Innovation and creativity spur China's economic growth

You cannot report on the Chinese economy or business, as I have done for more than a decade (and others have, of course, done for much longer) without touching on the subject of innovation.

It is fundamental to almost everything the government wants to achieve and, in particular, moving the economy up the value chain.

Technology is also central to a number of the trade disputes the US administration currently has with China.

I have recently been interviewing science and technology experts from around the world about the state of Chinese innovation and what struck me was how the debate has changed in a very short period of time.

Only a few years ago, the strength of Chinese innovation was seen as incremental improvements in industrial processes. Blue-sky breakthrough innovation was seen very much the preserve of the United States and Europe.

Chinese universities were also seen as being very rigid in their teaching methods and not conducive to original thinking. This was a particular perception of PhD teaching.

It was striking to me therefore that many of the experts I spoke to no longer think that－in fact, quite the opposite.

China is now seen as one of the most innovative countries in the world and not just in the digital sphere but also in artificial intelligence, biotechnology, quantum computing, renewable energy and satellite technology.

Shenzhen－which is marking its 40th anniversary as one of China's first Special Economic Zones that kick-started China's economic transformation－is increasingly seen also as a rival to Silicon Valley.

Having visited many of China's top scientific institutions and science parks across the country, it is an opinion I had to some extent already formed. What strikes you in China is the scale of what you are seeing. You go to one high-tech zone and think something of that size would be the flagship one in your own country and yet there are hundreds of the same across China.

Peter Williamson, professor of international management at Cambridge University's Judge Business School, who was one of those I interviewed, believes there has been a step change in Chinese innovation.

"The capabilities in rapid innovation and improving industrial processes China has built over the past 20 years has provided an important springboard to become a genuine innovator, competing now in blue-sky research and development," he told me.

China's technology effort has been energized by the Chinese government. Only in May it committed $1.4 trillion to invest in new technology over the next six years as part of its post-outbreak economic recovery plan.

Of course everything has been galvanized also by President Xi Jinping in his report to the 19th National Congress of the Communist Party of China in October 2017. He also restated his commitment to innovation on a visit to an advanced manufacturer in Changsha, the capital of Hunan province, on Sept 17.

One huge factor that is giving China an advantage is that it produces more STEM (science, technology, engineering and mathematics) graduates than any other country in the world.

According to the World Economic Forum, it had 4.7 million such graduates in 2016, compared to the 568,000 of the US. As those in China will have also observed Chinese students actually study in contrast to some of their Western contemporaries.

Abishur Prakash, a geopolitical futurist at the Center for Innovating the Future, a strategic consultancy firm based in Toronto, said Chinese students are now much in demand globally for their knowledge in blockchain, quantum computing and AI with big six-figure salaries being offered.

"There is big global talent war taking place with US companies also trying to attract Chinese students," he said.

Most of the experts I spoke to were frustrated by the current tensions between the US and China. If you speak to scientists anywhere they see technology as a global collaborative effort in contrast to some of their governments.

Duncan Clark, a leading expert on China's tech sector and author of Alibaba: The House that Jack Ma Built, wonders though whether the tensions will spur China's innovation effort.

"As we know necessity is the mother of invention. Is decoupling creating a new necessity, and will it be the mother of a new phase of invention in China?" he asked.

China is not going to be deterred. As Eric Thun, Peter Moores Associate Professor in Chinese Business Studies at Oxford University's Said Business School, told me, the country is now a leading innovator and it is competitive in the private sector that is the driver.

"While firms operating in the digital space, such as Tencent and Alibaba, are the most high profile, there are innovative firms throughout the Chinese economy," he said.

China has certainly earned itself the right to regard itself as one of the world's most innovative societies.