How China's know-how is challenging the US

[beijingwalker]

How China's know-how is challenging the US

December 30, 2013
THOMAS BARLOW
America has been the dominant force in global innovation for half a century, but not any more.

In a survey launched this month, the Pew Research Centre finds that most Americans now believe that the US plays a "less important and powerful role" in the world than it did 10 years ago.

The result is hardly a surprise. It doubtless reflects widespread perceptions of foreign policy miscalculation, as well as ongoing weakness in the US economy. Perhaps less well appreciated, however, is that a similar judgment could also be made in assessing the relative importance of the US in global science, technology and innovation.

For more than half a century, the US has been the dominant force in global innovation. For years, its intensity of investment in knowledge – estimated by totting up spending on software, R&D, and higher education as a share of GDP – has been twice that of Europe.

California still spends more on business R&D than Germany does, even though its population is less than half that of Germany's.

And, of course, in the second half of the 20th century, 58 per cent of the world's Nobel Laureates were resident in the US.

By almost any measure of innovation performance American society has long seemed to be the world's most dynamic power. But comparisons drawn with the moribund societies of Europe are no longer something to crow about.

There is now not a single European nation that would be counted among the top 10 US states for their per capita investment in business R&D. And European cities are rapidly dropping down global rankings of regional clusters by international patenting activity in high-technology domains, such as information technology and biotechnology.

Comparisons with Europe, in other words, are much less meaningful today than they were last century, and turning across the Pacific gives a very different perspective of American performance.

There is a zone of nations extending from Japan, China, and South Korea in the north, down to Singapore, Indonesia, Australia, and New Zealand in the south, which might be termed the Western Pacific.

In 2011, combined R&D investment in all sectors, public and private, within this zone exceeded that in North America for the first time.

In 2009, total patent applications made through the patent co-operation treaty process from applicants in these nations also exceeded those from North American applicants for the first time.

The transformation within this region has been more significant and more broadly based than many in America would realise. Australia, Singapore, South Korea, and Taiwan have all experienced a dramatic expansion in technological and scientific capabilities in the past two decades.

But a significant proportion of the new innovative capacity in the region is attributable to the re-emergence of technological creativity in China.

Today, there are more industrial researchers in China than in Europe.

This year there have been more patent applications made through the patent co-operation treaty involving Chinese inventors than there were involving German inventors.

And there are now three provinces in China where business R&D spending exceeds that of Italy and Spain, not only in absolute terms, but even in per capita terms. These are Jiangsu, Shanghai, and Tianjin.

Perhaps most telling, though, is that along certain dimensions, the Chinese are gaining ground even against American benchmarks.

Within a decade, on the latest projections, there will be greater R&D investment in China than in the US. Chinese authors already publish more scientific papers a year in the fields of physics and chemistry than American authors do.

And Shenzen, in Guangdong province, has just surpassed Silicon Valley as the world's most prolific cluster for international patent applications relating to information and communications technology.

These are not patents filed by subsidiaries of US corporations either. Two Chinese firms based in Shenzen – Huawei and ZTE – have recently joined the top five companies globally across all industry sectors by annual volume of international patent applications.

Of course, not all patents are equally valuable, and different societies have different patenting cultures. But the trajectory is clear.

The balance of the world's inventive and creative power is shifting rapidly. Europe's dynamism is fading. America is still the leader, but it looks vulnerable. And the competitive challenge from East Asia is not just economic or demographic – a consequence of a billion people suddenly entering the global economy. It is also scientific and technological.

In this context, a second finding of the latest Pew survey is surprising. When asked whether Europe or Asia was more important for the US, the proportion of Americans who nominated Asia fell from 47 per cent two years ago to only 35 per cent this year.

Meanwhile, the proportion who nominated Europe as more important shot up from 37 per cent two years ago to 50 per cent in this year's survey.

Perhaps Americans are thinking, in a world of waning American power, that they will need the help of their oldest allies. But, in the economy of ideas, it is time to recognise that the Europeans are themselves of declining significance.

America is still the most innovative nation the world has ever seen. But if it is to remain so, its citizens must not neglect the mounting importance of the nations on t