that Huawei has taken actions within the legal process, includingaccusing the "political motives" of the Meng Wanzhou case, includingcounterclaims against the Canadian government and the US government, which areall worthy of recognition.


When people say that Huawei is facing a "technical war"between China and the United States, it seems to pay more attention to the endproducts of the intellectual property system called "coretechnology", and seriously underestimates the intellectual property systemand the rule of law itself which guarantees the system effectiveness. .Lao Tzusaid, "The great way is the simplest"; the same, the great way willbe obvious. Paradoxically, the end products of knowledge are often secretive,with a wide variety of categories, and require payment of fees; and the mostimportant institutional conditions - the rule of law, is clear and open to theworld, the rules are simple, and can be given free of charge. However, the factin China is that the rule of law knowledge without patent protection is full ofhouses, but people do not want to implement it; and the end-knowledge productswith intellectual property protection are fascinating for people to catch. Infact, if you want core technology, the key is outside the core technology.Although China has established an intellectual property system and made greatprogress, in 2017, core patents only accounted for 1.6% of the total authorizedamount, equivalent to 9.76% of the US core patents (China Merchants Securities,“Comparison of Chinese and American patents in all aspects: Chinese patents arecatching up, July 23, 2018).The gap should lie more in the rule of lawenvironment. Some people may say that in the initial stage of China'stechnological development, the best strategy is to use ready-made technology.Even so, China is now at a turning point – are they to continue picking thefruits of other people’s trees, or planting trees by themselves? It’s just thatstupid Americans are forcing the Chinese to plant trees. Let us turn theirtrick to our own use.


March 22, 2019, at Fivewoods Bookroom


March 29, 2019 published firstly in FT Chinese and China-reviewWeekly



Upcoming Events
Unirule and Fairbank Cent...  
A Seminar on “Tax Burden...  
An Urbanization Salon Hel...  
The Sixth Session of the ...  
Seminar on “Theoretical ...  
The Sixth Session of West...  
The Third Session of Haye...  
The New Economy Salon Ses...  
        Unirule Institute of Economics
        Floor 6, Zhengren Building, No. 9, Chong Wen Men Wai Street, Dongcheng District, Beijing, 100062, China
        Tel: 8610-52988127 Fax: 8610-52988127