Rising China Faces Challenges to National Innovation Goals

Products manufactured in China are now ubiquitous in the global economy. Yet, how many Westerners who buy these products can list major Chinese companies like Sinopec, China National Petroleum, China Mobile Communications, or Shanghai Automotive? How many can name the best Chinese entrepreneurs, inventors or scientists? China also is poised to become the world's largest user of petroleum and emitter of greenhouse gases. How will China deal with the possible severe economic and environmental consequences of uncontained growth while still reaching its goal announced in 2000 of quadrupling its Gross National Product by 2020? These questions raise two major issues with which China has not yet come fully to terms. Chinese policymakers recognize that the answers to both of these questions are integrally connected with the development of its science and technology infrastructure. China needs a strong infrastructure to reach its goal of being recognized as one of the most innovative economies. It also needs the answers that science and technology can provide to ensure its growth is sustainable and not overwhelmed by escalating energy costs, desertification, public health issues related to pollution, and other negative consequences. Innovation Economy by 2020? A recent report by the Organization for Economic Co-operation and Development (OECD) in collaboration with China's Ministry of Science and Technology concludes that "China needs a better return on its fast-rising investments in research and development (R&D) and higher education if it is to meet its goal of becoming an 'innovation-oriented' economy by 2020" (1). The report also states that "China still has a long way to go to build a modern, high-performance national innovation system. " Can China make the leap from being a manufacturer of goods often for others to being a world-class inventor and innovator as well? China's economy, along with its R&D, has expanded rapidly in the last decade and there is every indication that expansion will continue. According to the International Monetary Fund (IMF), China is now the world's fourth largest economy, trailing only the United States, Japan and Germany. As recently as 2000, China along with Italy ranked sixth. For 2006, China grew at about 11 percent with a GDP of $2.63 trillion. It is closing in on Germany, whose $2.89 trillion was larger but whose growth rate was only 2.5 percent. The United States and Japan, however, remain substantially larger at $13.24 trillion and $4.37 trillion, respectively. [ILLUSTRATION OMITTED] In Fortune magazine's 2007 list of the top 500 global corporations, China added four companies to the list, bringing its total to 24. While impressive, this number is still much below the leaders--United States with 162, Japan with 67, France with 38, and Germany with 37. China now surpasses its other Asian competitors, however, including South Korea at 14, and India and Taiwan at 6. What could slow China's growth? Its economic success remains unevenly distributed, with wealth still concentrated in its coastal provinces and urban centers. Other issues China faces are an aging population and inadequate intellectual property protection. It also needs to increase the quality of researchers and engineers and, in the future, address an emerging trend of fewer students choosing to pursue science and engineering in college, although it still has the second largest number of researchers after the United States. China's current status reflects the success it has had since it accepted and opened itself to the global economy in the late 1970s. Its economy is growing at rates that recently have averaged 8 to 10 percent a year, although in the long term this rate of growth is certainly unsustainable, as it has been in other industrialized economies. Many of the economic changes necessary within China to achieve economic growth have been greatly expedited by the inward flow of foreign direct investment, e. …