Pages Navigation Menu

China’s Innovation Race

China’s Innovation Race

Allison Carroll Goldman’s article in titled: ‘China’s Innovation Race’ describes China’s plans for cultivating innovation over the next 5 years. China is dedicating massive resources into the exact sectors America has let atrophy over the last few decades. But will all this be enough to become a world-class innovator the way they hope?

In one of his recent speeches, President Obama referred to the need for America to revive the flailing economy. He mentioned that to achieve this goal, America would have to leapfrog the rest of the world in terms of innovation, production and education. The theme of ‘falling behind’ was peppered throughout his speech, but the real question wasn’t whether he was correct or not, it was: “Falling behind whom, exactly?” China seemed to be the obvious answer, and for good reason. They have been diligently building infrastructure and capacity for a very long time. Interestingly, when Jon Stewart had Austan Goolsbee (of the White House Council of Economic Advisors) appear on “The Daily Show” to speak about Obama’s ‘winning the future’ campaign, he was practically laughed out of the studio.

A quick look into China’s economic plans reveals a very well-orchestrated campaign. Their current 5-year plan which covers 2011 – 2015 involves balancing economic growth, making it sustainable, increasing domestic consumption, improving education and most importantly, moving away from just being a widget manufacturer. Their aim is to become a bona-fide hub of product innovation as well. They are focusing on key areas that will be sectors of massive growth over the next 2 decades. These being: new energy, clean energy vehicles, biotech, high-end manufacturing, energy conservation, next-gen IT, new materials and environmental protection. They are allocating half a trillion dollars to them over the next 8 years, effectively doubling their usual spend for these sectors.

Their education plans are impressive too. They are raising education funding enough to effectively double the number of citizens with college degrees by 2020. From having almost no higher-education system at all three decades ago to now having the largest in the world, they have come a long, long way. However, they still have many challenges to face. Because of their strict one-child policy, China has a rapidly-ageing population on it’s hands with 168 million of them being over the age of 60. This number is only going to increase with the pressure to produce falling on the ever-shrinking working-age population. This might just be enough according to Robert Fogel of the University of Chicago. His estimations are that a college-educated worker is three times more productive than one without a high school diploma.

Whether China can improve their education system with the same analytical, heavy-handed approach used for their big industry remains to be seen. If the relationship between the amount of innovation and the number of college degrees was a fixed one, they might stand a chance, but unfortunately there is little evidence to support it. According to the author Malcolm Gladwell there are 5 keys to successful innovation:

  1. The right amount of resources – not too little or too much.
  2. Imagination for the potential application.
  3. Creative planning.
  4. Confident people to execute the plan.
  5. A free flow of ideas or concepts.

Some of these are obviously not China’s strong points. According to this recipe one needs people who will question authority, challenge the status quo, break rules and experiment. These are all attributes that are difficult to plan for.

As things stand right now, China’s innovation plan is producing products ranging “from the world-class to the awful” according to Foxconn CEO Gordon Orr McKinsey. He also stated that 90% of the patents from China are useless. However, this is just the start and if they can learn fast from these first few steps they just might become a major player within the next decade or two and surprse everyone. The good thing is that they have a plan and recognize their weaknesses. They also have a strong vision for the whole country to work towards. The fact that they are investing in their innovation and education are great things too, however, the question remains whether it will do the job or not in the long run. Will it help them compete when it comes to real innovation? This is something America is brilliant at and has decades of experience with. It will probably take China a lot longer than 5 years but either way, America would definitely do well to step their game up..and fast.

China is definitely not sitting still.

Note: The preceding is a summary of an article found though our research, and is provided here with editorial comment for members only. Please see the full article at the following link for full original content:

The New Asia Innovation Team