Guest Contributor Sandy Pho: The State of Chinese Innovation

In January 2006, the People’s Republic of China(PRC) launched a fifteen-year “Medium- to Long-Term Plan for the Development of Science and Technology,” otherwise known as the MLP. The plan set out two ambitious goals for China. The first is for the PRC to become an “innovation-oriented society” by the year 2020, and world leader in science and technology (S&T) by 2050. Having already built the world’s largest hydroelectric dam and the fastest supercomputer and bullet train, it seems as though the Chinese are well on their way.

These engineering feats have prompted a flurry of foreboding headlines in the United States, asking questions such as “Is US Losing Innovation Race Against China and India?” or stating that the “U.S. Could Lose the SciTech Edge to China…” As the world’s second largest economy and largest holder ofU.S. debt, it is no wonder that the progress made by the PRC has garnered much attention. This piece is intended to act as a basic primer on the topic and hopefully a bridge into the broader discussion over Chinese innovation today.

China’s rapid economic growth brought with it the complementary distinctions of becoming the world’s largest consumer of energy, and its top emitter of greenhouse gases. That being the case, energy is appropriately highlighted in China’s MLP. Since the plan’s introduction in 2006,Beijing has focused a great deal of its efforts on developing more efficient and clean uses of energy, as well as on developing new energy sources.

Beijing’s first line of attack in accomplishing this goal was through attracting and spurring investment. In 2005, less than USD 3 billion worth of private investment flowed into China’s clean energy sector. According to a recently released report by the Pew Charitable Trust, total private investment in China’s clean energy sector reached a record-breaking total of USD 54.4 billion in 2010. As the supplier of almost 50 percent of the world’s solar modules and wind turbines today, the PRC has rightfully earned for itself the title of “global clean energy superpower.”

Although much of the technology used by Chinese companies originates from the West, particularly Europe, Beijing’s forceful entry into the new energy market via massive investment established a platform from which Chinese indigenous innovation (both old and new) could flourish. For instance, solar greenhouses, a Chinese innovation dating back 20 years ago that produces more varieties of vegetables, even during winter months, have long played an essential role in the PRC’s agricultural landscape. A recently released peer-reviewed study by a team of researchers from China Agricultural University details how the Chinese innovation “may contribute to solving worldwide problems such as the [current] energy crises and global climate change.” Beijing is hoping for more breakthroughs of the sort as it is set to spend 5 trillion yuan on new energy in the next decade, with a particular focus on integrating imported technologies with indigenous innovations such as the solar greenhouse.

China is also looking to break new ground in science and technology (S&T). Chinese domestic spending in this area has grown by leaps and bounds since 1996, increasing ten-fold from RMB 40 billion to RMB 461 billion in 2008 (approximately USD 5.8 billion and USD 67.8 billion respectively). As a proportion of its GDP, known as research and development (R&D) intensity, China’s investment in S&T research has grown from just 0.6 percent of GDP in 1995 to 2 percent in 2010, and under the MLP is expected to grow to 2.5 percent of GDP (USD 4.3 trillion) by 2020. Compare this to the United States whose R&D intensity has remained steady over the past few years at about 2.7 percent of GDP.

Although China’s R&D intensity still trails other countries such as South Korea and Japan, this explosion in S&T spending suggests a greater understanding in China that technological advancement is the wave on which sustainable economic growth rides. Furthermore, it is indicative of Beijing’s serious aspirations to reshape China from simply being a manufacturing hub for cutting-edge products, into a country that develops these products.

To that end, Beijing has initiated several government-backed programs targeting specific sectors. Nanotechnology, the development of new materials through the manipulation of matter on an atomic scale, is one such sector.  It has been designated a “megaproject” in the MLP, and its development has been given priority status. Since 2006 China has invested over 5 billion yuan (USD 760 million) on nanotechnology R&D, nearly three-times the amount spent between 2001 and 2005.

This massive influx of R&D spending is beginning to yield tangible results. In 2009, a group of researchers at Beijing’s prestigious Tsinghua University developed a transparent film made of carbon nanotubes, (cylindrical forms of carbon that are only a few nanometers wide), which when heated, make the air around them vibrate and produce sound. These nano-speakers are not only paper-thin, but can recreate the original recording just as faithfully as conventional loud speakers, even while bent and stretched. Professor Shoushan Fan, director of the nanotechnology lab at Tsinghua University told the Guardian that “You could stick it to the back window of your car and play music from there. This is cutting edge.”

According to a recently released report by the Royal Society of London, China is now second behind the United States in the number of scientific papers it publishes and is poised to take over the number-one spot as soon as 2013. Moreover, international patent applications coming out of China have tripled since 2006, with 12,337 filed for 2010. (Although the United States is still the world leader in patents filed-with 44,855 filed for 2010-U.S. applications decreased by 1.7 percent that year). In spite of these achievements however, concerns remain. In contrast to their counterparts in the United States and the United Kingdom, Chinese publications tend to be cited less frequently by other scientists. In an effort to spur indigenous innovation however, the Chinese government has attempted to create “an ecosystem of incentives” for patents filed, with sometimes mixed results.

It is without a doubt that China is carving out for itself an enduring place in the global innovation landscape. What this Chinese presence exactly means however is still up for debate. It is true the PRC is making headway in sectors such as nanotechnology, but Chinese innovation today is still largely a product of improvements made on existing technology while being able to produce those technologies at lower costs. According to Adam Segal, senior fellow at the Council on Foreign Relations and author of a new book on innovation in Asia, “You can’t really point to an individual firm or area where the Chinese are currently leading. It’s hard to figure out if there’s going to be any breakthrough in China. I just don’t see it happening.” Issues such as lax enforcement of intellectual property and an education system built around memorization and repetition are but a few of the shortcomings China has to overcome. In the economic sphere specifically,China has shown a preference for central planning over free-market principles, which has limited entrepreneurship and the innovations that come with it.

Sandy Pho is a Program Assistant with Kissinger Institute on China and the United States

Sources: American Institute of Physics, Chinese Government’s Official Web Portal, Daily Tech, Environmental Protection, Fox News, The Guardian, The National Science Board, The National Science Foundation, The National University of Singapore, People’s Daily Online, The Pew Charitable Trust, Reuters, The Royal Society of London, UN News Service, Voice of America, Xinhua News

Photo credit: Innovation Works courtesy of flickr user keso