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PANEL IV NEW FRONTIERS: OPPORTUNITIES & CHALLENGES FOR COOPERATION Moderator: Bill Bonvillian Massachusetts Institute of Technology This panel addressed opportunities and challenges for cooperation between the United States and China in science and technology, said Mr. Bonvillian, who as director of MIT’s Washington office manages the university’s relationship with federal agencies and its role in national science policy. “As we all know, there is a remarkable amount of integration between our two countries on the commercial side,” Mr. Bonvillian noted. “The two countries are major trading partners. And there are global enterprises that are remarkably integrated, though they still obviously have a distance to go.” This panel asked “whether we can cooperate more deeply than we are now on some very big societal challenges that we share,” Mr. Bonvillian said. Issues discussed by the panel included health research, energy, water, information technology. Speakers also addressed the structure of the two nations’ innovation systems themselves and how they can accommodate further collaboration. Mr. Bonvillian said he hoped the discussion not only would explore what kind of cooperation exists now, “but more importantly what there could be.” In the pre-commercial stage in particular, he asked, “What are the steps that might work? And could such cooperation be expanded and occur?” The first speaker, Yang Xianwu, has worked on high-tech commercialization in the Chinese government since 1998, Mr. Bonvillian noted. Mr. Yang is deputy director of high technology and commercialization at the Ministry of Science and Technology. Over the years, he has worked with high-tech industry zones, business incubators, 101
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102 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION university science parks, and on boosting productivity. Mr. Yang has a particularly strong background in commercialization of information and space technology, he said. Anna Barker has an extensive background in leading and managing scientific research, Mr. Bonvillian explained. Dr. Barker is deputy director of the National Cancer Institute at the National Institutes of Health. She also is deputy director for strategic initiatives in science. Dr. Barker “has done very interesting work on nanotechnology and its application to cancer,” he said. She also has worked on the Cancer Genome Atlas Project. Dr. Barker also has been a scientist herself. Prior to joining the NIH, she led a large team performing cancer research at the Battelle Memorial Institute. Dr. Barker also has been CEO of a biotech drug-development company. The third speaker, Robin Newmark, is director of the Strategic Energy Analysis Center at the National Renewable Energy Laboratory. “She has led very interesting work on the interrelationship between water and energy, including the impact on climate change, the de-nitrification of agriculture, and development of energy-efficient water-treatment technologies,” Mr. Bonvillian said. International Collaboration and Indigenous Innovation Yang Xianwu Ministry of Science and Technology China has achieved remarkable economic progress since reform began and the nation opened up to the outside in 1978, Mr. Yang said. The economic has grown rapidly, living standards have improved, and China’s overall strength has been greatly enhanced. But China still faces problems, Mr. Yang noted. The level of Chinese industries remains relatively low on world standards. Most industries focus on manufacturing. During the financial crisis, many such enterprises closed. “The economic structure is unbalanced and improper,” he said. “Also, our development is unsustainable.” Manufacturing accounts for too high a proportion of the overall economy and the service sector too low. Energy consumption is relatively high, given the nation’s GDP. “To tackle these problems, we feel we have to strengthen innovation, especially scientific and technological innovation, to transform China’s economic development pattern and change the industrial structure,” Mr. Yang said. “The ultimate goal is to make our
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103 PANEL IV-NEW FRONTIERS nation an innovation country to match the level of countries such as the United States.” In 2003, China’s central government began drafting a medium- to long-term science and technology plan from 2006 to 2020, Mr. Yang explained.1 There are three major aspects to this plan. The leadership has identified 16 major national science and technology projects. The plan also identified priority areas for development, such as new energy sources, new materials, information technology, advanced manufacturing, biotech, and services enabled by information and communication technology. The government is implementing a number of policies to achieve these goals, Mr. Yang said. It has been promoting science and technology through financial support, taxation policies, and support for research institutions, for example. Advancing China’s innovation agenda isn’t only the job of the Ministry of Science and Technology, he noted. The Finance Ministry also is active by funding basic research, such as through the National Natural Science Fund, which supports research based on scientists’ own interests. The 973 Program supports projects with obvious application prospects, while the 863 Program backs frontier high-tech projects. Another program offers technology outreach for manufacturing and agriculture “to assume the good application of technology in areas that are directly related to peoples’ lives,” Mr. Yang said. Another program provides financial support to innovative small and midsized enterprises. Many of these programs existed before the current medium- and long- term plan, Mr. Yang noted. “But since the plan, our financial investment from central and local governments has greatly increased,” he said. Investments from the governments of Guangdong Province, Jiangsu Province, and Shanghai have grown several fold. Tax policies are another important tool, Mr. Yang said. The government offers generous breaks for high-tech enterprises and R&D investment. While government investment in R&D has risen sharply, to 1.5 percent of GDP, Chinese companies have been slow to do so. Some 40 percent of R&D is funded by government, with the remaining 60 percent 1 China’s National Medium- and Long-Term Program for Science and Technology was issued on February 9, 2006, by the State Council. It calls for boosting research and development spending to 2.5 percent of gross domestic product and for science and technology to contribute at least 60 percent of the country’s development. It also calls for reducing China’s reliance on foreign technology to no more than 30 percent by 2020.
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104 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION coming from companies and institutions. “I think this is low,” Mr. Yang said. “Business and society should increase their funding for R&D.” Major weaknesses remain in China’s innovation system, Mr. Yang said. The government is trying to stimulate more private research investment. For example, it is identifying promising high-tech enterprises and providing them with tax incentives. To qualify, these companies must be in high-priority areas and must devote a certain share of revenues to R&D, he said. Recipients also should have their own, proprietary patents and have developed good applications for their technology. For every yuan such companies invest, they will receive 1.5 yuan worth of tax incentives, he said. In terms of policy, the government’s goal is to “strengthen construction of basic conditions in priority areas,” Mr. Yang explained. This includes establishment of national laboratories, high-tech research centers at universities, and research institutes with modern laboratory equipment. To accelerate the translation of research results into commercial products, China has been establishing more small-business incubators, university science parks, and high-tech industrial zones. The government also is financing the establishment of laboratories, engineering centers and large science facilities. It is aiding projects that can serve as catalysts, Mr. Yang explained, such as university science parks, high-tech industrial parks, and innovation centers. “We’re learning from the experience of Finland and America’s Silicon Valley by establishing a large number of incubation centers to help scientists transform their research results and open their own small and medium- sized enterprises,” he said. The Ministry of Education has been promoting science parks since 1990. Most reputable research-oriented universities now have their own science parks, Mr. Yang said. There are 50 high-tech industrial parks throughout China, and more will be built. “They have become the most energetic areas in local economic growth and industrial development,” he said. “We continue to promote cooperation and alliances between enterprises, research institutions, and universities so that they work together on R&D and transformation of the tech sector.” Some technologically innovative enterprises receive no government money. “We just give them certain guidance and honor,” Mr. Yang said. Despite the growing emphasis on indigenous innovation, however, China still attaches great importance to international cooperation in science and technology, Mr. Yang said. “We have gradually realized that promoting international cooperation has played a very important role.”
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105 PANEL IV-NEW FRONTIERS He noted that China has signed science and technology cooperation relationships with 152 nations and regions. It has sent science diplomats to 45 nations, and has signed inter-governmental agreements with 97 nations. China has joined 350 different international science and academic organizations, in which 265 Chinese scientists hold posts. China has participated in bilateral and multilateral programs, such as the Human Genome Project, the International Thermonuclear Experimental Reactor project,2 and European Galileo Program.3 Few relationships have been more important than the one with the United States. “Cooperation with the U.S. has always been our priority,” Mr. Yang said. The first Sino-U.S. Agreement on Science and Technology was signed Jan. 31, 1979, by Deng Xiaoping and President Jimmy Carter. This agreement has been extended every five years since, most recently in April 2006 by Chinese President Hu Jintao and U.S. President George W. Bush. This partnership has achieved concrete results over the past decade. Mr. Yang noted that the United States and China have signed some 50 cooperation agreements over the past 30 years. They have covered fields such as agriculture, energy resources, the environment, and basic science, involving nearly all Chinese government agencies. Since 2004, the two nations have conducted scientific exchange programs each year. The most recent agreement was the Protocol on Sino-U.S. Joint Research Center for Clean Energy, signed in November 2009. Both countries have promised they will provide the same amount of money, $150 million over the next five years, he noted. The protocol calls for collaboration on clean water, coal, automobiles, and energy. “This has historic significance,” Mr. Wang said. “In the past, cooperation mainly focused on exchanges of personnel. This is the first time both governments donated directly to some joint development programs.” In 2009, Mr. Yang explained, China and the United States celebrated the 30th anniversary of scientific and technological cooperation. President Barack Obama has spoken highly of bilateral collaboration, he noted. 2 The International Thermonuclear Experimental Reactor (ITER) project is a $12.8 billion multinational research and development program intended to develop fusion as an energy source. 3 The European Galileo Program is building a global navigation satellite called Galileo that is meant to be an alternative as well as complementary to U.S. and Russian global positioning systems. The European Union and the European Space Agency are leading the multibillion-dollar project.
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106 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION Despite these successes, significant problems still hold back collaboration in science and technology. “We have noticed some areas for improvement,” Mr. Yang said. From the Chinese perspective, he noted, “we feel that in enhancing Sino-U.S. cooperation, both governments should deepen their commitment to investments.” He also noted that the United States still places some restrictions on exports of high-tech products to China. In addition, high-level personnel from China continue to encounter unpleasant experiences in obtaining visas to the United States. Mr. Yang acknowledged China’s indigenous innovation “cannot be separated from international cooperation. “The U.S. is the most developed country in the world, while China is the most populated in the world and one of the countries with the fastest growth,” he observed. “During the past 30 years, we realized that bilateral cooperation benefits us both. We’re both pursuing a win-win result. So we can foresee that Sino-U.S. cooperation will develop further. For this, I am full of confidence.” Joint U.S.-China Medical Research Opportunities Anna Barker National Cancer Institute Medical research is an area that is best positioned for collaboration between the United States and China, said Dr. Barker, the National Cancer Institute’s Deputy Director. The National Institutes of Health already has a long history of working with Chinese researchers, especially in cancer. In fact, she said, some of the seminal research in cancer has been done as a result of the 30 years of collaboration between the two countries. Why is collaboration important? One reason, Dr. Barker noted, is that the United States last year spent $2.5 trillion, equal to around 20 percent of gross domestic product, on health care. The health care reform bill passed in 20104 attempts to control future costs. “That is a big challenge,” she said. Looking ahead, annual spending is expected to reach $4.5 trillion by 2018. 4 The Patient Protection and Affordable Care Act (H.R. 3590) was signed into law on March 23, 2010. Among other things, it expands Medicaid eligibility, subsidizes insurance premiums, provides incentives for businesses to provide health care benefits, and supports medical research.
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107 PANEL IV-NEW FRONTIERS China is moving down a similar road as the United States, Dr. Barker said. Infectious disease is declining in China, while chronic diseases are rising significantly. Another major trend in medical research is that there is an “important convergence” of advanced technologies, molecular biology and bioinformatics, which offers unprecedented opportunities for progress against diseases such as cancer, she noted. “When you think about great advances in science, it is in areas where the sciences come together,” Dr. Barker said. “What we are seeing now in biomedical and medical research is that areas like computation, engineering, and physics, which we do not think enough about in biology, are converging in ways we haven’t seen before. That represents significant opportunities for innovation.” Broadband offers another great opportunity to accelerate medical research as the infrastructure develops, Dr. Barker observed. “If you think about one of the areas where computation is really going to be called on to make a major contribution, it is in medical research,” she said. The United States has made the sharing of digital medical records a major priority. “We’ll see. It’s very, very hard,” she said. “These communities are very separated and, in many cases, siloed.” Cancer exemplifies the rise of chronic disease as a killer. “Cancer is a major U.S., and increasingly a global, health care crisis,” Dr. Barker said. By 2020, cancer is projected to kill 10.3 million people globally. Such forecasts recently have been raised and are projected to reach as high as 20 to 30 million new cases per year on a global basis. It is an emerging crisis in China as well, “and will get much, much worse in the next 10 to 15 years, primarily due to the number of smokers,” she said. There were 2.2 million new cancer cases in China in 2009 and 1.6 million deaths. Dr. Barker displayed a chart showing how cardiac disease and cancer between 1973 and 2005 have emerged as the two top killers in China as the population ages. In 2009, cancer overtook cardiovascular disease as the biggest killer of people under the age of 85 in the United States. She predicted the same will happen in China. The United States reports 565,000 cancer deaths each year. Another 1.4 million new cases are expected to be diagnosed in 2010. The United States spends $213 billion a year treating cancer. That will move much higher in years to come—approaching $1 trillion a year. New cancer cases are forecast to rise by 30 percent to 40 percent by 2020. China is where the United States was around a decade ago. Cancer already is the No. 1 killer in Chinese cities and No. 2 in the countryside, Dr. Barker noted. It accounts for 25 percent of urban deaths and 21
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108 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION percent of rural deaths. The aging population is a major reason these statistics will continue to rise. By 2035, 23 percent of Chinese will be at least 60 years old. As in the United States, obesity also is rising, with 23 percent of Chinese now considered overweight.5 “That was not a problem in China until just very recently,” she said. Environmental and occupational hazards are other major cancer causes in China. There is a high incidence of liver cancer caused by Hepatitis B, a disease that has been conquered in the United States, Dr. Barker said. Lung cancer is perhaps the biggest danger in China. There are 350 million smokers, and many of them will get cancer. The pattern is similar to what the U.S. experienced, she observed. Lung cancer accounts for 29 percent of cancer-related deaths in the United States and has reached 22 percent in China. While stomach cancer largely has been conquered in the United States, it remains a serious problem in China. The National Cancer Institute works actively with Chinese researchers on this problem. “We have learned a lot about stomach cancer from the Chinese, and we will learn a lot more,” Dr. Barker said. She predicted stomach cancer will follow the pattern observed in the United States and be virtually eliminated in China based on treating patients for the associated infectious agent H. Pylori). Serious bilateral research collaboration between the United States and China began in the 1970s. It was noticed that certain areas of China, such as near tin mines, had unusually high mortality rates. These areas represented hot spots in terms of environmental exposure, Dr. Barker explained. In 1979, the U.S. Department of Health and Human Services signed a memorandum of understanding with China. November 2009 marked the 30th anniversary of that agreement, and a symposium was conducted to discuss progress. A new memorandum of understanding is planned, she added. Some of the National Cancer Institute’s seminal epidemiology studies were done in China, she noted. “We learned a lot in China about cancer causation in some of these areas,” she said. “It has benefited the world overall.” One such study led to regulation of benzene in the United States, Dr. Barker noted. Important studies that advanced understanding of liver cancer and the impact of the environment on different cancers were done in China. The NCI’ s Division of Cancer Epidemiology and Genetics teamed with China’s Centers for Disease Control and Prevention, for example, to study the link between indoor cooking and lung cancer. The University of Washington and the Shanghai Textile 5 Data from World Health Organization Health Information Profiles, (2008).
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109 PANEL IV-NEW FRONTIERS Industry Bureau studied cancer among textile workers. “Most of these studies have led to worldwide regulation of one form or another,” she said. China is currently making vital contributions in biomedical research, Dr. Barker said. In the past decade, the number of papers published by Chinese scientists in cancer research has more than quadrupled. China ranked second to the United States in published scientific papers in 2007, 2008, and 2009. The highest portions of these papers were in material science, chemistry, physics, and mathematics. The number of life sciences publications has risen exponentially, and many have been written with American colleagues, Dr. Barker noted. The number of Sino-U.S. collaborations doubled between the periods of 1998 through 2003 and 2004 through 2008.6 The National Cancer Institute works with the Chinese Academy of Medical Sciences, the Chinese Academy of Sciences, the China Center for Disease Control, and many major universities. Cancer genomics is among the most exciting areas for investment in China. It now is possible to sequence cancer genomes, Dr. Barker explained. In the United States, the National Cancer Institute has launched a project called the Cancer Genome Atlas. The goal is to sequence genomes of all cancers. Chinese colleagues are collaborating on the project, she said. Nanotechnology is another area were both the United States and China are making enormous investments, Dr. Barker noted. “We believe this is the area that is going to have one of the biggest impacts on the ability to detect and treat disease and deliver drugs,” she said. “Nanotechnology will actually touch everything we do in medicine in the next 10 years.” In terms of cancer treatment, Dr. Barker said, China is a vital partner in clinical trials. “I should add that for cancer, nearly every major cancer center and hospital in China is being led by a scientist who trained at the National Cancer Institute and/or a U.S. medical school,” she said. “We have a huge number of alumni in China. When we go to China, it is like going home—we are going to see people we know.” Cancer genomics will be important for developing new therapies and diagnostic technologies, Dr. Barker predicted. China’s programs also are an opportunity to study rare cancers not found in the United States. The National Cancer Institute is working with China on brain, esophageal, gastric, and liver cancers, for instance. “We are looking at population 6 Data from Global Research Report China (2009), Thomson Reuters.
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110 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION differences as well as to build the whole area of genomics,” she said. “China has led this area in the sequencing of the human genome, and I think will lead it with us for the next several years.” In addition to playing a big role in sequencing the human genome, China sequenced the rice genome. Its researchers were among the first to identify the SARS genome. In 2010, the Beijing Genomics Institute became the world’s largest next-generation sequencing center, she noted. The National Cancer institute and BGI are researching brain tumors. Research collaboration in nano-technologies also will grow, Dr. Barker said. China has 5,000 scientists at 50 universities in this field and 300 nano-technology enterprises.7 It is second only to the United States in research publications. There are 20 Chinese Academy of Sciences institutes and 300 Chinese companies in nanotechnology. The Chinese government invested an estimated $240 million from 2004 through 2007, and local governments another $360 million.8 “We are trying to build on our respective strengths in nanotechnology,” she said. “This is a very strong collaboration.” The third meeting between United States and Chinese medical researchers on this topic will be conducted in fall 2010. The National Cancer Institute also wants to build on the collaboration with China in clinical trials and the study of environmental effects on cancers. “There is an opportunity to do this right from the beginning,” she said. “We are working with the Chinese to build new clinical-trial systems with several hospitals in China.” The institute’s goal is “to continue to expand our health care partnerships, and do that with a number of alumni in China and many of the post-docs that train with us here,” Dr. Barker said. The institute has set up an office in Beijing, she noted, headed by Dr. Julie Schneider, who leads many ongoing collaborations. In the future, medical and health care research “is going to be a very distributed enterprise,” Dr. Barker predicted. “But I think it will be dominated by the U.S. and China because our countries are making the investments.” Because of research in areas such as disease genomics, she predicted there also will be “a shift toward understanding the mechanistic causes of disease, which will lead us to a global understanding of how to prevent diseases like cancer.” Dr. Barker said she foresees such research leading to big changes in the health care system. “I think the knowledge base with bio-informatics and broadband will enable broad access where ever you are in the world 7 Data from Science 309: 65-66, 2005. 8 Ibid.
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111 PANEL IV-NEW FRONTIERS to the best available treatments,” she predicted. Healthy populations will “define stability” in the future and will be critical to knowledge-based economies, she said. “China and the U.S. are in the best position to really dominate in medical research,” she said, adding that she looks forward to the next 30 years of collaboration. National Laboratories and International Cooperation Robin L. Newmark National Renewable Energy Laboratory The National Renewable Energy Laboratories (NREL) is engaged in a wide array of clean-energy projects in China that reflect the laboratory’s broad mission, Dr. Newmark explained. NREL, a U.S. Department of Energy national laboratory, is the nation's primary laboratory for renewable energy and energy efficiency research and development. In addition to conducting research and development on renewable energy and energy efficiency technologies, energy efficiency and technologies, NREL, based in Golden, Colorado, and tied to the Department of Energy, analyzes “the markets, financing, and policy mechanisms that will enable the great energy transformation we are all undertaking right now,” she said. “Part of that work is the study of innovation.” Collaborations between government agencies of both nations range from research into broad national needs to narrowly focused partnerships with private companies to accelerate development of specific technologies. Many such projects stem from an umbrella agreement on clean energy negotiated through the U.S.-China Strategic Economic Dialogue.9 High-level engagements in areas of national interest include an Electricity Production and Transmission Action Plan, which explores best planning and management practices. A Clean and Efficient Transportation Action Plan exchanges best practices on new-vehicle technologies and design and management of transportation infrastructure. NREL also aids two “eco-partnerships,” which pair cities in the United States with cities in China for cooperation on specific clean energy and environmental objectives. Seven initial eco-partnerships were established under the U.S.-China Framework for EcoPartnerships, signed 9 The China-U.S. Strategic Economic Dialogue is a framework agreement initiated by President George W. Bush and President Hu Jintao in 2006. High- level officials from both nations meet twice a year to discuss topics affecting economic relations between the nations.
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112 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION in December 2008 under the S&ED Ten Year Framework for Cooperation on Energy and Environment. Six new partnerships have since been established. One is between Denver and Chongqing and focuses on transportation. A partnership between Greensburg, Kansas, and Mianzhu, the earth quake-stricken city in Sichuan Province, focuses on disaster recovery. Greensburg was devastated by a tornado and has since been rebuilt, Dr. Newmark explained. The lab is part of several seven new Sino-U.S. clean-energy research cooperation centers initiatives announced during President Obama’s mission to Beijing in the November of 2009. These initiatives span both conventional and non-conventional energy technologies. On behalf of the Department of Energy, NREL currently leads the U.S.-China Renewable Energy Partnership initiative for the United States, which interfaces with the Energy Research Institute under the National Development and Reform Commission in China. A wind-power project under the U.S. China Renewable Energy Program Partnership (USCREP) begins with national wind-energy deployment planning analysis and includes technical issues such as analysis of wake effects caused by downstream turbulence associated with turbine interference in large wind farms, and analysis of new wind resource assessment techniques based on SODAR technology. Another important component of the USCREP is cooperation for wind and solar standards, testing, and certification. Currently, U.S. and Chinese industry and leading experts are cooperating for new standards development in international forums such as the IEC, and are cooperating in comparing results between national testing centers and in general raising the level of international test center capabilities, and development of standards, Grid interconnection cooperation is also a high priority. Dr. Newmark explained. “Interconnection is very important for both countries as we continue to deploy renewable energy technologies and as we begin to incorporate that energy into the infrastructure of the grid,” she said. In addition to technical details, the wind partnership studies the economics of wide-scale deployment. As part of this project, NREL, LBL, and the Energy Foundation in Beijing Center for Resource Solutions of the United States is teaming with HydroChina, the State Grid Energy Research Institute, and the Meteorological Society to chart a cost supply curve for wind -power that depends on the potential installed capacity in different parts of China. These local cost-supply curves are used to map wind-power resources across the country that can be used to support development of a national plan. “Being able to link the geographic distribution of the resources with the investment potential for wind power deployment is where those resources are and how much
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113 PANEL IV-NEW FRONTIERS money it will cost to implement wind power is really critical moving into the future,” Dr. Newmark said. The same kind of methodology, she added, will be applied to solar power and its connections to China’s existing transmission system. Other types of policy cooperation under the USCREP include: two workshops in 2011 to exchange information and experience on effective policy development to support renewable energy deployment, a workshop PV project evaluation and business model development to support market expansion, and training in several advanced analytical models at use at NREL for use in strategy energy analysis needed by the Chinese National Energy Administration. A number of private-sector partnerships also are underway in clean energy. Chinese companies increasingly are investing in the U. S., Dr. Newmark noted. Duke Energy, for example, is discussing a U.S. wind- power plant with China’s Huaneng Power International. Duke also is developing solar projects in the United States and joint technology in bio-fuels, clean coal, smart grid, and other areas with ENN Group. The U.S. Renewable Energy Group has proposed a large $1.5 billion wind project in Texas with two Chinese companies. And AMSC Windtec of the United States is working with Dongfang Turbine Corp. on an offshore wind project that would be designed by the American Superconductor Corp. Dongfang would own the intellectual property, she said. Consistent with increasing interest in expanding U.S.-China renewable energy trade, Chinese companies also are beginning to building U.S. factories to make renewable-energy equipment and would like to increase clean energy investment in the United States at the manufacturing and project development levels. This interest includes plants to make solar photovoltaic panels and wind turbines by such companies as Suntech and Goldwind in China. “The bottom line is that China is making investments in U.S. projects and manufacturing capabilities,” she said. There are public-private partnerships between the two countries as well, Dr. Newmark explained. One example is the U.S.-China Bio-Fuels Cooperation Program. The project program was begun by initiated by the DoE, USDA and Chinese NDRC-China Memorandum of Understanding on Cooperation in the Development of Biofuels. Partners include five U.S. DoE national laboratories, agencies of the USDA, and federal labs controlled by the U.S. Energy and Agriculture departments and several research institutes and universities supported by the Chinese companies SinoPec, PetroChina, CNOOC, COFCO and COFCO ZTE. The bio-fuels program has four major research areas, each with very different mixes of players, Dr. Newmark said. A project on the supply
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114 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION and logistics of feed stocks, for example, studies the economics and technical solutions for supplying non-food feed stocks for cellulosic ethanol conversion. Two U.S. national laboratories and the U.S. Department of Agriculture, ORNL and INL, are teaming with a range of Chinese partners. Another set of bilateral projects focuses on processes for converting feed stocks into bio-fuels. One project involves NREL, Tsinghua University in Beijing, and PetroChina and other future partners focuses on biochemical conversion processes for cellulosic ethanol production. . It utilizes NREL work on characterization to study the breakdown of enzymes and other parts of the conversion process. Another project focusing on thermo-chemical conversion processes is a partnership between the Pacific Northwest National Laboratory in Richland, Washington, and the Dalian Institute of Chemical Physics supported by CNOOC. They primarily study pyrolyosis and gasification processes to convert biomass feedstock to mixed alcohols and other biofuels. A partnership between NREL and the Chinese Academy of Sciences in Qingdao seeks to develop biodiesel from algae and green diesel, which is derived from plant oils. Once technology is developed by these collaborations, the private sector must use it to develop commercial products. NREL is involved in three partnerships with private companies that work with Chinese research institutes. “It is a ground-level interaction,” Dr. Newmark said. “Through this cooperation, we go from a government-to-government to research institution to a commercialization train in order to develop new bio-fuels,” she explained. A partnership between NREL and ENN Group Co. focuses on commercial production of solar power and algae biodiesel, for example. The company is using 5.2-square-meter amorphous silicon module manufacturing equipment acquired from Applied Materials. NREL also works with the Institute of Electrical Engineering of the Chinese Academy of Sciences to cooperate on solar PV device testing. . The project uses NREL’s testing know-how to cooperate for standards and certification processes for Chinese products, which are prevalent in the global PV marketplace, Dr. Newmark said. On the purely commercial side, the United States and China have launched an energy-cooperation program that “is very unique,” Dr. Newmark said. The program is a consortium of 30 to 40 large U.S. companies that are seriously engaged in China’s energy sector. It is supported by the U.S. Foreign and Commercial Service, the trade- promotion arm of the Department of Commerce. “This consortium has developed a communications network that makes it very easy for them to
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115 PANEL IV-NEW FRONTIERS interact with their Chinese counterparts,” Ms Newmark said. “It helps them know who to speak to and where the connections should be made for various energy topics.” In sum, Dr. Newmark said, both the public and private sectors are heavily engaged in research collaboration between China and the United States. “We see rapid growth in interactions,” she said. “There are enormous opportunities for mutual benefit with innovations from both the U.S. and China.” Although many challenges in the relationship remain, “our observation is that we are making progress,” she said. Discussion Dr. Wessner asked Dr. Newmark to elaborate on the barriers in China she mentioned in her presentation. One barrier is concern over intellectual property, Dr. Newmark responded. Whether it is transferred or created through innovation, multinationals worry whether intellectual property is protected and whether its “commercial benefits will be maintained.” In recent energy agreements with China, intellectual property has been addressed more specifically up front, she noted. Mr. Bonvillian asked if intellectual property also is a concern in medical research and whether there has been any progress. Intellectual property is a major issue in medical research as well, Dr. Barker said. “As collaborations increase, especially in biotechnology, international distribution becomes an issue,” she noted. “I think we are seeing progress, but we have work to do.” Mr. Bonvillian asked both speakers whether U.S. visas also are a major problem in medical research. Obtaining visas for Chinese counterparts was a significant barrier for the first year after the Sept. 11, 2001, terrorist attacks, Dr. Barker said. In 2009, “I think we were able to get visas for nearly everyone who wanted to visit with us,” she added. “I think it is getting much better now than it was.” Dr. Newmark said NREL works with a large number of foreign visitors and that it is relatively easy to get visas for them. She added that NREL does hardly any classified work, though. For other national energy laboratories doing classified research, there are more barriers for American visitors as well as foreign nationals. “Overall we have seen an improvement in conditions since 9/11,” she said. “I think we will continue to see improvement with the tremendous focus on energy
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116 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION research and the need for the perspective of multiple stakeholders and other nationals.” Still, visas remain a problem, she said. Mr. Bonvillian asked Mr. Yang of the Ministry of Science and Technology to elaborate on the visa problem. While he is not very well informed on the current situation, Mr. Yang said, he had experienced problems with transfer of technology from the United States. “These issues are familiar to everyone,” he said. In terms of travel visas, the ministry has heard complaints. China has experienced visa problems in collaborative life sciences research and in areas where there is “some sensitivity,” he said. But this hasn’t been an issue in energy research, he said. Mr. Wang responded to some of the comments regarding intellectual property protection. He noted that systems to protect IPR have been in existence for a long time in other countries. Since China opened its economy, “it has achieved tremendous progress” in establishing laws. Many IPR courts also have been set up in China to address disputes, he added, and there have been successful cases of prosecution for intellectual property theft. Intellectual property protection, however, “is not only the work of the government,” he said. “Enterprises should provide evidence of IPR infringement. With evidence, a court will make a ruling.” Companies should not count on the government to conduct investigations on its own. Mr. Chen of the Ministry of Industry and Information Technology said he had heard of many IPR infringement cases, mainly through the work of the State Intellectual Property Office. In terms of software, the Chinese government has consistently expressed to the public the importance of using legal software. He noted that China now has a copyright law and is implementing regulations to protect copyrights. “Many, many manufacturers have complaints about enforcement of copyright protection,” he conceded. China has set up a judicial system to interpret these laws. “I am sure the government can do more in terms of establishing this environment,” he said. The government took an extra measure in 2006, Mr. Chen said. The Copyright Bureau, in collaboration with the Ministry of Commerce, issued a ruling that all computers manufactured in China install registered operating systems. No piracy is allowed for computers leaving factories, he said. “If copyrights are infringed, companies should seek legal means to protect their rights. But the government did extra work,” Mr. Chen said. “I believe this cannot be achieved by many countries.” These efforts are producing results, Mr. Chen said. Each year, the government collects measurement data on the 22 largest computer
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117 PANEL IV-NEW FRONTIERS hardware manufacturers. Legal operating systems are now pre-installed in 90 percent of computers released by manufacturers, he said. “We have the hard figures to prove that, at least at the operating system level, the piracy issues have greatly improved,” he said. “Many of our colleagues may not understand the measures taken by the Chinese government. In my view, many of the figures that people get were not obtained correctly.” He cited the example of a study on copyright infringement and software piracy in China that was based on only 150 product samples. “In a country as large as China, they made of conclusion on software piracy based on only 150 samples. I think we can ask whether these figures are accurate.” Dr. Barker asked if China is experiencing success with its business incubators and whether the government is doing anything to encourage technology transfer through incubators. China’s system is different from that of the United States, Mr. Yang noted. In the past, R&D mainly was conducted by universities and research institutes. “Chinese companies paid attention to production and didn’t care about R&D,” he said. Research institutes even designed products and then tried to convince manufacturers to produce them. Now, “we encourage companies not to wait for research institutes to give the R&D,” Mr. Yang said. The government is establishing platforms for commercializing R&D and to encourage innovators to set up business, Mr. Yang said. Science parks and incubators are examples. The government is supporting the effort with policies, such as preferential treatment. “The main driver is the market, however,” he said. “We learned from advanced countries.” China’s first incubator was established in Wuhan in 1987, he noted. Now there are incubators in most major cities. Many were built after science parks were established to encourage researchers to commercialize innovations. Another Chinese delegate explained that many state-owned Chinese companies are weak in research and development. So China has borrowed strategies from developed nations. “We realized what is required is not just innovation in technology but also innovation in services,” he said. There are some preconditions for development of a high-tech industry, he noted. It requires venture capital, for example. The Chinese government is developing the venture capital market. Next, China needs intermediate agencies. “The government realizes that services and commercialization of results are very important. We will make all efforts
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118 BUILDING THE 21ST CENTURY: U.S.-CHINA COOPERATION to accelerate commercialization of results as China tries to form a more market-oriented economy.” Jim Hurd of the GreenScience Exchange observed that a private incubator in Beijing was started by Kai-Fu Lee, the former president of Google China. A second development, Mr. Hurd noted, is the evolution of foreign limited-partner venture capital firms in China. A new law is under discussion in the Pudong district of Shanghai to encourage the venture capital industry. He asked whether these developments also may be a source of cooperation between the United States and China. Dr. Wessner asked how much money the Chinese government is investing to support small and midsized enterprises. He noted that the United States has the Small Business Innovation Research program, which provides almost $3 billion a year for early-stage funding. Dr. Wessner asked whether China has a similar program, and if so at what scale. China’s central government has been investing in small and midsized high-tech companies since 2000 through a fund announced by former Premier Zhu Rongji, Mr. Yang explained. In its first year, the fund totaled RMB1 billion. The fund is managed by the Ministry of Finance. The Ministry of Science and Technology advises how to utilize the funds. Mr. Yang said he believes the fund has been increased to RMB 4 billion. However, this fund only represents the federal government’s investments, Mr. Yang noted. Local and provincial governments also provide funds for small and midsized enterprises. Xu Jing, deputy division director of the Tariff Policy Department of the Ministry of Finance, asked how the U.S. government decides how to make such investments. Mr. Bonvillian noted that defining the U.S. government role is very complicated because there are “so many different models in so many different sectors. So there is no simple answer.”