The Argument For Chinese Innovation

The New York Times’ Thomas Friedman checks in from “AliFest” in Hangzhou, an annual gathering of Chinese entrepreneurs sponsored by Chinese e-commerce site, and discusses how China may be changing the global marketplace by building a network of trust among potential innovators:

Alibaba, Zeng predicted, will eventually connect in some way with Facebook, Amazon, eBay, Apple, Baidu, LinkedIn and others to create a giant trusted virtual “global commercial grid,” where individuals and companies will offer their talents and buy and sell products, designs and inventions.

Eventually, Zeng argued, “every individual will have to find a way to succeed” on this global grid. “National boundaries will offer you no protection.”

The other trend is that the Chinese will be big players on this grid. The creation of global trusted business frameworks like Alibaba is starting to enable a new generation of Chinese innovators — who are low cost, but high skilled — to extend their reach. We’ve seen cheap labor out of China; now we’re going to see more cheap genius.

Which is why Phillip Brown and Hugh Lauder, in a recent essay on, argued that a big shift of the global labor market is under way, in which “many of the things we thought could only be done in the West can now be done anywhere in the world, not only more cheaply but sometimes better.”

Economist George Magnus writes in The Financial Times that as China loses its edge as a manufacturing hub, its growth model must “shift towards transformative technology and innovation” to remain competitive:

China’s manufacturing strategies will have to get smarter. Its 13 per cent of global R&D spending and prowess in incremental process innovation will have to focus more on product innovation, management organisation and the fusion of new information, biological, and materials technologies. Its prominence in patent registrations masks weakness in indicators such as cited patents. Chinese scientists and engineers are prolific, but their work is often viewed as a triumph of quantity over sometimes dubious quality.

It may be hard to overcome these shortcomings, which are rooted in a tradition that has rewarded good administrators over freethinking innovators, and made it hard for individuals to exchange ideas. It has also discouraged the curiosity, critical spirit and collaborative approach that are the hallmarks of advanced manufacturing.

These problems will not retard Chinese innovation and technological competitiveness forever. But to adapt, China requires extensive political reform, more robust institutions and a tilt in the role of the state towards supporting enterprise. It will not be helped by the uncertainty over the nature of its downturn and the consequences of the leadership change.

See also previous CDT coverage of innovation in China.


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