Freeman Report January-February 2011 Vol. 11, No. 1-2

If one were keeping a historical scorecard, by country, of great innovations, China would be at or near the top. Chinese invented iron casting, porcelain, automatic seed planters, paper, gunpowder and movable type; all of which were in use in China centuries before the Europeans adopted (and adapted) them. The past 300 years, however, have not been kind to Chinese innovation. Slow to industrialize, then mired in social turmoil for decades, and finally guided by Maoist policies that viewed technology as a pernicious ideological influence, by the time Deng Xiaoping began to urge technological advancement in the late 1970’s, China was among the most technologically backward societies on earth.

Against this backdrop, the pace and breadth of China’s technological modernization over the past three decades have been – like many things about China over that period – astounding. China is today a world leader in technology applied in communications, alternative energy, rail and other sectors. High-tech manufactured goods accounted for 28.6% of China’s exports in 2008. Year-on-year growth in Chinese patent filings is astronomical: in 2010 the number of Chinese-filed patents grew by 56.2%, while U.S.-filed patents dropped by 1.7%. China graduated 10,000 Ph.D. engineers last year while the United States graduated just 8,000 (and of those who are Chinese or of Chinese descent, many have plans to seek their professional fortunes in China). China’s drive to build an enterprise-led "indigenous innovation" capacity has set off alarm bells among multinational companies and the popular press. All of this has raised the looming concern: "is China about to leave the United States and the rest of the world in its innovative dust?"