January 24, 2008

China is passing the USA in technology development

According to a worldwide technology competiveness study by the Georgia Institute of Technology China may soon rival the United States as the principal driver of the world’s economy and become the technology development leader.

1993-2007 world technology competitiveness

The study’s indicators predict that China will soon pass the United States in the critical ability to develop basic science and technology, turn those developments into products and services – and then market them to the world.

The 2007 statistics show China with a technological standing of 82.8, compared to 76.1 for the United States, 66.8 for Germany and 66.0 for Japan. Just 11 years ago, China’s score was only 22.5. The United States peaked in 1999 with a score of 95.4.

“China has really changed the world economic landscape in technology,” said Alan Porter, another study co-author and co-director of the Georgia Tech Technology Policy and Assessment Center, which conducted the research. “When you take China’s low-cost manufacturing and focus on technology, then combine them with the increasing emphasis on research and development, the result ultimately won’t leave much room for other countries.”

Recent statistics for the value of technology products exported – a key component of technological standing – put China behind the United States by the amount of “a rounding error:” about $100 million. If that trend continues, Newman noted, China will shortly pass the United States in that measure of technological leadership.

China’s emphasis on training scientists and engineers – who conduct the research needed to maintain technological competitiveness – suggests it will continue to grow its ability to innovate. In the United States, the training of scientists and engineers has lagged, and post-9/11 immigration barriers have kept out international scholars who could help fill the gap.

China is becoming a leader in research and development, Porter noted. For instance, China now leads the world in publications on nanotechnology, though U.S. papers still receive more citations.

China has been dramatically improving its input scores, which portends even stronger technological competitiveness in the future.

“It’s like being 40 years old and playing basketball against a competitor who’s only 12 years old – but is already at your height,” Newman said. “You are a little better right now and have more experience, but you’re not going to squeeze much more performance out. The future clearly doesn’t look good for the United States.”

I have noted that the exchange rate based size of the Chinese Economy is on course to pass the United States in about 2018 plus or minus 3 years


jesse said...

Wow. I wonder important Chinese will become as a language of science, compared to English.

al fin said...

China would be 15 to 20 years behind where it is now, if not for a number of rather dubious and dishonest practises. The recent hyper-reaction of stockmarkets there reveals how dependent China is on the outside.

bw said...

al fin: What specific practices are you referring ? Although it seems to me that you are implying that China cheated to catch up to where it is now. I think that is not that important because life is not fair and the main issue is that China is close to catching up and how it was achieved is secondary. If China gets ahead then probably others should considering how to "cheat" to catch up to them.

Jesse: Yes Mandarin and Shanghainese would be useful things to know as well as english. (Or find good translation tools)

bw said...

al fin wrote an article that expanded upon his comment

China: Scratching its Way to the Top by Industrial Espionage, Counterfeiting, Reverse Engineering, Spying, Cheating, Bluffing ...

Or they could have played nice and been 15-20 years behind technologically and perhaps economically.

I would have to say that it looks like they might the right choice for them.

Although for things like copyright infringement and counterfeiting products etc... Some of the companies who had that happen to them benefit in some ways. Just as in the west when someone's burns extra copies of movies and software, where they were unwilling to pay full price, then the software company can gain by having a stronger actual share and more people able to use their software. It can encourage a stronger hold on a standard platform.

where a country the size of China goes of and is able to launch competing standards then the current global companies would be hurt.

Copy to catch up and then set standards, compete and pass.

kurt9 said...

Al fin;

Sure the Chinese are copying western technology. So did the Japanese and, later, the Koreans and Taiwanese. So what? Sooner or later (I think sooner) the Chinese will have to do the hard work, think and innovate on their own. Once they start doing this, they will truly become competitive.

China is on the same development curve as Japan was in, say, 1970. They will surely progress along just like Japan and, more recently, Korea and Taiwan.

The key point to realize is that technological development is positive-sum in nature. The more people who do it, the faster things move along. Also, having technology decentralized among many different countries is a good thing because if one country decides to be luddite of socialistic, one can always pick up and go to a different country.

BTW, I go to China on business from time to time. Its not as polluted as you may think. I actually found both Beijing and Shanghai to be less polluted than Kaohsiung (in Taiwan). Of course, even Kaohsiung is less polluted than it was 10 years ago.

Al Fin said...

It is the current government of China I have a problem with. The combination of fascist controls on freedom of speech and assembly, with very corrupt and loose controls on polluters, banks, and builders, leads to a seriously unstable nation and region.

The Chinese government wants to spread its hegemony over East Asia, into Central Asia, now Africa, etc etc

The dangers implied by the obvious desperation of the CCP's unscrupulous expansionary actions should not be excused or ignored. The suffering of the majority of people within China should likewise not be ignored or excused.

The Chinese people are too intelligent to be both:

1. exposed to the modern world, and
2. submissive to an authoritarian and corrupt government.

Something will have to give. I would rather the Chinese people have something to work with when the current government falls--but the CCP is intent on destroying everything in the process of gaining widespread hegemony.

bw said...

I do not see the current Chinese government as being one that is expansionist. Taiwan is a special case.
taiwan history shows china's claim since the Ming and Qing dynasties. China's claims predate the United States.

China got back control of Macau and Hong Kong but those were forced out of china for 100 years following the Opium wars.

China has some relatively minor border disputes and arguments over islands but I see no evidence that they are trying to establish hegemony over East Asia, into Central Asia, now Africa, etc

they are trying to gain and buy influence, but how is that different from what the US does in an even more aggressive way ?

I do not see China as being that unstable politically. There have been pragmatic expansion of local voting and township level democracy. Taiwan's path to democracy may be an path that China will follow over a few decades. However, I see the current technocrats in China as doing a reasonably efficient job of governance. The top leaders seem to having to spread power around more and each leader since Mao has had less and less control

bw said...

Al fin wrote another article this time on whether China is a good or bad hegemon.
I think China is an oblivious hegemon. Below is my comment to his article

I agree with Audacious Epigone, China is only trying to gain influence for self-interest (access to oil etc...) They are not actively trying to change local politics or human rights or democracy (like the US sometimes does). It is "you make your choices on human rights etc... I just want to buy oil or get something else" "not only do I not want to take you over, I don't care what you do"

Tsunami aid:
Australia became the single largest aid giver with about US $ 810 million in grants and loans to the Tsunami affected countries, followed by Germany at about US $ 700 million, Japan pledging grants of US $ 500 million, and the United States US $350 million.

China’s emergency aid a day after Tsunami struck was less than US $3 million but raised this to about US $60 million next week after an emergency meeting called and attended by the foreign, commerce and defence ministries. Taiwan, which is left out of the ASEAN special meeting on Tsunami, as with the World Health Organisation when it was affected by the SARS, contributed US $ 50 million and more than that amount from the private donors is expected
US aid pledge was initially $35 million and was up to $350 million. china started at $3 m and went up to $63 million.

the chinese economy on an exchange rated basis in 2004 was still only 20% of the USA. So the $63 million was proportional. By the aid test I guess we should want an Australian hegemony.

chinese gov't tax revenue in 2004

In 2003: The State Administration of Taxation (SAT) announced on Oct.20 that the tax revenue of China reached 1,524.3 billion yuan (184.3 billion US dollars) from January to September, 271.6 billion yuan more than in the same period of last year. (about $250 billion for the year)
In 2007China's tax revenue went up 30.8 percent to 3.72 trillion yuan (495.5 billion U.S. dollars) in the first three quarters. About $660-700 billion for the year.

the US federal budget
Was $2.2-2.3 trillion in 2003-2004 and is now $2.77-2.9 trillion.
So it was 9 times bigger than China's central gov't money in 2003 and 2004 and is still 4 times bigger.

I think China's level of aid will grow over this coming decade and beyond as its economy and tax revenues increase.

kurt9 said...

I don't like the Chinese government either. Of course, I don't like any other government for that matter. I don't like government in general.

It is true that the Chinese government is nasty. However, it is actually quite weak and is gradually weakening over time. As China's economy grows, it becomes more complex and diverse. Its become logistically impossible for a single entity (like a government) to control it. The CCP has made a social contract with the people. You keep us in power and we will do whatever it takes to grow the economy and allow you whatever social freedom you want. The CCP is trying to evolve into something like Singapore's PAP.

Whether they will succeed or not is another story. Membership in the CCP is declining because people don't need it anymore to make business connections. The Chinese invented networking 4,000 years ago and connections (guanxi) is what their culture is all about. The Chinese are natural-born entrepreneurs and it is certainly quite apparent in in places like Zhejiang. Contrary to what pundits here in the U.S. say, the entrepreneur revolution in China is real and is very much a "bottom-up" phenomenon (which fits with my personal experiences in China).

This is all very positive for China and the rest of the world. Much of the West has fallen under the delusion that large-scale social institutions actually work and are essential to modern society. My personal experiences have taught me that all large-scale social institutions (private, public, and religion) are dysfunctional bureaucracies and are, therefor, parasitial. Modern society does not require parasitism.

The reason why the rise of China is good for us is because it provides outside competition for all of our own corrupt large-scale institutions. More competition in ANY area of human endevour is ALWAYS a good thing and should always be embraced.

The rise of China is good for me personally because it allows me to both buy and sell things there and that is always a good thing for me.

The Chinese have a 4,000 year history of not being expansionistic. I see no reason why this will change in the future.

In short, I do not fear the rise of China. I see it as an opportunity.

India will eventually go through the same transition as China. That will be a good thing for us all as well.