This is CBS I On The World. I'm John Batser with Arjun Romany of the Economist magazine,

Global Business Writing About the technology competition between the PRC that is now in

the moments after the 20th Party Congress a direct contestant for world domination in

the high end strategic industries, a semiconductor AI, biotech, health are certainly involved in

vaccines and quantum computing. Arjun, thank you for this. What is a Jew-Gro TT? I say that

roughly. Whole of nation system. What is that system in China?

Yeah, that's great question. The whole of nation system is this idea that the Chinese Communist

Party is basically able to marshal all of society's resources and all the actors to invest

and act in accordance with the national interest. A great way to see that is if you look at

even the private sector which you might expect to be independent of the state, it turns

out that a huge share of their investment is actually in accordance with state priorities.

And that happens because the CCP, the Chinese Communist Party is basically able to set up

these interesting capital structures where it acts as a limited partner in a lot of private

investment vehicles so it can actually direct private capital towards the state's priorities.

In addition to that, when the CCP identifies priorities, private actors often tend to fall

in line with it. They will start acting in accordance and investing in these strategic

industries because that's a way for them to curry favor with the state and gain preferential

access to things like special economic zones, subsidies and other favorable treatment.

So in general, the whole of nation system basically means that Chinese state has a much

greater degree of influence over the direction of innovation in China compared to other countries.

It's rising to me to then learn that the US and the West spend 17% of the funding on basic

research not going to be practical anytime soon. But the PRC spends only 6% on basic research.

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