Chaotic Order

Abstract

This chapter explores how order emerges from chaos in China’s innovation machine. It emphasizes how innovation is emergent, evolutionary, and complex and cannot be centrally planned and controlled. Innovation involves experimentation, the initial growth of which requires some protection, but the scale and scope of which can be rapidly amplified in an interdependent digital economy. The challenges facing the innovation machine are outlined. These include the impact of the Covid-19 pandemic, and the impending clash of political ideology between China and the West manifested by a technology cold war over issues such as technological standards. The chapter argues that, despite numerous shortcomings, China’s innovation machine is remarkably successful and robust and can even strengthen as result of external pressures. It does, however, face specific internal policy challenges, including whether the government can maintain the pragmatism of recent policies with continued development of the market, and strengthened transparency on the nature and purpose of China’s approach to innovation, and the nation’s greater assumption of leadership roles in international forums. How China handles these challenges will significantly impact the future of global economic development and political cooperation.