Focus
Technological cooperation between Spain and China
By Andrés Ortega | Updated: 2018-09-28 10:41

Technology has become a basic key to bilateral economic and cultural relations between China and Spain. Although these economies are very different in terms of size and priorities, the two countries have common and interlocking interests that bode well for productive and mutually beneficial cooperation. But technological cooperation is still marked by a level of investment reciprocity far below that of other countries in Spain's neighbourhood, like the UK, Germany and France.

Chinese technological power suggests that reciprocity and balance should be sought as soon as possible when cooperating with China. European companies and institutions have very limited access to Chinese R&D and face growing problems in contracting Chinese researchers on the ground – another sign of the imbalance in the relationship. Furthermore, there are some high technology sectors – like the manufacture of solar panels – in which Spain and China are competitors.

China also has a series of "prohibited sectors" which are cordoned off from foreign penetration and imply a serious limitation. The "black list of industries", however, has shrunk in size, from 36 sectors in 2015 to 18 in 2017, and is also increasingly less technological. 

At the same time, there could be even more opportunities for Spanish companies in the regulated sectors – which the Chinese government considers of special importance – in the form of tax incentives and higher operational autonomy. These are the "encouraged" sectors that the Chinese government wants to see attract more foreign investment. They embrace various technologies, including: intelligent emergency medical rescue equipment; the production of hydrological monitoring sensors; the research, development and manufacture of virtual and augmented reality equipment; the design and manufacture of 3D printers; and the construction and operation of hydrogenation stations.

A central key for technological cooperation between Chinese and Spanish institutions and companies is the possibility for complementarity in advanced sectors. For instance, in certain sectors the Spanish might be stronger in one area, while the Chinese side – in a complementary manner – might be superior in some other way. Spanish companies enjoy a strong reputation as "integrators" of diverse technologies, even though they do not always produce them themselves. Green technologies, ecological automobiles, smart cities, the health sector, food and agriculture are all central in China's Five-Year Plan. Mention should also be made of civilian space infrastructure, new generation information networks, integrated circuits, new materials, biomedicine, aviation engines, gas turbines and defense R&D.

Among the sectors in which China stands out, and in which Spain is also advanced, are 5G mobile communications, crucial for the Internet of Things and self-driving vehicles. Others include modern agriculture and food processing, green energies, biotechnology, biomedicine, nanotechnology and new materials (like graphene), pharmaceuticals, smart cities, the aerospace industry and 4.0 industries. And in basic sciences, there is the possible development of a wider network of astronomical observatories.

In all these areas, Spain has many interesting and attractive assets to contribute and a strong interest in cooperation in the face of future competition from increasingly capable Chinese companies. Technological cooperation is a very good tool for the two countries to get to know each other better, and an opportunity for companies from both sides to help each other gain access to the global market. Many Spanish technology companies are present in China, but not as much as other European tech companies.

Several dimensions of the cooperation

Spain-China technological cooperation is part of the general framework of EU-China cooperation. Some European projects – such as the manufacture of Airbus planes in China at centers in Beijing, Tianjin and Harbin – directly favor Spain because they incorporate Spanish technologies in many ways. In this respect, Spain-China cooperation is complementary with Europe-China cooperation, and all should also be based on the principle of reciprocity. 

There is also a Europe-China “connectivity platform” embedded within the Chinese initiative of the New Silk Road, also known as Belt and Road Initiative. So far, the platform has had a fund for small and mid-sized enterprises, financed by the European Investment Bank and the BRI fund. This enormous project offers a wide range of possibilities in the technology sector, especially activities related to efficient resource distribution, connectivity and market integration.

Despite the framework being European, there is much competition in Europe for cooperation with China between companies and between member states, particularly Germany, France and the countries of Central and Eastern Europe. 

Nevertheless, a combination of obstacles faces Europe in its pursuit of cooperation with China. These include the asymmetry produced by China’s relatively closed economy and Europe’s relatively open one, differences in the protection of intellectual property, the growing Chinese demand that foreign investment be accompanied by the transfer of technologies from the investing companies, the general difficulties faced by foreign investment in China and a massive Chinese plan for the acquisition of civil and military technology abroad.

Spain has its own mechanisms that allow it to suspend the principle of investment freedom, in line with the assumptions also held by the commission. Therefore, such a new European system would not distort Spain’s own vision, or the defense of its interests.

Europe is not everything. Spain is intimately linked to Latin America, and in the technological realm as well. Technology – particularly the digital dimension – will be very present at the next Ibero-American Summit in November, as well as at other regional and international meetings. Latin America must truly enter the Fourth Industrial Revolution; this is one of the big topics that the Argentine Presidency of the G20 in 2018 wishes to address. China is also very present in the region, through investment and trade. For this reason, Spain's focus on the region should also consider China and its technological contributions so that experiences in technological cooperation between Spanish, Chinese and Latin American companies and research centers might crystallize. Triangulation in this area could be interesting and could strengthen all three vectors of cooperation. For triangulation to be acceptable to both Latin Americans and the Chinese, however, it should be designed as a process of exchange between companies and/or research centers and not as an inter-governmental strategy.

The institutional framework for technological cooperation between Spain and China is relatively well-developed, although it should be deepened and improved. Nevertheless, China has a Strategy for Scientific and Technological Cooperation with Germany and another with the UK, but it has not developed such an instrument for its relations with Spain. The creation of the Ministry for Science, Innovation and Universities might be able to stimulate the development of such a strategy. In 2013 the two countries signed an agreement for cooperation in R&D+I but there is still no effective bilateral mechanism for the two governments to promote it.

Scientific and technological cooperation between Spain and China also requires a greater exchange of researchers. There is still much ground to cover, especially with respect to Chinese students and researchers in Spain. Although the number of Chinese students has increased to more than 8,000 in 2016, most come to Spain to study Spanish, just as, in the other direction, most students from Spain in China study Chinese. More campaigns should be undertaken in China to make known the wide possibilities available in Spain. In general, Spain remains off the map for the Chinese scientific elite when considering an attractive place in which to engage in research. On the other hand, the perception in Spain of the possibilities for research in China, or of the quality of its human capital, is also insufficient.

Andrés Ortega is Senior Research Fellow, Elcano Royal Institute, Spain. This article was first published at the official website of Elcano Royal Institute. The views expressed do not necessarily reflect those of China Watch.

All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.

Technology has become a basic key to bilateral economic and cultural relations between China and Spain. Although these economies are very different in terms of size and priorities, the two countries have common and interlocking interests that bode well for productive and mutually beneficial cooperation. But technological cooperation is still marked by a level of investment reciprocity far below that of other countries in Spain's neighbourhood, like the UK, Germany and France.

Chinese technological power suggests that reciprocity and balance should be sought as soon as possible when cooperating with China. European companies and institutions have very limited access to Chinese R&D and face growing problems in contracting Chinese researchers on the ground – another sign of the imbalance in the relationship. Furthermore, there are some high technology sectors – like the manufacture of solar panels – in which Spain and China are competitors.

China also has a series of "prohibited sectors" which are cordoned off from foreign penetration and imply a serious limitation. The "black list of industries", however, has shrunk in size, from 36 sectors in 2015 to 18 in 2017, and is also increasingly less technological. 

At the same time, there could be even more opportunities for Spanish companies in the regulated sectors – which the Chinese government considers of special importance – in the form of tax incentives and higher operational autonomy. These are the "encouraged" sectors that the Chinese government wants to see attract more foreign investment. They embrace various technologies, including: intelligent emergency medical rescue equipment; the production of hydrological monitoring sensors; the research, development and manufacture of virtual and augmented reality equipment; the design and manufacture of 3D printers; and the construction and operation of hydrogenation stations.

A central key for technological cooperation between Chinese and Spanish institutions and companies is the possibility for complementarity in advanced sectors. For instance, in certain sectors the Spanish might be stronger in one area, while the Chinese side – in a complementary manner – might be superior in some other way. Spanish companies enjoy a strong reputation as "integrators" of diverse technologies, even though they do not always produce them themselves. Green technologies, ecological automobiles, smart cities, the health sector, food and agriculture are all central in China's Five-Year Plan. Mention should also be made of civilian space infrastructure, new generation information networks, integrated circuits, new materials, biomedicine, aviation engines, gas turbines and defense R&D.

Among the sectors in which China stands out, and in which Spain is also advanced, are 5G mobile communications, crucial for the Internet of Things and self-driving vehicles. Others include modern agriculture and food processing, green energies, biotechnology, biomedicine, nanotechnology and new materials (like graphene), pharmaceuticals, smart cities, the aerospace industry and 4.0 industries. And in basic sciences, there is the possible development of a wider network of astronomical observatories.

In all these areas, Spain has many interesting and attractive assets to contribute and a strong interest in cooperation in the face of future competition from increasingly capable Chinese companies. Technological cooperation is a very good tool for the two countries to get to know each other better, and an opportunity for companies from both sides to help each other gain access to the global market. Many Spanish technology companies are present in China, but not as much as other European tech companies.

Several dimensions of the cooperation

Spain-China technological cooperation is part of the general framework of EU-China cooperation. Some European projects – such as the manufacture of Airbus planes in China at centers in Beijing, Tianjin and Harbin – directly favor Spain because they incorporate Spanish technologies in many ways. In this respect, Spain-China cooperation is complementary with Europe-China cooperation, and all should also be based on the principle of reciprocity. 

There is also a Europe-China “connectivity platform” embedded within the Chinese initiative of the New Silk Road, also known as Belt and Road Initiative. So far, the platform has had a fund for small and mid-sized enterprises, financed by the European Investment Bank and the BRI fund. This enormous project offers a wide range of possibilities in the technology sector, especially activities related to efficient resource distribution, connectivity and market integration.

Despite the framework being European, there is much competition in Europe for cooperation with China between companies and between member states, particularly Germany, France and the countries of Central and Eastern Europe. 

Nevertheless, a combination of obstacles faces Europe in its pursuit of cooperation with China. These include the asymmetry produced by China’s relatively closed economy and Europe’s relatively open one, differences in the protection of intellectual property, the growing Chinese demand that foreign investment be accompanied by the transfer of technologies from the investing companies, the general difficulties faced by foreign investment in China and a massive Chinese plan for the acquisition of civil and military technology abroad.

Spain has its own mechanisms that allow it to suspend the principle of investment freedom, in line with the assumptions also held by the commission. Therefore, such a new European system would not distort Spain’s own vision, or the defense of its interests.

Europe is not everything. Spain is intimately linked to Latin America, and in the technological realm as well. Technology – particularly the digital dimension – will be very present at the next Ibero-American Summit in November, as well as at other regional and international meetings. Latin America must truly enter the Fourth Industrial Revolution; this is one of the big topics that the Argentine Presidency of the G20 in 2018 wishes to address. China is also very present in the region, through investment and trade. For this reason, Spain's focus on the region should also consider China and its technological contributions so that experiences in technological cooperation between Spanish, Chinese and Latin American companies and research centers might crystallize. Triangulation in this area could be interesting and could strengthen all three vectors of cooperation. For triangulation to be acceptable to both Latin Americans and the Chinese, however, it should be designed as a process of exchange between companies and/or research centers and not as an inter-governmental strategy.

The institutional framework for technological cooperation between Spain and China is relatively well-developed, although it should be deepened and improved. Nevertheless, China has a Strategy for Scientific and Technological Cooperation with Germany and another with the UK, but it has not developed such an instrument for its relations with Spain. The creation of the Ministry for Science, Innovation and Universities might be able to stimulate the development of such a strategy. In 2013 the two countries signed an agreement for cooperation in R&D+I but there is still no effective bilateral mechanism for the two governments to promote it.

Scientific and technological cooperation between Spain and China also requires a greater exchange of researchers. There is still much ground to cover, especially with respect to Chinese students and researchers in Spain. Although the number of Chinese students has increased to more than 8,000 in 2016, most come to Spain to study Spanish, just as, in the other direction, most students from Spain in China study Chinese. More campaigns should be undertaken in China to make known the wide possibilities available in Spain. In general, Spain remains off the map for the Chinese scientific elite when considering an attractive place in which to engage in research. On the other hand, the perception in Spain of the possibilities for research in China, or of the quality of its human capital, is also insufficient.

Andrés Ortega is Senior Research Fellow, Elcano Royal Institute, Spain. This article was first published at the official website of Elcano Royal Institute. The views expressed do not necessarily reflect those of China Watch.

All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.