"The advent of ChatGPT marks a milestone in the Third Industrial Revolution, but it does not herald the Fourth Industrial Revolution."

This year, generative AI represented by ChatGPT has swept the globe, and the claim that the "Fourth Industrial Revolution has arrived" is frequently heard. Wen Yi, a distinguished professor at the Antai College of Economics and Management at Shanghai Jiao Tong University, might be the perfect choice to respond to this discourse.

In recent years, Wen Yi's research area has shifted from macroeconomics to the history of science. He has published works such as "The Great Chinese Industrial Revolution" and "The Cipher of the Scientific Revolution - The Mystery of Guns, Wars, and the Rise of the West," attempting to solve the "Needham's Grand Question" in the long river of history.

Wen Yi believes that, from the perspective of the upgrading of industrial structure in production methods, rather than from the angle of energy utilization, the world has only undergone three industrial revolutions so far. The first industrial revolution saw machines replace human labor, realizing mass production of light industry consumer products at the terminal. The second one achieved "machines producing machines," meaning that all materials, tools, and particularly heavy industry products and intermediate materials involved in mass production are produced by machines, further replacing human labor in almost all production links. The third revolution, guided by the development of information technology, replaced intellectual labor, and ChatGPT has not yet broken this boundary, still being considered part of the information revolution.

With the emergence of ChatGPT, "Needham's Grand Question" also gets a new interpretation - why didn't revolutionary inventions happen in the East?

Wen Yi points out that historical breakthroughs in Western technology were always application and demand-driven, thus forming a "Science-Technology-Business" accelerator cycle: science serves technology, and technology serves business. Conversely, the market funds technology, and technology supports science. If our country wants to achieve technological development and industrial upgrading and create its own technological revolution, it can also follow this principle.

"National mobilization can overcome some difficulties of 'from 0 to 1' technological innovation, but without subsequent support from commercial promotion and market application, the huge initial investment will have little return. On the contrary, if there is only business and market, but no enterprise-level and national-level consciousness of independent innovation and significant R&D investment, sustainable industrial upgrading and economic growth are also impossible," says Wen Yi.

The organic cycle of "Science-Technology-Business" needs to rely on a large market and its scale effect to overcome the high costs brought by industrial organization, fixed investment, technological introduction, and innovation. Wen Yi believes that, from this perspective, the Guangdong-Hong Kong-Macao Greater Bay Area has inherent advantages: "Successful small-scale experiments are then expanded nationwide, and the Shenzhen Special Economic Zone has played the role of a 'yeast' in the development of a unified large market."

ChatGPT will not Trigger a New Industrial Revolution

Since the advent of ChatGPT, it has been endowed by the industry with a disruptive significance akin to that of the steam engine in the 18th century. With its low cost and broad applicability across all industries, liberating a large amount of repetitive mental labor, ChatGPT is expected to generate new business models and drive transformations in productivity and production relations.

However, Wen Yi believes that the emergence of ChatGPT should not be viewed as a new industrial revolution.

In his book "The Great Chinese Industrial Revolution," Wen Yi proposes the "Embryonic Development Theory" of economic development. He believes that industry is a complex organism, and industrial revolutions are sequential "embryonic development" processes of this organism, with each stage requiring the "primitive" accumulation of the previous stage to create and nurture markets and obtain "financing."

Specifically, the UK triggered the first industrial revolution in the 18th century by initially replacing human labor with simple machines, achieving large-scale mass production of light industrial consumer goods such as textiles. The demand for machines, energy, power, transportation, and intermediate materials (such as steel and cement) continuously grew during the first industrial revolution, naturally calling for the second industrial revolution. It produced the production tools, raw materials, and intermediates needed for the first industrial revolution on a large scale, further replacing human labor with machines.

After the completion of the second industrial revolution, industrial production formed a virtuous cycle, with everything from consumer goods to the production tools required to produce them, and intermediate products and parts, all being mass-produced. At this point, high-tech services serving the real economy, such as the financial industry, information technology, biotechnology, etc., fully served the automation, informatization, and electronization of the production and consumption process, igniting the third industrial revolution (also known as the "Information Technology Revolution"), which mainly replaced "brainpower."

Wen Yi notes that each "embryonic development" process is very lengthy, encompassing significant changes in power, energy, communication, and transportation. For example, the first industrial revolution shifted from natural power to coal and petroleum, the second industrial revolution turned to electricity and nuclear heat, and the third industrial revolution further moved to lithium and solar power. Communication methods have also undergone major changes, such as from printing to telegraph, telephone, electronic communication, etc.

"These energy and infrastructure revolutions need the massive global unified market created by each industrial revolution, and the huge demand it stimulates to push forward. In this sense, the emergence of ChatGPT is not an independent industrial revolution, it is still part of the information technology revolution 'replacing brainpower'. However, it can be said that ChatGPT is of milestone significance in the third industrial revolution," says Wen Yi.

Establishing a "Science-Technology-Business" Virtuous Cycle

"Why didn't the scientific and industrial revolutions take place in China in modern times?" The famous "Needham Question" along with the question posed by Qian Xuesen have become enduring research topics for numerous scientists, historians, and economists.

After the emergence of ChatGPT, the "Needham Question" evolved further. For instance, Fan Gang, the Deputy Chairman of the Chinese Economic System Reform Research Association and the Secretary-General of the Chinese Reform Foundation, recently pointed out in a public statement that China has reached the global forefront in multiple areas, including artificial intelligence. However, once revolutionary progress is made, we may lag behind for a period of time. He called for accelerating learning and establishing an effective innovation system.

Wen Yi believes that from its inception, modern science has always been utilitarian, supported by state power and primarily aimed at pursuing practical value. By this token, the key for China to catch up and even lead technological change lies in forming a "Science-Technology-Business" accelerating cycle.

Wen Yi exemplified that Galileo was long-term artillery expert and scientific consultant for the Venice Arsenal, and Lavoisier once served as the director of the French Gunpowder Administration. The warfare of firearms and European cross-national armament competition posed epoch-making ballistic problems for Galileo's classical mechanics revolution and material combustion issues for Lavoisier's chemical revolution. To address these questions, a scientist selection mechanism enacted by state power ignited the so-called "scientific revolution" of the modern era.

Similarly, under the enormous financial pressures of war, European royal families heavily sponsored geographical discoveries and global voyages in their search for gold and the expansion of colonies, leading to significant advancements in astronomy, navigation, shipbuilding, geography, maritime medicine, and botany.

"Scientific research isn't about daydreaming under an apple tree. It's application-oriented, aimed at solving the problems and challenges posed by the era," said Wen Yi.

Such a development model in the West has formed a "Science-Technology-Business" virtuous cycle: enhancing technological levels in the process of answering real-world questions, refining scientific issues based on understanding the principles behind technology, and in turn pursuing the transformation from science to technology and from technology to the market.

Wen Yi mentioned that since its founding, especially since its reform and opening up, China's scientific development and innovation have also followed this basic "demand-supply" principle. In the future, to initiate its own scientific revolution, China will need to use industrial demands to drive technological breakthroughs, to seek fundamental scientific topics from technological breakthroughs, and to answer numerous "bottleneck" problems posed by scientists in technological research and industrial practice, such as issues in quantum communication and quantum computing.

"Only when a technological breakthrough is made can it be transformed into products, stimulating market demand and reaping commercial benefits on the one hand, and promoting 'from 0 to 1' basic scientific research on the other, ultimately forming a 'Science-Technology-Business' virtuous cycle," Wen Yi stated.

The Development of a Unified Large Market Needs "Yeast"

According to Wen Yi's "Embryo Development Theory," industry is a massive-cost organic system that relies on a vast market and its scale effects to balance costs, making all industrial "organs" and "cells" cheaper, replaceable, and renewable, and ultimately approaching the "near-zero marginal cost" of large-scale social production.

"The basis for the new round of industrial revolution is a large enough market, so we can't just be content with our domestic market, we have to look at the global market. In this sense, the Guangdong-Hong Kong-Macao Greater Bay Area has an inherent advantage," Wen Yi revealed in an exclusive interview with a reporter at an event in Shenzhen, noting that ten years have passed since his last visit to Shenzhen and the Greater Bay Area has undergone earth-shaking changes.

"Firstly, geographical locations are different, so the transaction costs of logistics vary globally," Wen Yi mentioned. Land transportation, such as traveling to the "Western Regions" via the terrestrial Silk Road, was the least costly long-distance trade channel in ancient times before the advent of seafaring technology. However, it became high-cost and low-efficiency after long-distance seafaring technology emerged. By contrast, before the advent of long-distance high-speed rail technology, maritime transport was less costly, giving coastal areas of our country a geographical advantage for early development since the reform and opening up.

Based on this coastal advantage, the Guangdong-Hong Kong-Macao Greater Bay Area also has the institutional advantage of "One Country, Two Systems." Riding on the winds of reform and opening up, the Shenzhen Special Economic Zone (SEZ) was formally established in 1980, targeting outward-oriented economic development, implementing flexible and special economic policies, and creating a good business environment to encourage foreign investment.

"In the context of 'One Country, Two Systems,' the establishment of SEZs can avoid much friction caused by differences in administrative systems. Reform and opening up cannot be 'one size fits all', and SEZs play the role of a 'fermenting agent' in the development of a unified large market."

Wen Yi believes that starting with the SEZs as a pilot, from small-scale, small-scope, "with a way out" experiments, and then promoting successful experiences nationwide, is a more scientific and rational development method.

"Hong Kong, as one of the 'Four Asian Tigers,' is a wealthy Asian financial center, which is also a huge advantage. The next step should be to leverage the Greater Bay Area's locational and financial system advantages to expand the influence of the SEZ and accumulate sufficient funds, technology, and markets for the new round of technological revolution," concluded Wen Yi.