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Macroscope | To become a world leader in innovation, China needs to loosen the economic reins
- In a push for more tech breakthroughs, China is ramping up state spending on research and development. But without creating space for private sector innovation, China is unlikely to achieve the kind of results it wants
The great challenge facing Asia is the need to innovate. Nowhere is that challenge more pressing than in China, given Xi Jinping’s pledge to make the country a leading global power by 2050.
For a country where the average income is still only about 25 per cent of that in the US, this is an ambitious target. Without innovation, not only will economic growth falter, but other strategic objectives – including in space and security – will prove fanciful. Successful innovation involves not only improvements to existing products and processes, but also radical changes that can transform behaviour.
However, a detailed look at the evidence suggests that some of these metrics may flatter to deceive. Take the case of patents. Despite the rapid growth in applications since 2010, only around a third are granted. That contrasts with over 60 per cent in the US.
Further, most Chinese patent applications are made from within the country, with intellectual property protection being sought largely for domestic markets. And most of those domestic patents are for small improvements to existing products.