Chinese innovation – paper tiger or king of the hill?
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September 14th, 2011
08:00 AM ET

Chinese innovation – paper tiger or king of the hill?

Editor's Note: John Kao, dubbed "Mr. Creativity" by The Economist, is the chairman for the institute of large scale innovation and author of Innovation Nation. You can follow John on TwitterFacebook and at www.johnkao.com. This post is the third of six pieces by John about his recent trip to China. The first post was China as an innovation nationCheck back each morning this week at 8am for the next installment.

By John Kao – Special to CNN

Two narratives are in play these days with regard to China’s innovation future. They could not be more polar opposite. One is openly dismissive of China, while the other sees a massive threat from the East on a scale that makes the Japan of the 1980’s seem like a tea party. The truth as always lies somewhere in between. But there is value in deconstructing these current perceptions because the future of China is definitely in play, and with it the world’s response.

Perhaps the most obvious example of narrative #1 is a recent editorial in the Wall Street Journal, titled Chinese Innovation, A Paper Tiger. It argues that China’s innovation prowess has been misleadingly marked up because of the number of patents it has filed. The authors, respected management academics, contend that the quality of those patents is low, more related to incremental improvement than groundbreaking innovation and therefore, China is not an innovation force to be reckoned with.

While this may be an argument for teaching logic in business schools, it is typical of a more general thesis - that the Chinese are imitators, that they will always remain “downstream” from us who are the “upstream” wellspring of world-changing innovation. The “paper tiger” reference itself suggests a kind of pejorative payback, in that it was originally used by Mao Zedong to describe America’s lack of military will during the Korean war era.

Read post #1: China as an innovation nation.

Others who want to dismiss Chinese innovation with broad brush, negative strokes accuse the Chinese of attempting to win by cheating, citing ongoing issues with piracy and counterfeiting, or the perception of self-serving national innovation policies.

Finally there are those who feel that Chinese innovation is not relevant because the wheels are likely come off the Chinese economic juggernaut over time for many reasons, including: corruption, bad accounting practices, real estate bubbles and a social payment overhang of massive proportions.

The potential for upping the vitriol ante is disturbingly large, and does not lack for proponents. For example, Congressman Frank Wolf of Virginia recently introduced retaliatory legislation that effectively prohibits the White House’s Office of Science and Technology Policy (OSTP) and NASA from any scientific collaboration with China, specifically any funding effort "to develop, design, plan, promulgate, implement or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company." This is one reason why OSTP - the U.S. lead in the innovation dialogue with the Chinese Ministry of Science and Technology - was not along for our study tour. If the Chinese had questions about our fiscal policies, think how they must now begin to wonder about our politics.

So where does this leave us? As mentioned earlier, the truth is somewhere in the middle. China is not the Beast from 20,000 Fathoms that is poised to eat our (and everyone else’s) lunch. But they are richly endowed with innovation assets and their portfolio of investments are likely to pay off, which clearly makes them a force to be reckoned with.

What are these assets? First, and at an actuarial level, China’s massive population creates the world’s largest talent base. If you believe in the golden bee-bee theory of creativity (for example, that one out of a million people is a genius), then China has approximately 1,400 of such big brains. Capital? China has tons. Also, pent-up consumer demand and a high savings rate will support the development of an ocean of new businesses. National will? No one who visits China can miss the zeal with which national development is being pursued and the kind of hunger for knowledge that leads to business and social advancement.

Read post #2: Why is innovation so important to China?

Venture capital? Absolutely. While venture investing tracked at a respectable $5.4 billion in 2010, its growth rate is described as being “second to none” by Lux Research. And the ranks of business angels and entrepreneurs, though admittedly not many in the all-important serial entrepreneurs categories, is growing rapidly.

In terms of a national strategy for innovation, China definitely has one, and is iterating on it to realize continuous improvement. Innovation is clearly featured as a national priority in the 12th 5-year economic plan. More importantly, they have a cadre of leaders who get it, are responsible for it and are doing it. Innovation stewardship? Check. Infrastructure? Massive investment is pouring into science, technology, institutions of higher education, broadband etc. And perhaps most importantly, China has a national vision that the innovation drive is linked to.

Of course, there are significant liabilities on China’s innovation balance sheet and a good number of significant potholes on her path to becoming an innovation powerhouse. Three are worth mentioning in particular.

Pothole #1 is the Chinese tendency to think vertically from an organizational perspective. That is to say the person on top gets wide latitude to call the shots, whether they are the CEO, the professor or the domain expert. Part of the subtext of the periodic suppression of dissent in China, in my view, is because it is culturally dissonant and disrespectful to oppose the authority of one’s elders. I’m not justifying the Chinese position, but rather pointing out the challenges to the kind of innovation that largely comes from the edges and bottoms of organizations, and does not necessarily run parallel to a status hierarchy.

Related to this pothole is the overweighting of Chinese education towards neo-Confucian rote learning and “respect the teacher, learn the content” style of pedagogy. This shapes a culture that avoids risk and prefers incrementalism based on known business models rather than disruptive innovations that represent a leap into the unknown.

Pothole #2 is the tendency to rely on a centrally planned and top down approach to innovation. The Chinese approach to motivating innovation by linking benefits to the production of scientific papers and patents for example may be of some practical utility. But it also speaks to a nostalgia for an industrial model of productivity made up of objective inputs and outputs, metrics, and transform algorithms that fly in the face of much of what we know of as disruptive innovation, which can be inherently inefficient, nonlinear and on the edge.

Pothole #3 relates to ethical standards. The world will not accord China the full credibility it deserves until issues of reliable accounting, scientific honesty, and effective policing of intellectual property theft are addressed. The ethical issue inevitably leads to a perception of self dealing, and will be used by Congressman Wolf and others of his persuasion to justify the kind of retaliatory, zero-sum thinking that could lead to what one might call an innovation war. I will deal with that scenario as well as the potential for China-U.S. innovation collaboration in my fifth post of this series.

The views expressed in this article are solely those of John Kao.

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Topics: China • Innovation

soundoff (236 Responses)
  1. common dense

    I think the US and Fareed spends more time determining if China is innovated than the chinese government. Seriously how is this related to fixing america? Or are we just going to ignore it completely and blame it on china?

    September 14, 2011 at 10:46 am | Reply
    • china

      China is going to war with USA, its going to be the result of WW3

      September 14, 2011 at 11:00 am | Reply
      • j. von hettlingen

        How do the two go to war with each other? To claim what? Innovations?
        I think small advanced economies are flexible and more favourable for innovative people than countries with big bureaucracies. They can sell their ideas to China and the U.S for big money.

        September 14, 2011 at 12:52 pm |
      • tj

        We are at war with China and its an economic war. We are loosing. badly

        September 14, 2011 at 3:28 pm |
      • really?

        china is a 3rd world country and will always remain a third world country. you can only use slave labor for so long before it backfires on you. the rest of the world will NOT allow you to destroy the environment to try to become something you are not nor ever will be, a true world superpower.

        September 14, 2011 at 4:02 pm |
      • mickey1313

        and another thing, hows the weather there, lol, miss your 44 million yet? oh wait you need to loose 750 million before you re-gain solivance. I think china is doing just fine at distroying china.

        September 14, 2011 at 8:03 pm |
      • william fitzwater

        Going to war with China this reelects the nostalgic bi-polar point of view we enjoyed with former Soviet Union. China is neither our friend nor our enemy. They are a rival both economical and in a sense culturally. We need to engage with them but at the same time realize this.
        They are competing for resources and market / I would feel China Achilles heel is defiantly squashing of descent and ethical standards. Who in effect is behind the curtain pulling the levers & who pays when injustice is found. China has a very poor record on human right , rights on descent , opposition , unborn and religious freedoms. with out true openness mechanisms to to provide due process and accountability China will implode . Its a matter of time when dealing with socail injustice.

        September 15, 2011 at 3:28 pm |
    • US of A

      we can kick your azz china. with nukes.

      September 14, 2011 at 11:02 am | Reply
      • common dense

        i hope you realize that a lot of countries have nukes now...it's not ww2 anymore

        September 14, 2011 at 11:17 am |
      • Punisher2000

        Go nuke your azz

        September 14, 2011 at 11:54 am |
      • Rocky

        We have only one earth. You can nuke here and nuke there, but eventually you will nuke youself!

        September 14, 2011 at 12:49 pm |
      • Paul

        If you can't even kick Afghanistan's ass, how the hell can you kick China's ass??

        September 14, 2011 at 4:47 pm |
      • mickey1313

        to the detractors of this statment i have 2 thoughts. #1, it is called mutually ensured distruction, and it stops nuculer war. #2, what ever the government says we have had reliable anti balistic missle tech for 20 years, they will launch, (btw the launch of a nuke takes hours, not minutes) we will blow it up in silo, then we launch and the loosers loose.

        September 14, 2011 at 8:07 pm |
      • Lil W

        Since many of you call China "immitators", China can nuke your fat American asses too.

        September 14, 2011 at 11:14 pm |
      • Smart black guy

        The US has at least 1500 nukes, according to the START treaty. It's questionable whether China's 40-80 would even make it across the ocean. So no, you aren't the USSR. Stop posing lol. You couldn't even send one nuke to each country in the world. Just give up, you can't win against the US. The USSR tried, now it's your turn to be disappointed.

        September 14, 2011 at 11:28 pm |
      • G. R.R.

        @US of A,
        Have you noticed the fact that the nations that are now acquiring nukes (north korea, burma, Iran, and Venezuela ) are all friends of CHina. Increasingly, that includes Pakistan. So, are we going to nuke all of them as well?
        If you look carefully, these nations are satellites of China.
        Where this comes in handy for China is that down the road, these nations can threaten the USA and then we send into them. That will be followed by China coming at us. It would not be a big deal, however, we are cutting back our missiles and warheads while China is quietly restarting their warhead production.

        September 15, 2011 at 5:23 am |
      • tdsd

        @ Smart black guy,

        If that is so, why is America not nuking China?

        September 15, 2011 at 6:43 am |
      • Justin

        Well, If US is very strong,why US lose the war twice in Vietnam and North Korea.In that time, China was as poor as an Africa country,

        September 15, 2011 at 9:39 am |
      • Seriously

        China already kicked America's azz in the Korea War and that was without them having nukes at the time.

        September 15, 2011 at 4:43 pm |
    • China

      bish please.

      September 14, 2011 at 11:03 am | Reply
      • Smart black guy

        I think they are a paper tiger, and I'm not going to let Mr. John Kao guide my discussion on this topic. Everything they do is face saving/image enhancing. They don't innovate for the sake of innovation. Cracking the whip and saying "innovate da*n you!" isn't going to make them innovate either. It would require an entire break down/reconstruction of their society to be free and not just give the illusion of freedom.

        September 14, 2011 at 11:31 pm |
      • JohnKao

        顶!

        September 15, 2011 at 9:36 am |
    • G8r

      The U.S.A. needs to take responsibility for itself and not try to be the policeman of the world. We need to improve our education system back to the point that it is at least one of the top systems in the world, if not the best; we need to provide business with incentives and protections to innovate and produce; we need to cut back the level of taxation and simplify the form of taxation on individuals and business; and at the same time provide protections for the environment and the people. Poisoning our own nest or that of others is not an option. Passing on onerous debt to our grandchildren is not an option. Using our men and women in the military as mercenaries to protect the interests of the oil industry is not an option; they are to be used to provide security for OUR Country. Politics and partisanship as usual is not an option. As one of the Founders stated, "We need to hang together; otherwise we shall hang separately."

      September 14, 2011 at 4:53 pm | Reply
    • susan

      China is innovative because there are a lot of smart people, a culture that drives people to succeed, less government interference in business and more stable IP laws.

      September 14, 2011 at 5:48 pm | Reply
      • jo

        Yeah, and there are more coms and insidious chinese. Everything is fake and everyone is a liar there in china.

        September 15, 2011 at 4:04 am |
      • Neil Cassidy

        So many smart people in China?? Susan, have you ever been to China or better yet, lived here? I've been here 6 years and can honestly say I've never been around more backwards, ignorant people in my life. So many lack basic knowledge about health, science, and the outside world. They also lackk common sense–and graduates of Chinese colleges can barely function on their own when they get out of school. It's the bane of MNC's here. Creative and critical thinking? Forget about it. They don't know what they don't know. Stop relying on stereotypes to make your supposedly educated points, Susan.

        September 15, 2011 at 11:04 am |
      • TXIvy

        Susan, almost everything in that sentence was factually incorrect. i cant tell if you were trying to be facetious or not. China is not full of smart people, especially when compared to a Western nation, like the US. The bulk of their population lives in total ignorance of the outside world, and has little means of becoming informed – it's not like they all can just flip on the internet and see what the world is doing.
        Their culture doesnt encourage innovation, it encourages success, which is not the same thing. Again, for diametric comparison, Western culture teaches individuality, responsibility and independent, creative thought, all of which are necessary for innovation and development.
        Finally, less government interference? More stable IP laws? You do understand we're talking about China, right? The same nation that has practically NO IP protection, so much so that copyright infringement and international bootlegging has become a huge problem? The same nation whose primary businesses are state run? In the west, if government run programs account for say, 15% and private is 85%, in China those numbers are reversed.

        September 15, 2011 at 6:19 pm |
    • Dan, TX

      Wait a minute. I am wanting to start businesses in China and work for Chinese companies. They will pay me lots of money for my ideas. I will get paid more by Chinese companies than American companies. This is not about loyalty to a country, it is about capitalism and using your talents to make money. China will buy American brains, if necessary, to innovate. This is not attacking America, it is being like America. Isn't that what we want, the rest of the world to be like America? I will be glad to sell my unique innovative ideas to the highest bidder, like any good American should. If the highest bidder is the Chinese government, how is that anyone's business but mine?

      September 15, 2011 at 1:15 am | Reply
      • Neil Cassidy

        Don't be naive, Dan. I've lived here in China for 6 years. Have you ever heard of localization? Only Chinese get hired here by Chinese companies and MNC's, except for top management still here on expat packages. Do you speak fluent Mandarin? That would be one vital criteria. Another, if you somehow got hired, would be to accept much LOWER pay than you've ever earned before, because Chinese would rather get your ideas for very little or free. They are used to stealing their ideas–do you think they are going to be you a lot of money? Everything you might hear about dishonesty and cheating in China is true and more universal than you'd ever believe. I suggest Plan B, Dan.

        September 15, 2011 at 11:09 am |
    • JM

      I don't the US is going to blame it on China. I think the world will though. Opening up trade with China clearly has ruined the world. China itself has diluted the consumer market but who is exactly to blame? The US who started the trade agreements or China not holding up fully to their word on the trade agreement. China won't let their currency float and therefor monopolizing the manufacturer employment market. They won't let it go because they don't want the jobs to leave. Companies are now seeing the problem, they are able to sell their products at a cheaper price with an increase of profit however, consumer market has decreased. Damage has already been done and China should have copied enough make themselves self sustaining. So whats the answer? China can only go so far on cheap labor. As the consumer market has decreased which we are experiencing now China will slow in growth. It is funny because the two countries are nearly perfectly correlated with one another. If US looks to India to replace China, China will likely fall. Since labor is cheap and demands minimal resources China is on a verge of make or break. One thing that China does have the upper hand is the resources (rare earth metals and minerals) which our technology rely on. But the only reason we get our resources from china is because they can mine it cheaper and at a large volume. Until other countries can get up to speed on this then China has that in there favor. I wouldn't fear China, they are not even half the size of economy yet and prolly won't be in the next 5 years with projected rates.

      September 15, 2011 at 3:02 am | Reply
    • LV

      China is a communist police state using massive public works to back entry into areas such as solar arrays. They have stolen the designs and processes for many, many things, pegged their currency to the USD by fiat, and are, as a result, basically engaging in economic warfare with one aim: take down the US and make China 'great' again. Are they a paper tiger? They cannot even claim the South China Sea, and they just make up GDP numbers, so, yes, they're about 50% full of nonsense. Can they continue to use state money to pound our enterprises and flood our markets? Yes.

      September 15, 2011 at 11:58 am | Reply
      • Lee S

        If they took us down who would they sell to? WIthin the time it would take to fight a war we could bankrupt them by boycotting their goods.

        September 15, 2011 at 5:27 pm |
    • jorge washinsen

      Who would China sell all of that junk too if they nuked us?

      September 15, 2011 at 2:07 pm | Reply
  2. Pete

    "Make things cheaper with dirty energy and paying your workers little to nothing" is not innovation. The word "innovative" means "something new, not done before." Making things cheaper with dirty energy and paying your workers little to nothing has definitely been done before, and continues to be done.

    September 14, 2011 at 10:56 am | Reply
    • china

      i love you guys

      September 14, 2011 at 10:59 am | Reply
    • Allison

      http://www.payscale.com/research/CN/Country=China/Hourly_Rate

      Assembly factory worker making about USD 4. Don't just look how much they made a hundred years ago and talk tought here.

      September 14, 2011 at 11:29 am | Reply
    • Kailim

      (1) Americans are the dirtiest energywise. They have the highest CO2 emission per head in the world.\
      (2) Chinese workers are paid adequately for their living. Our cost of living is far lower than in the US. They even have the liberty to migrate to where the pay is higher, most of them flock to Yangtze delta region for this reason. Some of them even have enough money to send their children abroad for education. We got use to save money, our income has allow us to do so as well. In case we really become out of job for whatever reason, the first thing we contemplate is how to spend less from our saving for maintaining living; instead of figuring how to pay the credit card amount spent last month.

      September 14, 2011 at 1:51 pm | Reply
      • Michael P. Smith

        One thing the Chinese emphatically do not have is the freedom to move to where the jobs are. The vast majority of internal immigrants can't get hukou, and can't send their kids to school.

        September 14, 2011 at 11:28 pm |
      • Kyle

        The USA have the 12th highest CO2 emissions per capita.

        September 15, 2011 at 7:44 am |
      • ozmodius

        Ahh Kailim, your post illustrates one of China's biggest problems. No domestic market! Sorry to tell you this BUT the Walmarts of the world cannot and aren't continuing to expand indefinitely. China needs to start stimulating domestic demand.

        September 15, 2011 at 5:36 pm |
    • Dan, TX

      Right, why does China get to abuse powerless workers and freely pollute? That's not fair, we should exploit American workers and be allowed to pollute at home here in America!

      September 15, 2011 at 1:18 am | Reply
    • LV

      Since the 1970's, China has required anyone doing business in their country to invest real money locally while disclosing manufacturing and other processes to the government. We cannot compete with a police state bent on using capitalism and 'free' markets to destroy us in order to be 'great' once again. Look around US universities - why so many Chinese students? Their next phase is to bring home our know-how most broadly, and after stealing technology and ensuring we can't even sell them movies, well..........

      September 15, 2011 at 12:01 pm | Reply
    • jorge washinsen

      I like the Greeners. I remember when we were smelling coal smoke and our fathers were working and we were the strongest country in the world. If smog kills people why has China got 1.6 billion souls still kicking?We have millions over 70 years old here and they surely smelled coal smoke.A bunch of hog wash.Fat and sitting on the duff,and pills are killing Americans

      September 15, 2011 at 2:15 pm | Reply
  3. china

    blame it on china

    September 14, 2011 at 10:58 am | Reply
  4. Onesmallvoice

    Economically speaking, China is fast becoming King of the Hill but militarily, it's a Paper Tiger compared to the United States. Ours is the only country in the world to spend over half of the revenue on it's military and that makes us a military superpower but is weakening us economically. This, I expect to continue!

    September 14, 2011 at 10:59 am | Reply
    • common dense

      i highlt doubt it. As long as the "remember 9/11 and the support our troops" cries are made, we will continue to spend on our military. Which I find highly strange, if "we support our troops," then why do we place them in dangerous environments for no reason? I.e. Iraq

      September 14, 2011 at 11:19 am | Reply
    • JamesX

      In modern day Economics is more deadly than any military. And to deter military invasion all you need is the power to blow up the planet once. No idea why we need enough Nukes to blow up the planet 40 times.

      September 14, 2011 at 2:09 pm | Reply
    • Dan, TX

      China is no more interested in trying to expand beyond its borders these days than it has been over the past 5000 years. China has been a defense oriented country (the Great Wall) for a long time. It has been invaded much more than it has been an invader.

      September 15, 2011 at 1:21 am | Reply
    • Russiapride

      china has nothing to prove...every country is talking ill of china ..but it seems the Chinese government doesn't give a f***, and you think Bush doesnt give a f***..try China.

      September 15, 2011 at 5:31 am | Reply
    • Regan

      I agree about the paper tiger comment. China just built it's first aircraft carrier. How many does the US Navy have? I do not agree with your half of our revenue going to defense comment. The US annual GDP around $14 trillion a year. Defense budgets run around $600 billion a year. Percentage wise that is actually on par with many other countries. Our economy is just much larger than other nations. I am so tired of so many people trying to prop China up. As Americans we need to take care of our problems at home, our budget deficit etc. The world needs to hope the US never falls. China allies itself with the likes of N. Korea, Iran, and Venezuala. I live in Europe, and trust me when I tell you, they no longer have much of a back bone when it comes to standing up to tyrants(except GB). Without the US and its Military there will be no one to keep the wolves from freedoms door.

      September 16, 2011 at 7:17 am | Reply
      • agrwtw

        The US has 11 carriers and China didn't build one from scratch I believe they refurbished one they bought off the Russians.

        October 4, 2011 at 6:27 pm |
  5. cpc65

    Paper King or Tiger of the Hill?

    September 14, 2011 at 11:13 am | Reply
  6. Read much?

    @common dense I think you spend far too much time trolling than reading and comprehending articles. Also I'm pretty sure that the article was written by John Kao, not Fareed Zakaria. Did you even read it?

    Chinese innovation is important because right now, the US is leading the world in innovation and it is one of the main reasons for our success as a nation. I do believe that John Kao nailed it on the head. The main problem stifling China's innovation happens to be one of their strengths and proudest accomplishments, their long history of tradition and culture. It is continually instilled in them to follow culture and to not "think outside the box". In America, innovation comes from the highly educated as well as the college dropouts who take their deviant ideas and make them a reality. Our mix of culture offers more opportunity for innovation.

    September 14, 2011 at 11:19 am | Reply
    • common dense

      I hope you realized the meaning of ratification. Karo might have written it but Fareed placed it on his blog. Thus is the term "ratification." I think you need to go back to school instead of trolling.

      What's the US innovation? Create the ipad and then the ipad 2 which is basically the ipad with more space? Let me guess the US innovation is going to war with 2 countries installing dictators and destroying its economy? If that's innovation, I'm glad china is not part of it

      September 14, 2011 at 11:25 am | Reply
      • Read much?

        Ratify – to confirm by expressing consent, approval, or formal sanction
        I don't see how posting something to your blog means you approve or agree with the article. Could it be that the article is interesting? pertaining to current economic situations? possibly a good point of discussion?

        really? the ipad 2? that's the best you can think of? I was thinking more along the lines of supersonic aircraft, cotton gin, morse code, atomic clock, chemotherapy, the INTERNET and most everything else pertaining to it. the greatest/worst invention ever, the atom bomb. But if you want to stick with the ipad that's fine with me, still more innovative than making fake knockoffs of ipads and trying to pass them off as their own. Yes I know the ipad/galaxy tab/playbook are all copies of something else but they happen to be the best at what they do. That's why I would still say that my ipad is more innovative than your chinese Huawei crap, which is sad considering they are both made in China.

        September 14, 2011 at 11:56 am |
      • Read much?

        oh yea, forgot another great american invention, american football! ha!

        September 14, 2011 at 12:00 pm |
    • steven

      China's policy and culture is kill innovative,The high price of the real estate the serious inflation will cause more and
      more people lossing their innovative.Since people won't have enough money to put it into the enterprise or establish a business .All the money go into the real estate as well as the bank.

      September 15, 2011 at 1:09 am | Reply
      • Dan, TX

        Chinese learn to mimic and take ideas. Mao's ideas are their ideas – taking someone else's idea and it becoming their own idea is something they have been trained to do. It crushes innovation they don't learn to have their own ideas, they learn that other wiser ideas (again, Mao or Confucious) should be internalized and become THEIR ideas – they need not bother to create their own ideas. BUT, they now are beginning to understand this, they are now bringing American professors to China to teach. Innovation will improve in China in the next 20 years.

        September 15, 2011 at 1:25 am |
  7. Uncle Sam

    Innovation is not the issue, the Chinese are master copiers.

    Going back to Adam Smith, a nation's wealth is what it manufactures, mines and grows. China has an almost limitless supply of cheap labor, no labor unions, no workplace safety regulations, no minimum wage, no environmental regulations. As long as we force U.S. companies and workers to compete on such an uneven playing field by allowing free importation of Chinese products, the U.S will lose. We have already transferred a significant portion of our manufacturing base to China. It does not take a rocket scientist to figure out why our economy is in trouble.

    September 14, 2011 at 11:27 am | Reply
    • AngryCenter

      I agree with you, Uncle Sam, that the trade agreements we've made should've addressed a better level playing field. Innovation, alone, cannot help our economy. The number of people to employ, encourage and support innovation is a lot less than the number of people needed to manufacture the end product of the innovation.
      However, we still need to worry about China's ability to innovate. If they could also create new products and technology and hold more patents, the U.S. could be shut out of being able to use them. Patents and technology are often the source of more new products. Hence, if we are not able to use them, we are not only shut out of 1 thing, we could be shut out of many down-stream products. Once that happens, even if we do decide to get back into the manufacturing game, we can't because we do not own the technology or patents.

      September 14, 2011 at 12:19 pm | Reply
    • G8r

      I agree with you Uncle Sam. As long as the Chinese culture is prevented from free thinking, they will have problems with large scale innovation. On the other hand, as Americans, we are putting our ability to innovate at risk because of our failing education system. The taxpayers have invested in each child in our public school system something North of $100,000, yet we continue to allow a few to disrupt classes in which we have 2 or 3 million dollars (20 or 30 students per class) invested. This makes no sense and should be dealt with.

      September 14, 2011 at 2:14 pm | Reply
      • DalaiLama

        Whatever. But one bright Chinese invention I especially enjoy is e-cigarettes. Thank god for it, because I don't reek of cigarette smell, Clinton does not know I smoke.

        September 15, 2011 at 6:47 am |
      • RandalHere

        So the ones that do not conform, who live out of the box, should be made to be "NORMAL".

        The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

        -Geo. Bernard Shaw

        September 15, 2011 at 8:33 pm |
    • ozmodius

      Actually Uncle Sam, some Chinese workers are starting to unionize. Hence, why companies like Apple are moving farther inland. I think we will see quite a bit of this "cheap labor chasing" in China in the years to come.

      September 15, 2011 at 5:44 pm | Reply
  8. ObamaBush

    As mentioned yesterday, China's system is not set up for free thinking which results in innovation. Free thinking = questioning the party which is a no-no in the land of peaceful harmony.
    Rewriting someone else's research but with Chinese characteristics does not equate to innovation either.

    Who needs nukes? China's lifeline is trade with the US and Europe, cut one off and China falls. The economic weapon is far more deadly and less destructive than the physical ones. US/China war would also erase America's "debt" with China if you believe that it actually exists. Its more a necessity for the communist's existence.

    September 14, 2011 at 11:30 am | Reply
    • Rocky

      You are so smart. You will be the president of XXyYYZ island.

      September 14, 2011 at 4:47 pm | Reply
    • 1benza

      So to make China fall your willing to commit suicide? While a large part of the Chinese economy is heavily dependent on exports which guess what are needed and required by almost every western civilization, it is slowly moving toward a more consumer based society. Cutting off China's trade is the equivalent of nuclear MAD on an economic level. China pulls their investments from America causing a cascading effect that will effectively destroy the world economy. Good job governing.

      September 14, 2011 at 11:18 pm | Reply
      • Sheigh

        We can survive an economic embargo of Chinese goods, they cannot. For all this talk of "they took our jerbs" the truth is that the most technically challenging industries are keeping their plants in America, because you need innovation to build a better computer, you need slavery to build a better rubber chew-toy. Any shooting war would be economic suicide for China – they would lose their merchant-marine, their trade agreements would be void, and any debt owed to them would disappear.

        September 16, 2011 at 11:34 am |
  9. umadbro

    China was the world’s largest economy for 18 of the past 20 centuries. China going back to the king of the hill is merely a return to the status quo.

    -umadbro?

    September 14, 2011 at 11:39 am | Reply
  10. BamaJim

    what a stupid headline! Like most things in this world the truth lies somewhere in between. China is actually quite innovative with recent technologies and also significant investment in R&D in the past decade but it still lacks certain countries although the gap is closing. They are probably about 3/4 th up the Hill but they are definitely not paper tiger.
    Stupid sensational headline as always.

    September 14, 2011 at 12:11 pm | Reply
    • Half&Half

      I seem to be having trouble finding these "innovations" during the last decade. Could you name them because the only thing I could find that China has recently given the world are cheap Walmart prices.

      September 14, 2011 at 12:30 pm | Reply
      • Jacob

        China currently leads the world in published nano-technology research. They invented the maglev wind turbine, which is 50% more efficient than any other design. They are the first country to produce a cheap hydrogen fuel cell, and they are putting it into all sorts of vehicles. China is also the world's leading producer of solar cells, and they are very close to overtaking the US in almost all areas of green technology. The US is still #1, but unless we get serious about science and math education, we won't be for much longer.

        September 14, 2011 at 2:08 pm |
      • BamaJim

        The fact that you actually think all China makes are Wal Mart products is warning enough for me to not get into any sort educated and factual discussions with you.

        September 14, 2011 at 2:48 pm |
      • Half&Half

        I'm pretty sure the maglev wind turbine was originally invented by Hermann Kemper and commercialized by Ed Mazur. I could be wrong but i got that straight from the company's website.

        September 14, 2011 at 3:58 pm |
      • Tenpa

        China also specializes in modern day concentration camps in Tibet and Uigur regions, making ancient tortures fashionable in the world again. The world wouldn't care as long as they get their dirty hands some money. On second thought, the Nazis already did it. So, they copied that too.

        September 14, 2011 at 5:51 pm |
  11. AngryCenter

    Innovation, alone, cannot help our economy. The number of people to employ, encourage and support innovation is a lot less than the number of people needed to manufacture the end product of the innovation.
    However, we still need to worry about China's ability to innovate. If they could also create new products and technology and hold more patents, the U.S. could be shut out of being able to use them. Patents and technology are often the source of more new products. Hence, if we are not able to use them, we are not only shut out of 1 thing, we could be shut out of many down-stream products. Once that happens, even if we do decide to get back into the manufacturing game, we can't because we do not own the technology or patents.

    September 14, 2011 at 12:21 pm | Reply
    • Half&Half

      I absolutely agree! The manufacturing end supports more jobs than the innovation end. This is why our economy is hurting right now. Although we still have the innovative edge, the lack of domestic manufacturing is killing us. If we were to lose the innovation as well, that would be the end. We need to keep our innovative lead as we start bringing manufacturing back to the US.

      September 14, 2011 at 12:37 pm | Reply
      • AngryCenter

        The biggest 64 million dollar question is HOW do we bring manufacturing back?

        On the side, we have a party that keeps yelling for eliminating taxes, demolishing unions, and ending regulation. OK....so, their answer is to turn this country into Little China....low-wage vs. low-wage ... yeah...I guess you can call that a level playing field.

        On the other side, we have a party that is yelling to spend more money on infrastructure and education. OK, so....then what?

        On both sides, they want MORE trade agreements with MORE low-wage countries.

        Globalization is unavoidable and unstoppable. So, I think it is a waste of time to argue for shutting down all doors and all opportunities. However, it doesn't mean just because you have to make a deal, that you have to be a schmuck about it! Can we please elect sensible people to our government ... i.e. NOT the ones who keeps parroting their party's garbage talking-points? But people who actually understands complex global matters and who actually want to find INNOVATIVE trade agreement solutions?!!

        September 14, 2011 at 1:42 pm |
      • G8r

        We do have a door of opportunity left open yet. We are capable of manufacturing high quality items while the Chinese are content with lower quality. It's not that they can't; it's that they don't focus on high quality. As long as they are satisfied with that role, we have a niche.

        September 14, 2011 at 2:20 pm |
  12. TigerLily1945

    Whilke I agree with most of what you have said........ I find it hard to believe that we the USA or europe for that mater will ever take over Chica's status as a consuming contry. They have 1.3 billion people and the US has 315 million. Even if the US bought one item made by China we only purchased 315 million items. Now if China would allow the US to import itmes made in the US to sell to the 1.3 billion people we would not need Chica to purchase and US bonds.. but that will never happen. You see when a US company goes to Chica to open a factory they sign over their rights and yes for about 3-4 years the US company gets rich but then China suddenly starts making the same item and they put the US company out of business. If the people of the US actulay knew which oroducts were being made for the chinnes companies and that which is made by the American companies they would soon know the magnitude of the theft the Chinnes are doing to the American economy. As it is everything says MADE IN CHINA but is really american and what is chinnes?

    As to the chinnes building their infrastructure, yes this is simply to do. They simply pick out an area they want and move every living thing out and build the structure.... in the rest of the world they would have to go through zoning and purchasing of the land to build it....... It is not a democracy but still a comunist contry... the average chinnes do not have rights and therefor no say in what happens to them. The Chinnes government give just the right amount for modern inventions and rights to playcate them and take what they need.

    America will never surpass the chinnes. they have too many people and our buying power will never equal what the chinnes have in population alone. We can only surpass them in inteligence, inovations and creativity give throught the democratic rights each of us have and the Chinnes will never have............. we are not sheep and the chinnes are..... they are followers and will never lead the world in power........... They need us too much......... GO AMERICA

    September 14, 2011 at 12:39 pm | Reply
    • 1benza

      Haven't you noticed that democracy sucks. Command economies are the ones that work best, long term and short term stability. China always knows where its going, 5 year plans help to steer the country, allowing time for adjustments to be made. In America, king of democracy, whatever the polls say is good is the direction the country will move. This means that every two years the direction of the country changes, but that is only factoring in congressional and presidential election cycles, if you factor in the gubernatorial cycle then the shift in the direction of the country is more to the tune of once a year. A country that constantly changes its mind will go nowhere. If you look in the past of America there was a direction that everyone agreed to move toward, but with the hyper partisanship the country is not moving anywhere. Time to change who your root for, the chant will not be Go USA but Go CCP.

      September 14, 2011 at 11:27 pm | Reply
      • Sheigh

        You're right, command economies work so well in Zimbabwe, Cuba, North Korea . . . the only "command economies" that work are ones that allow more liberal capitalist approaches, like Vietnam and Venezuela. That is what China is trying to copy, but on too grand a scale.

        China has NEVER been "great." It has never been a leader in economy, never commanded any kind of overseas empire, has no force projection or ability to assert its will beyond its own borders. The rest of the world plays along with China for cheap crap, chuckle and politely nod when they publish a "We can science too!" paper without being able to back up any of their claims, and sit back watching a system that will destroy itself within two decades.

        September 16, 2011 at 11:40 am |
  13. spoo

    the future of china depends on the US policies. as long as the US corporations continue moving their business to china and the support for science and education continues its decline in the US, china will soon become the leader in innovation even if they don't want it. i see the future china as a hybrid of their cheap labor and american money and talent. not much has been said about how china is repatriating their thousands of american trained scientist and engineers, and how they are hiring american scientist. soon the best schools to study science and engineering will be in china and at much lower cost than in the US. this is what the conservative agenda is all about, to take american capital to china where it will grow much faster, and weaken the US government so it can not oppose that. the conditions to keep the capital in the US is to lower the labor cost, lower taxes for the owners of the money, and weaken environmental regulations, so the US would have to become another china.

    September 14, 2011 at 12:55 pm | Reply
  14. Clinton

    China isn't an innovator, they're not willing to innovate. Name something China has given the world in the modern age... nothing... A more accurate assessment of China is that they are a paper Hyena, they wait for the U.S. and other modern countries to innovate, watch the true innovative nations spend billions of dollars on research and development, wait for that product to hit the market, spend pennies on the dollar to reverse engineer it then use it's massive cheap labor force and inferior materials to mass produce it and sell it cheaply back to the original innovators. China is a paper hyena, they wait for the US to make the kill then come in and eat the carcass.... People keep wondering why a communist Government has been able to thrive and succeed in a modern age when most others have fallen to the way side because it simply is not an efficient ethical way to govern a society... It's because we keep feeding the beast... The only way to end this threat, which i truly believe that country is a threat to the world because it cares so little for other societies and the enviroment let alone it's own people... is to stop feeding it... stop doing business with them... isolate them... starve out their regime... Otherwise the world will be dealing with a tyrannical society as a superpower ala the Soviet Union..... way to go backwards world.

    September 14, 2011 at 1:03 pm | Reply
    • Rocky

      American has no future if you are not a American president again.

      September 14, 2011 at 5:01 pm | Reply
    • Luke

      you are so wrong. Without Chinese, you don't even have paper and powder

      September 14, 2011 at 5:50 pm | Reply
    • Tenpa

      Well, Mr.clinton, why then did you remove the human rights portion on the most favored nation status? That was the tipping point, which allowed the flood gate to open up and now we have what we have here. Trade without any morality attached to it is simply wrong business and will ultimately harm the values of the society that engages in it. America made a bad move on it. They should have kept the human rights clause on the trade with China and we wouldn't have lost so much manufacturing jobs to China.

      September 14, 2011 at 5:56 pm | Reply
  15. AngryCenter

    To add to the great posts regarding to China's oppression of their people, respect for intellectual property, and ability to operate bottom-up instead of top-down... these are definitely road blocks to an innovative culture and society.

    In a way, I hope that because the government is making a mandate to drive innovation, this would mean that they have to eventually address these points. In a way, this 'government sanctioned' goal becomes the catalyst to philosophical changes into their own society. They will have to come to terms that when they want to protect their own intellectual property, they have to protect others. The executives and bureaucrats who need innovations will now have to start asking for input from the the workers. This, in turn, get the workers (i.e. the common people, the masses) to start speaking out and to start questioning. Once you get people to understand that they have the power to speak even if they are low in the totem poll, they may start rising to the challenge in other aspects of life.

    I know this is wishful thinking, but that is my hope....that this will help push China to a more open society.

    September 14, 2011 at 1:09 pm | Reply
  16. AngryCenter

    There are a lot of posts stating that China is an imitator; not an innovator. I hope this doesn't lull the U.S. into thinking that we don't have to worry about this Chinese turtle taking over this American hare.

    There are posts stating that China only knows how to copy and that is why they can't be innovative. I don't think it's logical to use the current state as a reason why it cannot change. that is not a cause and effect reasoning. If you look at a child learning how to do anything (e.g. draw), they first learn by imitating. After they've mastered how to copy or trace a drawing, and then they start analyzing the world around them, they quickly learn to create their own. The first step to innovation is to master what's already known.

    As per my previous posts, China does have big obstacles to overcome, and these obstacles are put by the Chinese government themselves (i.e. treatment of people; top-down organization; inability to resolve conflicts without force). Innovation is messy and it is conflict-ridden and it requires a safe environment where people are allowed to voice dissent. If the culture does not allow for this, then it cannot be innovative.

    September 14, 2011 at 1:24 pm | Reply
  17. ObamaBush

    @Clinton,
    Actually, Walmart and its allies are giving China the means to produce America's innovation. They're bringing the factories over to China.

    Manufacturing nolonger is a reflection of a country's wealth. Back in the day with no free trade, you kept factories at home because tariffs made it too expensive to import and offset cheaper labour. That nuisance nolonger exists. This is how innovation lead to wealth, more innovation meant more factories to build it...at home.

    @umabdro,
    Those 18 centuries is only equivalent to 2 modern centuries, everything gets faster with time. Last 100 years, world has seen more innovation than the last 2000 years. During China's reign, you also needed actual money as a store of value and wealth, today, you just need computers to keep track of "money", whether you can actually touch that money or not, or if its just the same $100 recycled 1000 times through the economy.

    September 14, 2011 at 1:46 pm | Reply
  18. MALIBEANO

    This article made me wanna read Animal Farm again.

    September 14, 2011 at 2:12 pm | Reply
    • Gaadffly

      It appears China is using that book as a growth model

      September 14, 2011 at 2:46 pm | Reply
  19. Max

    Neither. Plastic tiger, actually. Western counties don't want to pollute their own homelands and China is a cheap place to dump garbage. We need a healthy China in the world, otherwise, eventually we are backfired. My heart goes out to those suffering Chinese due to heavy pollution. Air, water and soil..

    September 14, 2011 at 2:32 pm | Reply
  20. Gaadffly

    China has many issues to address before becoming a legitimate world leader. Human rights issues, mistreatment of it's people, freedom of speech, freedom of the press are a major problem. Their government is repressive and corrupt. Cheap and shoddy products from factories that have poor pay and unsafe working conditions is another major issue. Contaminated products and the uncontrolled use of pesticides and growth hormones on farms and livestock is another huge problem. Reliance on coal, excessive greehouse gas emissions, industrial pollution and cities choked with smog is another. The Chinese are their own worst enemies in the struggle to become a modern industrial nation.

    September 14, 2011 at 2:41 pm | Reply
    • abu

      Gaadffly, you are just regurgitating rhetorics based on your prejudiced views.

      September 14, 2011 at 6:18 pm | Reply
  21. Blah

    Seems to me like it's both. In the long run the health and growth of China may be good for the world. The issue is how long will the current Chinese leadership be able to hold power ...

    September 14, 2011 at 2:49 pm | Reply
  22. JackofArts

    Being both half-Asian and half-American, my brain is usually at war with itself. The American brain comes with new ideas and concepts, whereas the Asian brain takes those ideas, makes them better and cheaper, and kicks the American's brain ass with it. Of course the Asian products tend to fall apart within a year, and poisons people. LOL!!

    September 14, 2011 at 3:04 pm | Reply
    • G8r

      Good observation Jack of Arts! Ken and F. Daniel Gray have good comments too. Some of us expose our ignorance of the challenge that we face from China. What was true 10 or 20 years ago is no longer true. What is true today may be no longer true in another 10 or 20 years, especially in China. All it takes is for the leadership in that country to change their policies on a whim. Right now, they are wisely taking the path that benefits them the most. Tomorrow or next year, they may chose another path. Right now, they truly do have a free enterprise system and it is healthier than that in the U.S.A. That said, they face a number of challenges in the areas of food and water safety, environment, and working conditions. I think they understand that they need to deal with most of those issues or sometime in the future, the populace will rebel. They don't want nearly a billion people to rebel and it is in their own self interest that they will lead, mostly in a positive direction.

      September 14, 2011 at 5:05 pm | Reply
  23. BetOnAmerica

    I don't see people risking their lives sneaking into containers to migrate TO China.

    September 14, 2011 at 3:07 pm | Reply
    • Gone To China

      No we just get on a plaine Business Class.

      September 15, 2011 at 9:59 am | Reply
  24. F. Daniel Gray

    China has a recent history relating to other major nations. Hu Jintao said it best several years ago, "... with Chinese characteristics." They felt independent enough to tell the Soviet Union, their only benefactor at the time (1947), they were not going to play "little brother" under their tutelage, resulting in the ideological "split." They,, in turn invited and contracted with Western Europe to come and build manufacturing complexes, leave the plans, and return "home." The US eventually got into the "game" in the 70s and transferred their manufacturing to a local entrepreneur. It has now entered the African market, not caring a whit for local politics, or seeking puppets, or forming military "alliances," and having "bases," the US scenario. In a further move, undercutting/outmaneuvering the US, It has contracted with Italy, to build Scarabeo 9, an oil drilling platform for Cuba. That platform is scheduled to arrive in the Gulf of Mexico this year. CNPC (China), Gazprom (Russia) PDVSA (Venezuela), Petrobras (Brazil), and others, (not the US) have formed a consortium with Cuba. At a minimum, the success of the drilling, which is predicted to be quite likely, will make Cuba energy independent, and eventually a net exporter. Throwing the US blockade into the dustbin of history. It is predicted that by 2025, China will have more high speed rail than ALL of Western Europe. So, since 1953, nary a shot fired. Innovative? You betcha.

    September 14, 2011 at 3:07 pm | Reply
  25. Gaadffly

    The chinese government has become very innovative at controlling their people and stifling the individuals innovation.

    September 14, 2011 at 3:09 pm | Reply
  26. ken

    i have found that china is far behind us in education. most of the people do not have access to top notch schools, rural schools are a disaster. yes, there are 300 million that can send their children to good school, but they do not focus on training the person, we make rounded social people that can retrain if needed.
    2nd is that the chinese have a true free enterprize economy. one westerner, who started 5 business's in china said that in the west you might have 6 months to a year before some one copies you, in china it may be only days. they set there looking for a idea that works, ie, we say the early bird gets the worm, they say the early bird gets killed. why try something new and risk failure if you can wait for some one to prove it.

    September 14, 2011 at 4:51 pm | Reply
    • tdsd

      China is still far behind even as they are gradually catching up.

      September 15, 2011 at 6:49 am | Reply
  27. Byrd

    By the time Western capitalism gets through with China and India, the world will be one large toxic waste and garbage dump with the entire Pacific and Indian Oceans clogged with plastic. Wise up, China and India, before the capitalists do to you what they've done to us. So says Confucius.

    September 14, 2011 at 5:05 pm | Reply
    • G8r

      Byrd. You've made an excellent observation. Too bad that your advice is unlikely to be heeded.

      September 14, 2011 at 5:08 pm | Reply
  28. Martin

    China is laying low and not making a peep for now. This gives us a false sense of security, so that we keep buying and buying. They WILL tighten the noose. It will be bad.

    September 14, 2011 at 5:51 pm | Reply
  29. Strangewalk

    I've lived in China for 10 years, have taught at the university level and done business. The Chinese don't think creatively because of conditioning–here people are told what to think and don't have the right to think independently. The Chinese system of mass indoctrination education produces 'Xeroxed copies' that are highly disciplined yet dull and colorless, lacking in soul, spirit and vision, what some foreign educators refer to as the "glazed over look". Also, creative impulses are pre-emptively suppressed since even if someone had a very good idea, everyone knows instinctively that it would be quickly plagerized, copied or stolen and the idea would benefit someone else. The corruption here is so pervasive that it influences everyone's consciousness like this, and for that reason China may not need to innovate. The experience of most American and foreign firms operating in China is that their technology is quickly pilfered, but for reasons that I don't understand this doesn't seem to stop them from coming and investing here. However, rarely does the innovator or inventor of something new benefit much from it, so why innovate when you can replicate?

    September 14, 2011 at 6:19 pm | Reply
    • Byrd

      Capitalism is built on pervasive corruption. So what's your point?

      September 14, 2011 at 6:47 pm | Reply
    • USA

      You got some good ponits. So I heard they are working hard correcting their education systems.

      September 14, 2011 at 9:41 pm | Reply
  30. Shinjukuboy

    Take a look at US patents at the USPTO homepage, especially biotech patents. Notice how many of the inventors are Chinese? They will move back to China and continue their innovation as soon as the infrastructure is available. Today Chinese innovate in US labs and universities, tomorrow, they will innovate back in China.

    September 14, 2011 at 6:56 pm | Reply
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