Chinese President Xi Jinping made headlines this week with a speech at the World Economic Forum in Davos, Switzerland, that passionately defended free trade in the face of a worldwide surge in anti-globalism populism. But closer to home, a less dramatic story may paint a more complicated and nuanced picture of China's role in the global economy.
This story involves something as simple as the ballpoint pen — yes, that humble device you may well have lying around your desk or collecting dust at the bottom of your bag — and China's long and frustrating quest to manufacture it domestically.
This month, that quest has finally been fulfilled, and Chinese state media is all over it. Here's just one example of the coverage, from the English-language Twitter account of Xinhua News Agency.
China has developed its own ballpoint pen tips, ending a long-term reliance on imported ones pic.twitter.com/0A51NzIPOe— China Xinhua News (@XHNews) January 11, 2017
To anyone outside of the ballpoint pen manufacturing world, it might seem hard to understand what, exactly, is so surprising about this development. China already produces 38 billion ballpoint pens a year, according to China Daily, which is about 80 percent of all ballpoint pens in the world. That's a lot of pens, but there was a catch: China had long been unable to produce a high-quality version of the most important part of the pen, its tip.
The tip of a ballpoint pen is what makes it a ballpoint pen. At the tip, a freely rotating ball is held in a small socket which connects it to an ink reservoir that allows the pen to write or draw lines. Manufacturing a ballpoint pen tip that can write comfortably for a long period of time requires high-precision machinery and precisely thin steel, but for years China was unable to match those crafted by foreign companies.
While there were over 3,000 companies manufacturing pens in China, none had their own high-end technology for the tip. Instead, about 90 percent of the pen tips and refills, too, were imported from Japan, Germany and Switzerland, according to Chinese state media. This cost the industry $17.3 million a year, according to the China National Light Industry Council.
China's inability to produce a complete, high-quality ballpoint pen came to widespread attention in 2015, when Premier Li Keqiang singled out the products at a seminar in Beijing, noting that his writing was “rough” when he used Chinese-made ballpoint pens. For Li, China's failure to manufacture a complete ballpoint pen was indicative of the Chinese economy's weaknesses. “That's the real situation facing us,” Li said at the time. “We cannot make ballpoint pens with a smooth writing function.”
The Chinese premier's comments caused consternation in China's pen industry — which was, understandably, not used to being the topic of mainstream political conversation. These pen companies were once happy to manufacture shoddy pens that were sometimes exported abroad as cheap knockoffs of better brands. Now, they were being told that they were expected to do something more.
“In the past, the government praised the big companies that export the most and have the biggest profits,” Huang Xinghua, president of the Platinum Pen company in Shanghai told NPR's Marketplace soon after. “They seldom praise companies that truly make good quality pens.”
Li's comments apparently sparked action, however, and this week, after a reported five years of research and development, the state-owned company Taiyuan Iron and Steel Group (TISCO) announced that it would begin mass-producing ballpoint pen tips and replace imports within two years. Here, you can see the technology:
Chinese steel maker Taiyuan Iron & Steel Group produces groundbreaking ballpoint pen tips to replace imported pen tips after 5 yrs research pic.twitter.com/RDdYGUuZm8— People's Daily, China (@PDChina) January 8, 2017
The completely Chinese ballpoint pen is no doubt a symbol of Chinese innovation. It's far from alone. In recent years, China has caught up to other industrialized nations when it comes to technological advances — take a look at its booming tech industry for evidence.
But at the same time, the saga of the ballpoint pen shows that China's ideas about free trade and innovation are far from simple.
Consider this: The ballpoint pen innovation only took place after concerted government intervention. This is, in part, because in a country with lax intellectual property laws, spending money on research and development with little tangible benefit isn't economical. Worse still, China's powerful but notoriously overproductive steel industry, rather than the pen industry itself, controls this technology.
Many observers couldn't miss the potential problems. “Long term, TISCO's standard will probably result in a de facto domestic monopoly on pen tips, thereby replacing the foreign monopoly that China was originally trying to break up,” Adam Minter noted over at Bloomberg View this week.
Meanwhile, despite Xi's comments Tuesday, there's also a whiff of protectionism in China's quest to build a ballpoint pen — writing in the Wall Street Journal, editorial writer David Feith suggested that “mercantilist goals like pen independence” could be a signal of a broader problem between China and the rest of the world. And with China quietly gearing up for the possibility of a trade war with the upcoming Trump administration, those problems could come sooner rather than later.
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