上海的月亮: EN — LARRY ROMANOFF: Leapfrog is Not a Game for Children

Detail of Children from Children’s Games by Pieter Bruegel the Elder.

CHINESE ENGLISH ESTONIAN ROMANIAN

Some readers may remember the playground game at elementary school that we called “leapfrog”, where we would successively hop over each other. I don’t know if this game still exists, but the term has now been adopted by academics and others to describe some kinds of social changes. “Leapfrogging” is now defined as a strategic approach to development or innovation where one entirely bypasses the existing and established stages of technology (or infrastructure), and instead adopts a more advanced and radically different system. The purpose is not to catch up to society in an area where one is behind, but to skip entirely a generation of technology or an organisational model, and move to a new model that renders the current system irrelevant. Typically, by the time the incumbents realize the new system is superior, the leapfrogger is already far ahead and is now defining the new standard.

Leapfrogging does not aim to improve on an existing standard or model; it renders it obsolete by adopting a fundamentally different approach. One example would be skipping landlines and moving directly to mobile phones. Leapfrogging typically exploits what we could term a “Latecomer Advantage”, where one benefits from not being locked into legacy systems and infrastructure, or huge sunk costs. Leapfrogging is rarely accidental, although the conditions or circumstances that permitted it, are often fortuitous. It is usually a deliberate strategy that requires vision and foresight, political will, significant investment in R&D, and the building of new supporting ecosystems.

The Underdog’s Advantage and The Incumbent’s Curse

It may be easier for the “underdog” to imagine the future and leapfrog the present. The person who is already on the top, may be blinded by that success. There will be exceptions, of course, people who are naturally able to imagine the future, but these individuals are probably rare. The underdog may have a significant advantage in that when you have little to lose, you are free to imagine radical futures. China’s auto industry, for example, had no revered brands to protect, so it could bet everything on the EV revolution.

And simultaneously, there exists the incumbent’s curse. Success creates a legacy system of technology, revenue, and mindset. It creates cognitive lock-in. For a company like Ford to suddenly embrace EV technology on a massive scale, would mean cannibalising their own existing, highly profitable gasoline-powered models. For most incumbents, their success not only blinds them to the next paradigm; it also binds them to the existing one. The existing “establishment”, whether that be corporate products or government policies, is incentivised to protect the present, not to invent the future.

The Leapfrog Way is to identify an inevitable technological or societal shift, and then instead of competing directly on the old playing field, to build the new playing field entirely. This requires foresight, patience, and a willingness to bypass established, low-margin markets. The goal is to define the future, not to win a battle in the present. There are many such obvious examples: EVs vs. gasoline-powered cars, Mobile QR payments vs. credit card networks.

Historical Relevance

Shanghai 1936

This topic is relevant to us from an historical perspective because the lessons inherent in this process supply us with an understanding of some modern history and current events that can be obtained in no other way. Leapfrogging is a universal phenomenon. It is a viable strategy that has been employed globally, where nations bypass outdated or inefficient systems by adopting newer technologies. Nevertheless, it seems that the best, and certainly the most profound, examples of leapfrogging emanate from China, so I will concentrate my comments on these.

In reading the following examples, it will be worthwhile to keep several thoughts in mind. One is to consider the societal environment in which these leapfrog events occurred. Another is to ask the obvious question of “why didn’t the incumbents perform this leapfrog themselves, instead of permitting ‘outsiders’ to upset their applecart?” A third, and extremely important, thought, would be to examine the respective roles of corporations and government in this context; from this, you will derive a critical understanding of something important about Western countries.

Landlines, Mobile Phones, and Computers

This one is a bit complicated because several related “leapfrogs” occurred simultaneously. When I first moved to Shanghai many years ago, one of my first realisations was that nobody had a land line. They still existed in corporate and government offices, but I knew of no individuals who had one. China had a long road to develop the nation after a century of Western destruction and two world wars, with most of the focus on drawing the population out of poverty. One result was that the national telecom infrastructure was being built just as mobile technology became affordable, so the Chinese just decided to bypass the wired landline system altogether. There was little point in installing expensive copper lines to the homes of a billion people when you could build more efficient cellular towers. And mobile phones became not only ubiquitous, but very inexpensive; at the time, a perfectly serviceable mobile phone could cost as little as $25. This was actually a major transformative event because China didn’t just adopt mobile technology; it vaulted over entire stages of technological development that Western countries had to evolve over decades.

At the same time, the personal computer revolution was occurring, with rapid development from desktop to laptop. Given the still relatively impoverished state of Chinese society, the high cost of personal computers meant that for a vast portion of the population, their first and only computer was a smartphone. This created a society that was native to mobile, not desktop. Thus, the Chinese, to a very large extent, bypassed the desktop computer and went directly to smartphones and laptops. All of this cumulatively was a transformational event that laid the foundation for yet more leapfrogs soon to come. I would add here that, just as no one in China had a landline, few offices had desktop computers. The direct transition to laptops was virtually automatic. There are still shops in China that sell desktop computers, but they are in the minority, and are focused on AI and specialised applications.

I want to add here an important historical note, relating to dismissive Western theories about “Chinese innovation”. China’s lag in the computer and mobile phone technologies was, more than anything else, an unfortunate accident of fate that occurred during a blip in time. After Mao evicted all the foreigners and China shook off the effects of 150 years of foreign interference and plundering to begin the transition to an industrialised economy, this was precisely when the world of electronics and communication exploded. It was during that brief period of a couple of decades that computers, the Internet, mobile phones and so much more, were conceived and patented by the West. Virtually the entire process passed China by, because during that brief period the nation was entirely enveloped in the fundamentals of its economic and social revolution, and in no position to participate. China’s lack of patents and IP in the field of electronics and semiconductors today is due neither to Western superiority nor Chinese lack of innovation, but to Western aggression. The accumulation of American and European patents was in no way due to Western supremacy in innovation but to the absence of the Chinese.

Paying for Purchases

This is a crucial part of leapfrog history, and one of China’s most profound and successful leapfrogging achievements. China’s payment revolution represents a triple leapfrog – bypassing cheques, debit/credit cards, and increasingly marginalising cash. China vaulted over three distinct stages of financial evolution that characterized Western economies. This wasn’t just a technological upgrade; it was a complete systemic overhaul that created a new financial paradigm.

The Western paper-based system of cheques and money orders was bypassed entirely. The very concept of writing a cheque is alien to most young Chinese. In the West, while debit and credit cards tied to a centralised banking infrastructure became the standard, they were also bypassed (leapfrogged) in China. While the West is making a slow and hesitant move to digital wallets, mobile QR-code-based payments were adopted by the Chinese as the primary system, a new decentralized network outside the traditional card rails.

The important point is that China had no deeply entrenched, ubiquitous card payment culture. While cards existed, the infrastructure was not pervasive, and the banks had no leverage for resistance. This meant there was little consumer or merchant inertia to overcome, that the population was ready for a new standard. China’s skip of the desktop era meant hundreds of millions of people came online for the first time via smartphones. These devices became their primary, and often only, window to the digital world, making them the perfect vehicle for financial services. WeChat in particular wasn’t just a payment app; it was an everything-app, encompassing social media, messaging, gaming, news, and e-commerce. Embedding payments into this daily-use platform created frictionless adoption. Payment became just another feature of daily social and commercial life, not a separate activity.

Moreover, instead of requiring merchants to install expensive card terminals, the system used simple, printable QR codes, making adoption cheap and instant for even the smallest street vendor, and the consumer’s smartphone functioned as the terminal. Unlike in the West, where payments flow through Visa/Mastercard, China created closed-loop ecosystems that settle transactions between users and merchants directly, often without ever touching the traditional interbank card networks.

The effects of this go far beyond convenience, fundamentally reshaping the economy and society. For one thing, hundreds of millions of people who were previously “unbanked” gained access to digital financial services directly through their phones, without needing a formal bank account. And cash was automatically dethroned. While cash is still legal tender, its use has plummeted. It’s now common to see signs in major cities saying “We accept mobile payments only.” This is more than nothing. For at least the past 10 or more years, I cannot recall carrying any cash; I can live all the events of my daily life and travel throughout China with only my passport and mobile phone.

It’s important to note that this wasn’t a government-mandated change, but one driven by private tech companies solving real-world problems, although the government did step in to regulate and standardise the system. The West is now playing catch-up, trying to replicate this system, but is hampered by the need to integrate with legacy banking infrastructure and card networks.

China’s bypassing of cheques, cards, and cash is arguably one of the clearest and most impactful examples of leapfrogging in economic history. It demonstrates that leapfrogging is most successful when there is a lack of entrenched legacy infrastructure, when new technology (smartphones) achieves rapid near-universal penetration; when the solution is dramatically superior (QR codes); and when it is embedded into everyday life through platforms people already use (WeChat). This payment revolution did more than just change how people pay; it redefined commerce, accelerated the digital economy, and provided a blueprint for how developing nations can build modern financial systems without being shackled by the West’s technological legacy. It is a perfect case study.

The crucial part is that the West had a 50-year head start with credit cards. The entire Western consumer economy, from point-of-sale systems to consumer protection laws and credit scores, was built around credit cards and they were deeply entrenched. Even today, both merchants and consumers rely heavily on the card payment systems. In China, WeChat and Alipay offered a digital payment system that was fundamentally better, cheaper, and more convenient than establishing a physical card network from scratch. They didn’t have to displace a beloved incumbent; they just filled a vacuum with a superior solution. With the “mobile-first” user base, WeChat and Alipay made the cards redundant.

Why the West Chose “Tap-to-Pay” Over “App-to-Pay”

Capitalism is an evolutionary deadlock.

It is worth understanding why the Western countries went to a card “touch-pay” system for purchases, instead of a mobile app like WeChat or even using PayPal. In particular, the touch-pay system is not safe. If we lose a card, either debit or credit, the finder could make many small unauthorised purchases. The banks decided to swallow these losses from fraud rather than face existential threats to their legacy revenue stream.

Introducing a new mobile payment system requires changing deeply ingrained habits and competing with a well-funded incumbent system. The infrastructure was already there. Every merchant already had a card terminal, and upgrading those terminals to accept “tap-to-pay” was a simple, cheap software update. Transitioning to a fully QR-code-based system would have required a complete and expensive overhaul of every payment terminal in the country. The path of least resistance was to make the existing card system wireless. Western consumers already trusted and understood their credit/debit cards. The “tap” was a minor, intuitive change to a familiar object.

There is also the entrenched power of the Visa and Mastercard networks. These giants make a fee on every transaction. They had no incentive to dismantle their own network in favor of a system built on QR codes that would bypass their rails. That means they had no incentive to leapfrog or revolutionise their own products and system, so they “innovated” by creating the “tap-to-pay” model. It is crucial to understand that they didn’t do this for the benefit of consumers or society; they did it solely to neutralise the threat to their revenue stream by the new mobile apps.

EVs

China did the same thing with automobiles as with payment systems. I covered this in much detail in a previous article titled China’s Electric Vehicles (EVs). [1] 20 or 30 years ago, China was making cars that were lagging in technology and design. They could have invested countless billions in attempting to duplicate the Western auto makers, but that would have been a race to almost nowhere. The reason is that if successful, Chinese autos would have been more or less the same and maybe “as good as” the Western ones, but no more. And the reputation of brands like Ferrari, Rolls-Royce and Lamborghini could never likely be matched. So, China just looked at the future, and decided to abandon gasoline-powered autos. They went directly to electric cars where no one had experience, and no one controlled all the IP. And the Western countries, reluctant to abandon a current “cash cow” legacy model, delayed until it was too late.

There is a distinct parallel between China’s leapfrogging in digital payments and its strategic pivot to electric vehicles. Both have a pattern of avoiding direct competition with established products and instead pioneering new technological frontiers. There is also a direct parallel between the legacy auto manufacturers and the legacy credit-card companies. While VISA and MasterCard were trapped by their own infrastructure and instinctive desire to protect their existing revenue streams, the legacy automakers were similarly trapped by their investments in ICE vehicles (internal combustion engines).

China’s pivot to EVs is one of the most significant strategic economic maneuvers of the 21st century, a textbook example of the “leapfrogging” theory in action, and China’s execution of it has been nothing short of masterful. For China to compete directly with ICE vehicles would have meant going head-to-head with over a century of accumulated IP, manufacturing expertise, and, most formidably, deep-rooted brand loyalty and prestige. Companies like Mercedes-Benz, BMW, Toyota, and luxury brands like Ferrari and Rolls-Royce are protected by moats that are almost impossible for a newcomer to cross. Catching up would have meant being “as good as,” but otherwise of not much consequence. The Chinese studied this at length, and made a decision to bet on what they saw as an inevitable technological shift – the transition from ICE to EV.

This was more than a change in propulsion systems. It was primarily a transition from mechanical to digital, from the traditional concept of an automobile to a “Smartphone on Wheels” paradigm. This is not widely understood, even by some in the auto industry, but EVs are fundamentally different from ICE vehicles. Their core value shifts from mechanical engineering (horsepower, engine sound) to software, battery chemistry, and user experience, which completely resets the playing field. China’s strengths in electronics, battery production, and software integration became massive advantages.

An important factor was what we might term “IP Neutrality”. No single Western company “owned” the EV space. The technology was nascent, and the patent landscape was not yet a walled garden. This allowed Chinese companies like BYD, Xiaomi, Huawei, NIO, and XPeng to innovate and build their own extensive IP portfolios without being locked out.

But we really need to examine the West’s complacency and inertia in the EV arena. My earlier point about the “cash cow” was precisely correct; the legacy automakers were (and many still are) trapped by the innovator’s dilemma. Their entire business model, from manufacturing plants to dealership networks and supply chains, was optimized for ICE vehicles. Transitioning to EVs meant (1) cannibalising their own profitable sales and (2) making existing billion-dollar investments obsolete. The Western automakers saw the writing on the wall as clearly as did the Chinese, but they chose to slow-walk the transition rather than face – and deal with – the clearly existential threats that the new paradigm presented. Their strategy was one of gradual evolution, creating compliance cars (like the early GM EV1) or “me-too” EVs that often failed to capture the imagination of the market.

On the other hand, China’s decision to leapfrog the internal combustion engine was a stroke of strategic genius. It was a recognition that the future of mobility was electric, and that (at least for China) it was easier to pioneer a new technology than to replicate a century of legacy expertise. The reason was clear: the “playing field” was level in EVs, offering a once-in-a-generation chance to reset the global automotive hierarchy. By refusing to play by the old rules and instead writing the rules for the next era, China has transformed itself from an automotive backwater into the world’s most formidable automotive force. It is a case study in strategic foresight and national ambition that is now being studied – and feared – in boardrooms around the world.

Military

China has done something similar in the military sphere, bypassing conventional weapons and developing hypersonic missiles. This is another kind of leapfrogging, and it certainly has changed the concept of a “secure battlefield”, turning US aircraft carriers from the equivalent of “death stars” to being essentially large moving objects with targets painted on them. China has extended the “leapfrog” thesis perfectly into the military domain. The country’s development and deployment of hypersonic weapons is arguably one of the most significant strategic leapfrogging maneuvers in modern military history, fundamentally altering the balance of power in the Western Pacific.

For decades, U.S. military dominance, particularly its power projection capability, has been underwritten by its carrier strike groups. To challenge this conventionally, a nation would need to build a rival navy with its own supercarriers, advanced fighter jets, and nuclear submarines – an endeavor requiring trillions of dollars and decades of development. And that would produce only an “equal” or “as good as”, a situation offering relatively little real security from foreign military aggression. China chose not to compete on these terms.

China’s hypersonic weapons, specifically the hypersonic glide vehicles, are that game-changer. Their revolutionary nature lies in characteristics that bypass traditional defenses, primarily speed and maneuverability. Their flight paths are unpredictable and their impact points uncertain until the very last moments. Now, the US is in the position of the legacy incumbent, scrambling to catch up in a domain it did not pioneer, much like American (and other) automakers are now scrambling to compete with BYD.

China’s Low-Altitude Economy

I have covered this topic in much detail in a previous article titled China’s Low-Altitude Economy — Flying Taxis, Small Drones and More. [2] You may find it fascinating.

China’s low-altitude economy fits perfectly into this picture, with multiple leapfrogs occurring simultaneously and generally unappreciated by other nations. This area includes bypassing even EVs and robotaxis, and taking to the skies. There are DJI’s small consumer and industrial drones which are integrated into everything from food delivery to agriculture to fire-fighting. But perhaps much more importantly, this transformation is also integrated into the flying taxis that are already operative in some cities in China. It seems reasonable to assume these flying taxis will inevitably morph into privately-owned transportation that could replace the EV to a meaningful extent.

This is typical leapfrogging, building a new playing field, and bypassing traditional stages of development. China’s development of its low-altitude economy avoids traditional infrastructure, creates new ecosystems, and sets global standards. One area that seems to be invisible to most observers, and that demands highlighting, is that this area involves the strategic avoidance of competing in established markets like traditional aviation and even EVs, and is instead pioneering a sector that did not before exist.

China’s development of its low-altitude economy is a quintessential example of the leapfrog strategy. It represents a deliberate move to bypass not only traditional automotive infrastructure but even the current ground-based EV and robotaxi revolution, by pioneering an entirely new dimension of transportation and logistics. This isn’t just an incremental improvement; it’s an attempt to architect an entirely new technological paradigm.

China didn’t start with flying taxis. It first achieved overwhelming dominance in the global civilian drone market, primarily through DJI. This provided the perfect (and necessary) foundation of manufacturing superiority. China mastered the entire supply chain for advanced drones, from motors and flight controllers to sensors and cameras, driving down costs and accelerating innovation.

The immediate result was the widespread commercial use of drones for tasks like food and medicine delivery, agricultural spraying, infrastructure inspection, firefighting, emergency response, and so much more. This allowed regulators to gradually develop rules and standards for unmanned low-altitude operations. Success was partially dependent on public acceptance, but seeing these drones deliver supplies, fight fires, and inspect power lines daily has made the Chinese public more accustomed to and trusting of autonomous aerial vehicles, smoothing the path for passenger-carrying models.

While much of the world was still debating the concept, China moved to deploy, with flying taxis being the key operative. Companies like EHang have received operational certifications and are already conducting commercial tourist flights in some Chinese cities. This isn’t just testing; this is full revenue-generating operation. The current “air taxi” model is primarily B2B (Business-to-Business) or B2G (Business-to-Government). Companies or cities own the vehicles and operate them as a service, allowing centralized maintenance, charging, and regulatory compliance, which is simpler to manage initially. However, as technology proves itself, as costs come down and regulations evolve, and as battery range increases, the transition to private ownership is a natural next step.

This is leapfrogging in its purest form. It avoids legacy competition entirely. It doesn’t compete with Toyota, Volkswagen, or even other EVs on the ground. It creates a new market above them, where there are no entrenched incumbents with 100-year head starts. It leverages China’s existing strengths, building directly upon China’s world-leading dominance in drone technology, battery production, and especially the “true 5G” connectivity which only China has. In this area, data volume and speed are vital, and it is important to understand that what the West advertises as 5G is in reality a tweaked 4G that is far inferior and ultimately incapable of supporting a low-altitude economy of flying taxis and so forth.

China’s actions in this area define the new standard. By moving first and at scale, China is in a prime position to set the global technical and regulatory standards for the entire low-altitude economy, just as it did with 5G. This forces the rest of the world to play by its rules if they want to participate.

This is a deliberate, state-supported, strategically executed leapfrog. It bypasses the messy, capital-intensive, and competitive struggle on the ground to pioneer an entirely new layer of mobility and economic activity in the skies. It follows the same pattern: identify a future technological shift, leverage domestic scale and capabilities to drive down costs, deploy incrementally but decisively within a controlled regulatory environment, and aim to define the global standard. If successful, China won’t have just beaten the world to the next generation of transportation; it will have built the third dimension of its economy, leaving others to play catch-up in the air as well as on the road. It is perhaps the boldest leapfrogging attempt yet.

This low-altitude economy is complicated because there are several things – several leapfrogs – happening at the same time. One is that the US is the world leader in private aviation, with an enormous number of small aircraft (2 to 10 passengers). The idea of private aviation seems to be catching on in China but, with the development of the low-altitude ecosystem, China might bypass (and leapfrog) the entire traditional private aviation structure and go directly to flying EVs. Just as with automobiles, China has no need to enter and compete with American “general aviation” products and infrastructure. It doesn’t have to build the extensive ground support for traditional private aviation, the thousands of small and regional airports and all the rest. And this gives it a strategic avoidance of competing in established markets or competing with established products. Flying EVs don’t need airports or runways or fuel tanks for support. Moreover, flying EVs can easily integrate with the “smart infrastructure”, the 5-GA and 6-G networks that China already has and is developing rapidly for a multitude of applications.

It is true that the current focus of flying EVs is on commercial operations and, although future personal use is implied, flying EVs may be quite expensive and not within the reach of the average person. I doubt the skies of China will ever be filled with tens of millions of flying EVs, but they might still become a common sight.

China’s low-altitude economy of flying EVs is appearing to be one of the greatest “leapfrogging” events of all time. It avoids legacy competition entirely, not competing with other auto makers nor with all the established makers of small private aircraft. Flying EVs would render those irrelevant. And this is not only a new market, but there are zero entrenched incumbents with 100-year head starts and who control all the IP. Here, it is China who has the head start and controls all the IP for drone technology, batteries, connectivity, and much of the AI necessary to control all this.

This low-altitude economy distills the essence of a complex strategic maneuver with remarkable clarity, identifying the multi-faceted nature of this particular leapfrog. It is several leapfrogs happening simultaneously, and its potential is staggering.

The United States’ dominance in General Aviation – the ecosystem of Cessnas, Pipers, and small regional airports – is a legacy system built over 70 years. For China to replicate this would be a costly and ultimately fruitless endeavor to become second-best. But the flying EVs bypass all this infrastructure. The eVTOLs (electric Vertical Take-Off and Landing aircraft) do not require massive runways, extensive hangar complexes, or the vast network of small airports that define American GA. They need vertiports -smaller, more numerous, and cheaper pads that can be integrated almost anywhere.

The flying EVs also leapfrog the fuel ecosystem: eVTOLs are electric. They bypass the entire global avgas and jet fuel supply chain, tying directly into the national grid and renewable energy infrastructure China is building. It is not an accident that China is expanding its electricity generation by enormous amounts every year. This is an integral part of the foundation upon which the entire leapfrog is built. The low-altitude economy, along with the EV revolution and the AI/data center boom, is a primary reason for this massive energy build-out, a result of strategic foresight: China isn’t just generating more power; it’s ensuring it has the energy sovereignty to power its next-generation economy without being constrained by foreign oil or gas.

Perhaps the most critical enabler of this new development is its integration with China’s existing digital ecosystem: the “smart sky”, the integration with 5G/6G and smart infrastructure. This isn’t just about building flying cars; it’s about building a digitally native transportation layer operating from a network in the sky. eVTOLs will not operate as isolated vehicles. They will be nodes in a massive, connected Internet of Things (IoT) network.

This is really a strategy of breathtaking ambition. China is not trying to win the existing game. It is attempting to leapfrog (1) traditional automakers (via EVs), (2) traditional ride-hailing and logistics (via autonomous ground and air networks), traditional general aviation (via eVTOLs), and traditional energy paradigms (via renewables and electrification). By controlling the vehicles, the batteries, the communication networks, and the energy that powers it all, China is positioning itself to define the future of mobility and logistics on a global scale. It is a holistic, national-level strategy that is unprecedented in its scope.

There is another core matter here, which seems to have entirely escaped the attention of almost everyone, that of leapfrogging “general aviation” entirely. This endeavor bypasses the “skill barrier”. Flying a traditional aircraft requires a highly trained and licensed pilot. The endgame for eVTOLs is autonomous or highly assisted flight, dramatically reducing the need for the same level of human skill and making the technology accessible to a much wider population. This is a leapfrog in human capital as well as technology. Perhaps the most profound and overlooked aspect of this entire technological shift is that it’s not just a leapfrog in technology or infrastructure, but a fundamental leapfrog in human systems and economic accessibility. This changes the economic model entirely – not just replacing pilots but creating new job categories while democratising access. It seems self-evident once stated, but its implications are revolutionary.

The “High Priesthood of Pilots” may eventually disappear in large part. Traditional aviation is built on a pyramid of immense human investment involving years of training. Becoming a pilot requires hundreds of hours of flight training, rigorous theoretical exams, and continuous certification. In a small aircraft, the safety of everyone on board is vested entirely in the skill, health, and judgment of one or two individuals. This necessity dictates the entire regulatory and operational structure of aviation, making it inherently unscalable. The cost of hiring highly trained pilots and renting or purchasing private aircraft is a primary reason private aviation and small-scale air travel have remained the exclusive domain of the wealthy and large corporations.

Autonomous eVTOLs shatter this old model. The “pilot” is not in the cockpit; they are in the Cloud: The real “pilot” is the algorithmic AI traffic management system that orchestrates the entire fleet in a way no human ever could. A small number of highly trained remote operators monitoring multiple vehicles simultaneously, a role more akin to an air traffic controller or a network administrator. The critical human capital shifts from operators to maintenance technicians, software engineers, data analysts, and system managers. This creates a different, and potentially larger, set of skilled jobs that are more scalable and easier to train for.

The implications are that we might see a complete re-wiring of the air transportation model. You can theoretically scale an autonomous eVTOL network as easily as you scale a cloud computing service. The limiting factor is manufacturing and infrastructure, not the years it takes to train thousands of new pilots. It transforms the cost structure from a service industry model to a technology utility model. Accessibility is the true leapfrog. It means a city can deploy a network of air ambulances, firefighting aircraft, or public transit vehicles without being constrained by the national pool of available pilots. It means a logistics company can deploy delivery drones 24/7 without union rules or pilot shift schedules. The leapfrog isn’t just about building a fancy new vehicle. It’s about building a new socio-technical system that bypasses the most intractable bottlenecks of the old one. And this model aligns perfectly with China’s capabilities and governance style, especially the ability to execute large-scale infrastructure projects.

China’s YiWu

I detailed this in a prior article titled China’s YiWu: Business Models You’ve Never Even Heard of [3]. The Yiwu lighter industry case is a fascinating and non-traditional example of leapfrogging. While it doesn’t involve the typical technological bypass of a generation of hardware (like skipping landlines for mobile phones), it represents a profound leapfrog in organisational structure, business model, and economic development strategy. I recommend you read the above-mentioned article.

Briefly, the YiWu area had about 1,000 factories employing about 10,000 people, all producing some form of lighters, all competing against each other, each attempting all functions including manufacturing and marketing. The Yiwu families, many without high school diplomas, invented a business model that was more adaptive and efficient than those taught in top MBA programs, allowing them to achieve stunning global dominance in their sector. This group decided to cooperate and specialise in a truly unique manner. The results were astonishing; within only a few years, YiWu’s share of the worldwide lighter industry soared from 30% to about 70%.

The most striking leapfrog was in organisational design. The Yiwu cooperative utterly bypassed the standard corporate architecture that dominates Western business. Their model eliminated all corporate overhead, with no board of directors, no executive-level or middle management, no policy manual, no fancy offices, no bureaucracy. Financing and capital investment were not centralised, but spread across thousands of small, privately-owned businesses, which eliminated the need for massive corporate debt or equity raises and allowed for incremental, agile modernisation based on each unit’s capacity and ambition. In this Yiwu industry cooperative, every employee was also a salesman. When any person was not busy with manufacturing tasks, they were on the Internet actively looking for more customers. This transformed a massive workforce into a hyper-motivated, decentralized marketing and innovation engine. It functioned as a huge single corporate enterprise, but with no overhead and 10,000 sales people.

The stunning results were the proof of a successful leapfrog. Increasing global market share from 30% to over 70% in a few years is a textbook example of a successful leapfrog. The structure created the ability to go from product conception to sample in less than 24 hours and to accept and fill orders of any size. These were capabilities that a traditional, bureaucratic corporation simply could not match. Generating a GDP of nearly $1 trillion from a regional cluster – an economic output that rivals entire nations – proves the immense efficiency and power of this decentralized model.

China’s High-Speed Rail (HSR)

I covered the development and current status of China’s HSR system, with comparative current information on the US, in an article titled, China’s High-Speed Trains. America, Where are You? [4]

China transformed from importing technology to domestically producing HSR trains based entirely on its own IP, achieving the world’s largest HSR network and exporting expertise globally. This gets to the very heart of what constitutes a “leapfrog”, because its nature is more systemic and strategic than simply technological. China’s High-Speed Rail is a premier example of leapfrogging, but not in the pure “skip a generation of technology” sense like going from landlines to mobile phones. Instead, it represents a leapfrog in national transportation infrastructure, economic integration, and technological sovereignty.

China did not leapfrog the technology of high-speed rail; it leapfrogged the developmental stage that other nations were trapped in. The most significant leap was that it bypassed the disastrous automobile-centric development model of North America. Most large nations (especially the US, Canada, Australia, and to a lesser extent, European countries) developed their economies and geography around a combination of highways and short-haul airline networks. China looked at the congestion, environmental cost, oil dependency, and inefficiency of this model and bypassed it entirely for medium-distance travel. For journeys under 1500 km, they made HSR the default, superior option. They built a new backbone for their economy.

While often not categorised as a classic technological leapfrog, China’s High-Speed Rail network represents one of the most ambitious infrastructural and economic leapfrogs in modern history. China did not merely build a faster train; it bypassed the entire 20th-century paradigm of transportation development reliant on automobiles and highways. By strategically acquiring foreign technology and then relentlessly innovating beyond it, China built a unified, national rail system that has become the envy of the world. It leapfrogged not a product, but a phase of development, transforming its economic geography and setting a new global standard for what national transportation can be. This framing positions HSR not as an improvement on what came before, but as a strategic bypass of a less efficient developmental path – which is the very essence of leapfrogging.

Epilogue

I should emphasise that none of China’s leapfrogs were left to chance. Each was a national strategy executed with long-term focus. Each was part of a comprehensive, state-backed industrial policy. China’s “leapfrog” model is not an isolated economic policy but a core national strategy applied across technological, economic, and military domains. It is a deliberate, long-term approach to rapidly to develop the country in the best way for the entire population. As I stated earlier, leapfrogging is usually a deliberate strategy that requires vision and foresight, political will, significant investment in R&D, and the building of new supporting ecosystems. These leapfrogs were not meant in any way to shift the global balance of power by refusing to play by the established rules. In fact, global considerations were largely irrelevant, except perhaps in the military sphere.

Again, the objective of China’s leaders has been, and still is, to develop China to its potential, in a way to benefit the entire population and create not only prosperity but stability. The fact that China has been able to leapfrog industries is related more to the purpose of China’s government, and that purpose is the rejuvenation of China. The Chinese did not begin making EVs to spite the Americans; their decision was entirely internal: what was the best for China?

I suggested at the beginning of this essay that, during the reading, you keep in mind the question of WHY the Western governments or companies didn’t execute the leapfrogging themselves. Certainly, they had the same view of the world, the same conjectures about the future, the technology and ability to innovate and execute, but they did nothing. In part this was due to a desire to protect their legacy investments, but mostly it was due to an irreconcilable difference in the purpose of Western governments compared to that of China.

It is an axiom that leapfrogging requires not only forward vision, but the creation and determined execution of long-term plans to bring that vision to fruition. But the structure of the political system in the West, the fabled multi-party “democracies”, actively discourages, and even prevents, any attempts at long-range planning. And the entrenched value system virtually prohibits such planning, except perhaps in the field of military supremacy.

Mr. Romanoff’s writing has been translated into 34 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’. (Chap. 2 — Dealing with Demons).

His full archive can be seen at

https://www.bluemoonofshanghai.com/ + https://www.moonofshanghai.com/

He can be contacted at: 2186604556@qq.com

NOTES

[1] China’s Electric Vehicles (EVs)

[2] China’s Low-Altitude Economy — Flying Taxis, Small Drones and More

[3] China’s YiWu: Business Models You’ve Never Even Heard of

[4] China’s High-Speed Trains. America, Where are You?

https://www.bluemoonofshanghai.com/politics/7219/

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