Innovation in China

14 Feb

China has recently joined the very exclusive club of countries to successfully land a spacecraft on the moon. The Jade Rabbit rover touched down on the 13th December 2013 to the amazement of the world (Rincon, 2013). This marks the pinnacle of China’s mission to prove to the world that it is now a global player in science and high technology, and can compete with the likes of the USA as the leader in innovation.

However, looking back over the last one hundred years almost all paradigm shift innovations, such as the generation of electricity by Michael Faraday, have emerged out of countries with high political and intellectual liberty (Sass, 2014).

It must be noted however that the number of patent fillings in China are increasing, with estimates of a doubling of patents to two million by 2015 (Gupta and Wang, 2013). China also invests heavily in Research and Development (R&D), which now amounts to 1.6% of GDP and 13.7% of world total expenditure on R&D, second only to the USA (Gupta and Wang, 2013). However despite this, Chinese patents account for less than 2% of the patents granted by any of the leading patent offices outside China (Gupta and Wang, 2013).

Innovation is often a bottom up approach and this does not marry well with the Chinese Communist Party’s centralised top down control mechanisms. Free societies encourage scepticism and invoke the questions which lead to the first steps along the path to innovation. However in China there does not seem to be this culture and intellectual expression is still constrained. The grass roots nature of innovation also negates a lot of R&D investment at the institutional level because innovations are often the bright ideas of just a few individuals (Sass, 2014). This coming together of individuals is also hampered by China’s poor representation abroad for intellectual freedom which may discourage talent in existing innovation centres (often western based) from moving to China (Sass, 2014).

Another reason for the disparity between R&D input and innovation output is associated with the structure of the Economy. The numerous and powerful State Owned Enterprises (SOE) which dominate many key industry sectors do much to squash prospects for innovation. Their primary goal is employment and job creation, not disruptive innovation which may undermine their dominant market positions (Gupta and Wang, 2013). This is exacerbated further because it is the SOEs which receive the lion’s share of R&D grants. The privileged position SOEs enjoy hinders the formation of a true market economy and the intense competition which breeds innovation.
Increasing the freedom of individuals to ask questions and share opinions and for firms to compete may provide the necessary environment to nurture future innovation, but may also lead to dissent.

Gupta A. and Wang H. (2013) Harvard Business Review: China Can’t Be a Global Innovation Leader Unless It Does These Three Things.
http://blogs.hbr.org/2013/11/china-cant-be-a-global-innovation-leader-unless-it-does-these-three-things/ (Accessed 13/02/14)

Rincon P. (2013) BBC News: China lands Jade Rabbit robot rover on Moon.
http://www.bbc.co.uk/news/science-environment-25356603 (Accessed 13/02/14)

Sass S. (2014) The New York Times: Can China Innovate Without Dissent?
http://www.nytimes.com/2014/01/22/opinion/can-china-innovate-without-dissent.html?module=ArrowsNav&contentCollection=Opinion&action=keypress&region=FixedLeft&pgtype=article (Accessed 14/02/14)

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