TheEconomistJuly 13th 2019 391A
s a teenager, Wang Hanyang was fas-
cinated by the electronics markets of
Zhongguancun. He wandered the aisles of
hard drives and graphics cards like a kid in
a zoo, asking questions and learning. By
2009, government attempts to foster a tech
hub in Mr Wang’s patch of Beijing had
yielded little else to inspire a 14-year-old’s
imagination. There were a few successful
Chinese tech firms mimicking their Ameri-
can counterparts in search and social me-
dia, along with other startups. But in gen-
eral Zhongguancun, a byword for cheap
knock-offs, was still a disappointment.
No longer. Today Mr Wang, 25, is at the
helm of his second startup, Generalized
Aviation, which creates software for
drones. Trendy coffee chains and boutique
supermarkets dot the streets. Zhongguan-
cun has spread out from the electronics
markets into a sweeping quadrant of
northwestern Beijing that takes in its two
leading universities, Peking and Tsinghua.
Zhongguancun is now a concept as much
as a place, China’s “Silicon Valley”.
It is also China’s best hope for the do-
mestic innovation that might insulate the
country from a world perturbed by its rise.
The government calls this “self-dependent
innovation”, an idea that the trade war with
America has given urgency. In January,
during a visit to the new Binhai-Zhong-
guancun Science and Technology Park
(conceptually part of Zhongguancun, but
geographically distinct), Xi Jinping, Chi-
na’s leader, emphasised the need for
Zhongguancun to generate “high-quality”
economic development. As Mr Wang puts
it, the country must accelerate a shift from
assembling tech products to creating
them. Surrounded by the world’s largest,
fastest-growing market for such goods,
Zhongguancun is creating new apps, ser-
vices and devices more speedily and clev-
erly than ever before.
The ingredients for success are in place,
though it is hardly assured. The amount of
money pouring into Chinese technology
companies has grown rapidly over the pastten years (see chart), with the total annual
levels of venture-capital investment now
reaching parity with America. Armed with
capital, a new company can stake out office
space easily and quickly, and tap into an-
nually refreshed stocks of technically
minded graduates from the most presti-
gious universities in Beijing.
China has long since moved beyond
producing merely Chinese versions of Sili-
con Valley companies. WeChat, an all-en-
compassing chat and payment app intro-
duced in 2011 by Tencent, an internet giant
in the southern city of Shenzhen, has in-
spired copycattery from Facebook. The
newest firms in Zhongguancun employ
business models that do not exist yet in
America. One company lets doctors in
small family practices order up complex
lab tests for their patients on their phone.
Another sells robotic arms to knife fac-
tories, which use them to sharpen the
blades automatically. The international
popularity of TikTok, a video-sharing app
made by Bytedance, a Beijing company,
shows that even in areas where Silicon Val-
ley dominates globally, like social media,
Zhongguancun can compete.
Its young companies start not in ga-
rages, but in cramped offices, tucked away
in the low-rise towers that host what is left
of the electronics market, the heart of old
Zhongguancun. Mr Wang points out the
dingy nook in which DiDi, China’s ride-
hailing giant, got its start. A larger office
next door is for rent. Some 66 square me-
tres are available, and the landlord is ex-Letter from Zhongguancun
Home-grown
BEIJING
China’s Silicon Valley is transforming China, but not yet the world
China
42 Chaguan:Agenerational divideAlso in this section