This article first appeared in Forum, The Edge Malaysia Weekly on June 15, 2026 - June 21, 2026

Since Adam Smith’s landmark 1776 thesis on free trade as the anchor of the wealth of nations, global trade has been a major driver of human prosperity. Trade, of course, is all about networks of roads, maritime routes, air routes, space and, today, digital communications.

Free trade grows wealth and prosperity by lowering transaction costs between nations. By reducing friction across borders, it promotes the production, distribution and marketing of goods, services and ideas.

In the area of geonomics, trade advocate and logistics entrepreneur Merle Hinrich sums it up succinctly: “The future of global trade will be determined not only by what nations produce but [also] by who controls the systems that shape how the world thinks, decides and creates.”

The story of how China emerged as the world’s leading manufacturer and largest trading partner is summed up best by University of California San Diego professor Barry Naughton, who traced China’s manufacturing rise through focused industrial policy and trade strategies, building on its entry into the World Trade Organization in 2001. By focusing on scale, cost competitiveness, policy flexibility, structural comparative advantages and limits of state-led innovation, it step-by-step began to rival the US, Europe and Japan in geoeconomic competition.

When China announced its Made in China 2025 policy in 2015, many thought it was a copy of Germany’s Industry 4.0 model, launched in April 2013, which focused on German leadership in the Internet of Things (IoT), cyber-physical systems and smart manufacturing.

China’s total system approach to industrial prowess had its beginnings with California Institute of Technology-trained rocket scientist Qian Xuesen (1911–2009), architect of China’s aerospace and systems sciences.

He pioneered the concept of “engineering cybernetics” in 1954 and later founded within China the school of Open Complex Giant Systems that reframed engineering as a philosophical act, merging control theory with epistemology and ethics. Engineering is not simply mechanical science but also a total system that merges design, software, hardware, morality and ethics. To build ecosystems of entrepreneurship, innovation and creativity, engineering evolved to become a philosophy of “conscious design” within a dynamically open system of increasing complexity that transformed knowledge from theory to practice and an integrative understanding of intelligence within evolving systems of relational coherence, efficiency, resilience and emergence. This combined engineering with science, technology, biology and philosophy, moving away from a mechanical, linear and siloed approach towards organic self-adaptive systems of innovation, trial by failure, exploration and rejuvenation. Qian foresaw that open organic systems were not about optimisation but symbiosis: applying engineering to adapt or mitigate human well-being within planetary limits through creativity, entrepreneurship and experimentation (tinkering with pilots and prototypes).

In essence, he transformed systems theory into a philosophy of civilisational evolution, the pursuit of human, artificial, emotional and engineering intelligence guided by ethical consistency. He effectively asked, how could artificial or human intelligence be used ethically for human and planetary well-being?

In 2015, we could divide the world into two spheres: the US as the hegemon on technology, management, financial and marketing science that subcontracted manufacturing at the high engineering levels to Japan, Germany, South Korea and Taiwan, with China at the lower end. India was the major software powerhouse but mainly in terms of subcontracting software writing and design work to leading American technology, distribution and finance houses. India was clearly ahead of China in the software industry.

In the decade to today, China’s tech platforms of Tencent, Alibaba, Huawei, Bytedance (TikTok), BYD and others have come into their own and are now in the race to dominance in the total product and service sectors. China was early to apply artificial intelligence (AI) and robotics to manufacturing, where in 2015, it was lagging behind the best of the West. Today, it leads in the areas of electric vehicles, batteries, alternative energy, infrastructure development and engineering prototyping that is scaring American, Japanese and German automotive and engineering companies. The race to AI hegemony and onshoring of advanced manufacturing is therefore the US’ response to the Chinese challenge.

What is the secret sauce of China’s approach to technological parity or leadership?

Some may say that the scale and size of China’s large and diversified manufacturing base, plus the willingness to deploy large numbers of the best and brightest students and systems engineers to develop a multidisciplinary integration of design, theory, practice and experimentation until commercialisation, enabled the evolution of what Chinese social scientist Zheng Qinghua called “engineering intelligence” (EI). This is the application of a total systems approach, from basic design to market conquest, that drives high-quality economic and social development.

EI is not a simple application of AI in the engineering field. EI connects system design, architecture and usefulness to producers, subcontractors, consumers and intermediaries alike to actually reduce cost, improve quality and achieve user satisfaction at scale. EI enables technology democratisation and large-scale empowerment for everyone along the supply and distribution chain, particularly the consumer. EI is not easy to achieve but, once attained, it is powerful and scary to competitors.

This EI, or what some call the “AI+” action plan, is not just embodied in every company but also in government work at the village, enterprise, city, provincial and national levels. Clearly, AI and robotics have now broken new ground in terms of data collection, analysis, learning and predictive power. Robots with AI can now do kung fu jumps and acrobatic cartwheels never dreamt possible before. EI is the secret sauce that transforms technological concepts into reality. We have moved from engineering labs to living cities where the application of EI can move from scenario-building models to generative design in intelligent construction, predictive maintenance in intelligent manufacturing and dynamic scheduling in smart cities.

People enamoured with AI tend to forget that AI so far can only read what is available to scan digitally. Most of human knowledge and wisdom rests with the clusters of engineers, craftsmen and specialists that are increasingly networked together in silos of universities, companies or government research institutions. It works where the institutional structure allows and rewards continuous collective interaction, feedback and innovation. It welcomes failure and experimentation and does not shame us because we may stumble. We try till we (as a group) succeed. EI is all about the deep integration of technological, industrial and social trends that enables the transformation and upgrading of engineering to meet social and economic needs. The Americans glorify individualist genius. The Chinese venerate and respect collective outcomes where the innovator or leader is nameless and true genius comes from the group.

What does that mean for Malaysia at the state, university, research institute and corporate or social enterprise levels? None of us is smarter than all of us. We must learn how to grasp EI as an application, since we do not have the size, scale or wealth to finance, research and develop hugely costly cutting-edge science and technology. We must apply learning by doing, experimenting and applying AI, EI and systems change, applied to areas where we have a comparative advantage, such as palm oil, consumer manufacturing, ecotourism and selected niches in advanced manufacturing. We could be the living lab for the application of engineering intelligence in the Global South.

Talk is cheap. What will prove Malaysia’s opportunity in the EI age is to invest in our young, take risks and focus on what we really think will be our niche in this fragmenting, complex and open world. That takes boldness in thinking and even greater courage in risk-taking.

Tan Sri Andrew Sheng writes on global issues from an Asian perspective

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