China’s goals for science and technology (S&T) development are continued economic growth to promote prosperity and the military, movement toward an innovation-driven society that has thus far been elusive, attention to significant and growing environmental degradation, a focus on dual-use technologies, and global recognition of its return to the world prominence that it held more than a century ago. Chinese leadership uses its authority to align national culture with the needs for economic growth in S&T. China relies on global trade and acquiring innovation from abroad and uses its domestic market to attract multinational corporations. A high rate of growth in its gross domestic product (GDP) enables its priority investment in S&T infrastructure. Areas of S&T focus are many, although significant impacts are expected in information technology (IT), energy, and biotechnology.
China’s trajectory depends on the resolution of conflicts that are currently in play: desire to establish internationally competitive, national technology standards and various other efforts that involve wresting ever-more advanced technology transfers from foreign investors in order to aid creation of a more indigenous innovative society. The latter efforts will increasingly shape the type and amount of foreign investment in China. The conflict between open access to information and the national need to enforce political stability will also need to be addressed.
The United States should endeavor to ensure a collaborative yet strategically competitive relationship with China to benefit from Chinese resources and to jointly promote global stability while addressing issues of open access and technology transfer.
Since the initiation of Deng Xiaoping’s market-opening reforms in the early 1980s, China has become the world’s largest exporter, the third-largest economy in terms of GDP (having recently surpassed Germany and expected to soon surpass Japan in second place), and is home to more researchers than any other country. Underlying this dramatic progress has been an economic development strategy characterized by exploitation of the global marketplace for investment, technologies, and scientific knowledge. These efforts have coincided with the emergence of an information technology-driven boom in globalization, further accelerating progress and modernization in China’s economy and S&T community. As a result, China is a world economic leader and may be on the cusp of becoming a world-class S&T competitor.
Projections of China’s S&T future have recently become more optimistic, based on the country’s recent improvement in S&T indicators. China’s promise is magnified by its sheer size and the persistent strength of its
economy, even in the face of an extended global economic recession. Nevertheless, China must contend with significant challenges, which include currency inflation, outsized global trade surpluses, corruption, high unemployment and income disparities, projected resource constraints, and sustainable development challenges, as well as the potential for a decline in China’s economic growth rate. China’s recent advances in S&T proficiency satisfy only a fraction of the broader national need for development. A critical aspect of China’s continuing economic and S&T transformation is the phased-in promotion of economic development and modernization across China’s vast and disparate territory, as envisioned in China’s “Go West” strategy. If successful, this strategy has the potential to support an economic, industrial, and S&T expansion for decades to come (The Economist, 2010). Today, much of China’s scientific community remains set apart from the market-driven dynamic that characterizes the country’s coastal economic zones and foreign-invested enterprises. This and other systemic challenges lead some observers to be more skeptical about the sustainability of China’s fast-paced expansion in both economic and S&T capabilities.
China is an authoritarian state with a centrally planned economy, enabling it to quickly enact S&T policies. But such systems are vulnerable to problems such as excessive waste, redundancy, corruption, and difficulty in altering or reversing course mid-plan. In recognition of these limitations, Chinese state plans have evolved from strict, quantitatively driven mandates to “guidelines” and encourage more collaborative approaches to decision making. For example, when developing its medium- and long-term plan (MLTP), China brought in an array of domestic and international experts to assist in determining what and how to prioritize future S&T development.
In China, the pursuit of scientific and technological endeavors is considered a worthy ambition, as well as the answer to societal and environmental problems. Scientists, engineers, academics, and increasingly entrepreneurs are valued in Chinese society and economy, and China’s present leaders are considered to be technocrats. Recent surveys suggest strong popular support among Chinese citizens for scientific pursuits, with 74 percent of Chinese responding positively to the idea that “even if it brings no immediate benefits, scientific research which adds to knowledge should be supported by government” (NSB, 2010, p. 7-30). Promoting widespread scientific literacy is also a key priority. In 2006, China implemented an “Action Plan to Increase the Population’s Understanding of Science.” This plan, the first of its kind in modern China, is expected to be implemented through 2020 (Chen et al., 2009).
Although endowed with a broad enthusiasm for science, China remains a largely risk-averse, collective-oriented culture. This has hampered some efforts at adopting Western-style entrepreneurism and innovation, and in response China’s government has instituted policies and programs that promote more risk-oriented financial and organizational ventures. Other initiatives, such as the Chinese Academy of Sciences’ Knowledge Innovation Program, promote high-profile or interdisciplinary innovation. What these approaches will yield and how Chinese innovation will look compared to Western innovation is unclear, both to Western analysts and China’s own leaders. China’s adaptability and willingness to learn from other nations, however, will be essential to its S&T advancement. China’s “Go Abroad” policy (to enhance domestic firms’ brand, R&D assets, and technology access) was implemented to overcome these technology gaps and to enhance China’s continued, long-term access to global investment, technology, and know-how.
China’s economic growth and subsequent investment in S&T is transforming it into a regional and global hub for not only industrial production but increasingly also for industrial R&D, and to a lesser extent, basic research. As a partner with many of the world’s leading economies and global corporations, China appears to be finding it easier to catch up to the forerunners and is doing so at an unprecedented pace. The question remains whether and how China will attain S&T leadership.
NET ASSESSMENT OF S&T INVESTMENT STRATEGY
China’s S&T investment strategy is ambitious and well-financed but highly dependent on foreign inputs and investments. Many of its stated S&T and modernization goals will be unachievable without continued access to and exploitation of the global marketplace for several more decades. China plays a critical role in low- and select high-tech industry production and logistics chains, but it cannot (yet) replicate these processes domestically. As such, China has become an increasingly critical node in U.S. commercial and, in some cases, defense production
as well as in the research and development (R&D) efforts of multinational corporations. Foreign-invested R&D in China constitutes an explicit and critical component of China’s long-term S&T and industrial development strategies. Currently, China is host to more than 1,200 foreign-invested R&D centers, which represents 3 percent of developed countries’ global R&D investments (Simon, 2010). Yet, although foreign R&D investments have increased and, in some cases, have focused on more advanced forms of R&D (i.e., on basic and applied research rather than on technology development and product design), there has also been a transition from Chinese-foreign joint ventures to wholly foreign-owned enterprises, which introduces security and intellectual property concerns and thereby limits the prospects of technology spillover. Subsequently, innovative connections between foreign firms and China’s national innovation system have strengthened in the industrial sector but remain weak in the government and academic research institutes.1 It should be noted that this report does not include analysis of the possible national security consequences of U.S. indebtedness to China.
These trends in foreign investment can be explained by an oft-noted concern about China’s commitment to the rule of law and, specifically, to intellectual property (IP). China has been slow to enforce a regime that is effective in ensuring that copyrighted, patented, and otherwise protected IP, either domestic or foreign, is preserved. In fact, China’s current IP regime is so poorly regarded, and the government’s increasingly confrontational stance toward IP is sufficiently worrisome, that very little cutting-edge R&D will be performed by multinational corporations in China. The speed with which this situation is remedied and protections become effectively implemented will help determine the amount and level of foreign partnerships available to Chinese companies.
China is attempting to develop national technology and industry standards, which are intended to promote home-grown technologies that can serve as regional and global standards. To achieve this objective, China often pressures or requires (via regulatory changes) foreign firms to share core technology specifications. For example, China recently enacted an anti-monopoly law that enables it to break what it considered to be “monopolization” of key technologies by multinationals. This law forces companies to adopt the indigenous innovation regime, thus compelling them to transfer proprietary technologies to their Chinese subsidiaries or risk losing access to procurement by state-owned enterprises, which in some sectors comprise the largest part of the domestic market. Such efforts have thus far had mixed, mostly failed, results in the public domain; some companies choose to comply with informal technology transfer mandates or market pressures in an attempt to capture greater market share. Efforts to develop and enforce China-origin standards are explicitly promoted in various state plans and are likely to continue.
NATIONAL S&T GOALS
China’s long-term national S&T goals are to become a leading economic, industrial, and military power, and in doing so to reclaim China’s past scientific and technological glory. For this reason, China seeks to demonstrate its S&T capabilities in internationally competitive S&T sectors. Similarly, in an effort to gain technological and therefore economic self-sufficiency, China aims to increase its domestic technological input to 60 percent of economic growth and to limit its overall dependence on foreign technology to less than 30 percent. These larger milestones will be achieved by way of specific goals and strategies for S&T that are outlined in regular five-year plans (FYPs) and in longer-term plans designed to address emerging trends, challenges, and opportunities. These general plans are supplemented with more detailed, industry- and sector-specific S&T plans and programs. Government officials are presently implementing the 11th FYP alongside a 14-year MLTP and the Chinese Academy of Sciences’ S&T plan for 2050. There is little that is not included in these plans, making prioritization a key consideration in determining where and whether China’s S&T goals will be achieved. The current MLTP identifies five strategic priority areas, which are listed below (Li, 2009):
Development of energy and water resources in conjunction with environmental protection efforts
Acquisition of core manufacturing and IT technologies
Increase in focus on biotechnology
Acceleration of space and marine technology development
Enhancement of basic science and frontier technology research capabilities, with an emphasis on multidisciplinary research
China’s leaders are presently drafting the next FYP, which will take effect formally in early 2011, and they are preparing for the upcoming 18th Party Congress, which will take place in 2012. It is expected that the successors to Chinese President Hu Jintao and Premier Wen Jiabo will be determined at or around this time and that they will steer the country along a relatively similar S&T development path.
PROJECTED ADVANCES IN S&T PROFICIENCY
China’s S&T objectives are typically based on traditional indicators of Western S&T progress. According to such indicators, China has made impressive gains in recent years; however, its actual world position in S&T terms remains uncertain. There are several reasons for this ambiguity. First and foremost is that China’s own statistics and analytical methodologies remain questionable and, despite many years of international consultation under cooperative arrangements with the Organisation for Economic Co-operation and Development (OECD), National Science Foundation (NSF), and others, are not entirely commensurate with international data sets. Almost all analyses indicate that China has made significant gains in S&T over the past 15 years, but the use of different indicators and measures has resulted in different conclusions about the exact scale, breadth, and rate of China’s overall success. For example, the Georgia Tech High Tech Indicators (HTI) survey ranks China’s economy as 1st out of a selection of 33 countries, while the Global Competitiveness Index (GCI) survey ranks China’s economy as 54th out of 125 countries (Porter et al., 2009). These divergent outcomes illustrate the challenge that remains in assessing more precisely China’s current and future innovative capacity. As with many developing countries, traditional S&T indicators do not fully explain or predict China’s S&T progress to date and into the future.
In the meantime, China’s development plans provide some means of assessing where the nation is headed and how effectively the government’s own goals have been achieved over time. The country appears likely to achieve many of its stated S&T goals, although not necessarily within stated timelines, except in those areas that emerge as national security priorities. The government devotes significant (and often costly) resources and effort to achieve these latter goals, particularly as deadlines draw near. Examples of this phenomenon are demonstrated by the “2 bombs, 1 satellite” program of the 1950s-1970s to rapidly develop nuclear, missile, and satellite capabilities and more recently by China’s Shenzhou missions and continuing advances in its manned space program (Feiganbaum, 2003; Wu, 2006). Because reform of China’s national S&T enterprise is a vital component of its long-term modernization and defense strategy, it seems likely that S&T-related objectives will remain a top priority, barring some unexpected and large-scale disruption.
One possible source of disruption is the volatility of global markets, which, in the short term, could limit the foreign inputs of expertise, investments, and technologies on which Chinese growth depends. Nonetheless, momentum in development and innovation in China is high and is safeguarded in part by a high savings rate and spending ability. China’s political stability is another area of concern, but if economic factors and issues related to social and economic inequality can be managed, Chinese S&T will likely continue to advance as it has in the recent past. China’s principal challenges will be found in prioritizing S&T objectives, realizing efficiencies and innovative return on investments, and balancing nationalistic goals with the needs to maintain access to foreign S&T inputs and to effectively exploit globalization trends.
China’s rate of internal technological invention continues to lag well behind that of the United States and other Western nations, although the country has considerable resources with which to acquire technology for research, which it is indeed doing. For example, there is a national effort underway to build a research network in the field of structural and functional magnetic resonance imaging (MRI), using imported machinery (NRC, 2008). China holds greater near-term promise with regard to translating others’ inventions into commercial products. Unanticipated innovations might arise from the convergence of the vast array of S&T capacities currently in development, particularly in prioritized areas, or from the convergence of ideas from multiple fields of study.
S&T INVESTMENTS OF INTEREST
There are numerous areas of S&T investment that could have high impact on China’s economic competitiveness, social development, and military capabilities. Prime among these are the areas of information technology; energy and “clean” or “green” technologies; nanotechnology and new materials; and space, satellite, and sensor technologies. Biotechnology is another fast-growing field, representative of the increasing trend of Sino-foreign collaborative R&D efforts. Each of these areas is an identified priority and could lead to unexpected, innovative, or transformative advances. These areas also present dual-use S&T opportunities, which are a focus for the Chinese government and are intended to enhance both economic and military modernization efforts.
In addition to funding R&D in priority fields, the Chinese government is supporting high-level spending on core infrastructure that will have a broader impact on Chinese society and possibly beyond. This includes spending on education, construction of science parks, universities, highways, and other facilities necessary for high-capacity and technologically advanced development across China’s territory, as well as on information-sharing networks and databases designed to enhance cross-sector knowledge transfers. These efforts bolster the national emphasis on dual-use technology development, basic sciences, and new S&T fields (e.g., alternative fuels and “green” technology) that offer the potential to transform not only science and industry but also society as a whole.
As discussed in the section on S&T goals, China has identified a long list of strategic S&T priorities. Among the most fundamental, high-impact S&T areas are information technologies, sustainable energy development, and biotechnology.
Information Technology and Communications Sector
China’s path toward its long-term objective of becoming a technological superpower has begun with the use of foreign technology that is modified to Chinese domestic standards and contains intellectual property owned by Chinese majority-owned companies or Chinese nationals. Most Chinese high-tech products are copies from other countries; original inventions are rare on the mainland, but China will nevertheless pursue new technologies independently. As noted earlier, the information and communications sector (including computers, telecommunications systems, semiconductors, and associated software and information systems) has been identified as a national priority and occupies a central role in national defense and security strategies. Currently, about 90 percent of Chinese products in this sector are based on foreign technology. Under the rubric of the “863” high-technology plan, the “973” basic research plan, and the Gongguan or “tackle” plan, the following areas will likely be targeted for independent research, because they are perceived to be areas of weakness and obstacles to autonomy in IT and communications:
Embedded systems include embedded hardware (microprocessors, microcontrollers, and signaling processors) and software (operating systems, R&D and design tools, databases). Despite gains in developing logic devices, China is far behind the international leaders in this area (State Council PRC, 2006).
Large-scale “informatization” of design includes engineering software such as model-driven architecture (MDA), electronic design automation (EDA), 3-D computer aided design, and large-scale product data management (PDM).
Large-scale control equipment and systems refer to digital systems that control entire production lines and processes, an area in which China lags despite years of developmental effort.
Systems integration focuses on integrating diverse hardware, software, and equipment into reliably functioning information and communications systems. Despite considerable strides in recent years, China continues to experience difficulty in producing reliable integrated IT systems.
Encryption is considered to be a key element for national security. As part of a broader effort to develop a “national information security support system,” China seeks to develop an encryption system for trusted computing based on Chinese algorithms and informed by domestic security requirements (Jiefangjun, 2007).
Virtual reality refers to technologies that synthesize disciplines such as electronics, psychology, control technology, and graphics to create simulations for use in military, industrial, and medical systems, as well as in consumer entertainment products.
New materials refer to nanotechnologies, superconducting materials, photosensitive materials, “smart” materials (combining sensing, control, and execution functions), and other materials used in information hardware and systems.
For the foreseeable future, China’s policy in the IT sector will primarily rely upon accessing innovative technologies that are developed outside of China. Where possible, China will gain access to those technologies by entering into international cooperation arrangements or by enticing or coercing leading-edge foreign IT enterprises into technology-sharing arrangements. In other cases, China will use methods that have a coercive dimension. For example, China has just enacted an anti-monopoly law that prohibits the “abuse” of intellectual property rights and that was promulgated, in substantial part, to enable China to break what is seen as “monopolization” of key technologies by multinationals. Adoption of the indigenous innovation regime will compel multinationals to transfer proprietary technologies to their Chinese subsidiaries on legal terms that most will regard as unacceptable—the alternative being the loss of access to procurement by state-owned enterprises, which in some sectors comprise the largest part of the domestic market. China is also likely to use the standards-setting process to compel multinationals to transfer the technology that is implicated in the standards or face the legal consequences of noncompliance.
Within the IT sector, absent a sharp change in course, China’s stance toward technology acquisition is likely to evolve into a self-inflicted wound of substantial dimensions. Many, if not most, leading-edge multinational IT companies are reluctant to locate their most important R&D activities in China, although they will continue to establish R&D centers there to engage in application-specific R&D to serve local customers, and to participate in standards-setting activities. In effect, notwithstanding its status as a production base for IT equipment, China risks being “designed out” of the increasingly internationalized cutting-edge IT R&D environment, a process that has already begun.
China faces monumental long-term energy challenges. Its energy consumption is rising faster than that of any other nation, but its oil and gas resources are modest. China consumes more coal than the United States, Japan, and Europe combined. Although it has the world’s third largest reserve of coal (after the United States and Russia), current demand, particularly for coking coal used for steel production, has outpaced its production, causing China to become a net importer of coal for the first time in 2007 (Yuan, 2009; Xinhua, 2009a; World Coal Institute, 2010). At present rates of extraction, China will deplete its oil in 10 years, its natural gas in 15 years, and its coal in 75 years.
As energy production struggles to stay abreast of demand, blackouts and brownouts have become common in east coast cities. Failure to satisfy China’s growing energy demand could cripple China’s economy and give rise to social unrest. The environmental and health effects of coal-burning are also a serious public health concern. In response to these risks, China’s leaders are implementing a broad array of measures to ensure the country’s energy security, while at the same time reducing pollution and carbon emissions. Key policies include a massive expansion of alternative energy sectors (notably hydropower and wind energy), widespread introduction of “clean coal” technology (China is now the world leader in building state-of-the-art coal-burning power plants (Bradsher, 2009)), expansion of nuclear energy production capabilities, and pervasive conservation efforts. With respect to scientific research, China’s MLTP designates energy and the environment as priority fields for development through science and technology and through the following twofold approach:
Acquire, adopt, absorb, and ultimately own (through indigenous IP) foreign technologies in renewable energy and pollution control
Independently develop renewable energy and pollution control technologies in the key national research programs (MOST, 2010a,b,c)
China has decided to focus its scientific energy and environmental research on the development of technologies that reduce greenhouse gases and methane emissions or slow the processes (State Council PRC, 2008). Key themes include the following:
Hybrid and pure electric vehicles (a major target of the 863 program)
Technologies for renewable energy and new energy
High-efficiency energy materials for use in batteries, hydrogen storage, and solar power systems
Distributed energy supply technologies
Magnetic confinement fusion technology
Technologies for hydrogen storage, transmission, and distribution
Technologies that control, dispose of, or recycle greenhouse gases such as CO2 and methane in major industries
Technologies for the clean use of coal, natural gas, and oil
Technologies for manufacturing equipment for coal and nuclear-generated power
Technologies for controlling greenhouse emissions in agriculture
In 2008 China emerged as the world’s largest producer of photovoltaic (PV) panels, accounting for about one-third of worldwide PV shipments. Although China’s market for PV equipment is comparatively small, the government is implementing a number of policies to stimulate the establishment of new solar power projects, including an investment subsidy of 50 percent for grid-connected solar plants (via the Golden Sun Demonstration Program). Provincial governments in Qinghai and Yunnan are underwriting large-scale solar power plants, including a $1.3 billion, 166 megawatt solar plant in Yunnan Province (Xinhua, 2009b). The government resources being poured into this sector will virtually ensure that China remains a leading if not a dominant player in the global solar power equipment industry.
Nuclear energy production is also a top priority among China’s efforts to achieve emission-free energy independence. China plans to expand its nuclear energy capacity sixfold or more by 2020, followed by another 300 percent increase by 2030. Additionally, China is rapidly progressing toward a goal of self-sufficiency in the design and production of nuclear reactors (World Nuclear Association, 2010).
The Chinese government considers the promotion of renewable energy to be crucial to national defense. The National Energy Commission, formed in 2008, is partially comprised of high-ranking military officers, a fact which has attracted widespread comment. The Chinese government has tasked the national defense production sector with developing wind power equipment for “national defense,” and it has directed the industry to “facilitate the military’s rapid development and advancement of the wind power equipment industry in order to build the national economy” (Xinhua, 2007; NFTC, 2010). Government R&D spending on renewable energy is generous and growing, and China is developing renewable energy equipment (such as wind equipment utilizing large magnets) that capitalize on China’s near-monopoly of rare metals. China is expected to formulate standards for renewable equipment that promote Chinese standards as global standards, using the size of its domestic market as leverage. Under these circumstances it is possible that within the next two decades China will dominate one or more of the renewable energy equipment sectors that are emerging as among the most critical sectors of the 21st century.
Like IT and energy, biotechnology is an emerging and rapidly changing sector in China. Although most research facilities in China remain inferior to those in the United States, newer laboratories have excellent infrastructure and equipment that rival those of their U.S. counterparts. R&D funding in the biotech area is undergoing rapid growth, providing many new opportunities for researchers. In spite of expanding resources, the quality of Chinese research and innovation in biotechnology still generally lags behind global standards, with a few pockets of excellence as reflected by recent high-profile publications in prestigious journals. Given this unevenness in research quality and outcomes, it is uncertain that the increases in biotech spending will translate into real and worthwhile innovations. As with IT, some biotechnology applications with manufacturing components, such as antibody production, are moving to China as a result of investment from both foreign and domestic companies.
This will undoubtedly strengthen the biotechnology environment and infrastructure in China, which may lay the foundation for future innovations. Overall, the biotechnology and health sector mirrors other high-tech areas in China, exhibiting rapid growth and vast potential, but many obstacles to overcome to produce real innovations.
Integration of China’s S&T and Industrial Development with Defense Modernization
China’s long-term strategy for modernizing its military rests on combining civil-military science, technology, and R&D into a dual-use, spin-on and spin-off system. As outlined in the MLTP, China plans to:
Strengthen the overall planning and coordination in integrating the defense and civilian sectors … [and] allow for the creation of a new S&T management system embracing both the defense and civic sectors. Encourage defense-related research institutes to work on civilian research topics, while defense-related R&D activities be made open to civilian research institutes and industries. Expand the scope of defense procurement from civilian research institutes and industries. Reform the management system to ensure fair competition between non-defense and defense research institutes for defense-related research and production contracts while establishing public platforms for the integration of the defense and civilian sectors, and for dual-use applications. (State Council PRC, 2006)
The above approach to achieving military modernization, like Chinese economic reform, dates back to the early 1980s. Since then, China’s military capability has steadily expanded, with defense spending increasing by more than 10 percent annually from 1989 to 2009 (Wines, 2010) and the successful test of an anti-satellite weapons system in 2007, signaling significant and controversial technological advances (Covault, 2007). An important goal in current S&T planning is the creation of an efficient defense industrial sector that is responsive to, and interacts effectively with, the commercial, academic, and military research sectors of China’s S&T community.
NATION-SPECIFIC INDICATORS OF S&T ADVANCEMENT
It is evident, if only from the recent remarkable annual increases in GDP, that China is undergoing a period of rapid growth. The country’s future progress will be driven by the government’s desire for national prestige, self-sufficiency in S&T, economic growth, and military modernization. To assess China’s effectiveness in achieving its goals, a wide range of indicators should be monitored, including those listed here:
Number of international prizes and patents
Emergence of international brands
Emergence of innovative products and practices unique to China
Level of R&D expenditures over time
Degree and quality of connections between academic-industry-research centers
Quantity and quality of international collaborations and exchanges in industry and academia
Amount and type of foreign direct investment
Continued growth and improvement of education system and faculty
Reduction in corruption levels
Number of publications in well-known and prestigious journals
Successful expansion of S&T literacy into western China
Salaries for scientists and researchers
Trends in brain drain, brain gain, and brain circulation
Links between mainstream innovation system and defense industrial sector
From this expansive list, a brief selection of indicators are summarized in the following sections, with priority given to those that the committee sees as particularly indicative of China’s S&T advancement.
There is an array of data that reflect China’s economic growth over the past years and decades. It is this growth that is sustaining China’s continued increases in S&T investment and infrastructure. According to the MLTP (2006-2020), China aims to raise national investment in R&D to 2 percent of GDP by 2010 and 2.5 percent by 2020, from the current percentage of about 1.5 percent. Combined with the strong growth in GDP in absolute terms, China’s R&D spending has grown on average at a rate of 18 percent a year since 1995.
Although the growth in S&T funding is remarkable, there are still institutional issues that must be resolved. In particular, there is a general lack of openness and transparency in funding decisions, which negatively affects the ability of China to recruit first-rate scientists. Additionally, most R&D spending is geared toward development activities, rather than basic research. As a result, the quality and quantity of cutting-edge basic research is still small compared to that of the United States. Nevertheless, innovation in applied research and industrialization has successfully propelled China’s economic growth in the past decades.
Although China’s university system graduates hundreds of thousands of scientists and engineers each year, a critical shortage exists of highly qualified faculty, many of whom are attracted instead to opportunities in the private sector. This problem has given rise to new incentive programs specifically designed to attract foreign faculty and experts to teach in China. There is concern also over whether graduates have attained the proper skills needed to compete in a globally competitive environment (Simon, 2010), whether at the higher education or primary school levels. Finally, the sustained brain drain from China, to the United States in particular, continues to be a source of concern. This phenomenon is fueled by a lack of space for undergraduate and graduate students in Chinese universities, continued incentives to study abroad, attractive workplaces and improved quality of life overseas, and the ability to have a dual presence in China and abroad. Some reverse brain gains—or revolving “brain circulation”—have been realized as well, based on S&T investments in infrastructure, programs to lure back prominent scientists and others with attractive benefits packages (e.g., the Thousand Talents Program), and the increased ability to conduct research in more than one lab or location at a time.2 Nonetheless, China seems to suffer from an overall net drain. According to a recent analysis, efforts by China to attract first-rate foreign academics have had mixed results, and on average, only about one-quarter of Chinese who went abroad for study and research have returned (Cao, 2008). Many of those that do return to China do not hold foreign doctorates; rather, they received Ph.D.s from Chinese institutions and went abroad for several years of postdoctoral research experience. The primary reason that first-rate academics have not returned to China seems to be institutional: success is often based on social connections rather than merit. This underlying factor makes it difficult for first-rate scientists from abroad who lack this professional and social network to be successful in China. Other factors include differences in work culture, the need to engage in local politics, and rampant misconduct in science. Unless these systemic institutional problems are resolved, it is likely that China will continue to experience a brain drain.
China’s share of scientific and engineering citations grew by about 20 percent annually between 1974 and 2005. China leads internationally in publication of articles on cutting-edge technologies (e.g., nanotechnology), which contrasts with the more diverse output of papers from the United States, suggesting that Chinese scientists and engineers are pursuing technologies with defense-sector applications. Other research shows that about one-quarter of the papers attributed to China are actually the result of international collaborations, primarily with the United States (Kostoff et al., 2007). OECD data confirm the rate of growth and the significant focus on nanoscience and nanotechnology (Guinet, 2009).
China’s patent outputs have risen sharply in recent years but only 1 percent are regarded as being of high value (i.e., important enough to file in advanced economies such as the United States, Europe, and Japan; NSB, 2010). Most Chinese patents are for design or utility, and only a small number are for invention (Guinet, 2009).
POSSIBLE SCENARIOS IN CHINESE S&T
From the above descriptors, we can conclude that China is well into the process of developing an advanced national innovation system and is endeavoring to expand this capability across its vast territory. The future of this venture is as yet unclear, as is China’s capacity to provide the necessary tangible and intangible S&T infrastructure (skilled researchers, educators, enterprises) that will be necessary to support an expanding national innovation system, especially in less-developed parts of the country, over the next several decades.
Several fundamental questions remain: Can China achieve its economic and S&T modernization goals? If so, what then? Will China turn inward and/or continue to engage globally? Will China develop an innovation system that is based on the Western approach, or will China develop a more distinct and evolving innovation system and style? These appear to be fundamental but as yet undecided dilemmas even for Chinese decision-makers. Given the high levels of uncertainty about China’s current and future S&T environments and where it might be headed, it can be predicted that the trajectory for Chinese S&T innovation will fall into one of three general categories: upward trajectory; downward trajectory; or somewhere in the middle.
Under the first scenario, China becomes a global as well as a regional S&T and R&D hub and a global technology standards competitor, if not leader, in key sectors. Modern facilities built around innovation-technology-education clusters, particularly in China’s eastern provinces but also its central areas, prove both attractive and essential to multinational corporations as well as to leading international researchers and scientists, who in greater numbers conduct operations and advanced R&D in China on at least a part-time basis. Both multinational and domestic R&D centers develop increasingly innovative products and processes, including Chinese-developed components, that have a growing impact on the Chinese and global markets. Finally, China closes in on or achieves its goal of one of its scientists being awarded a Nobel Prize in Science (the lack thereof being a growing irritant and challenge to China’s status as a global S&T leader) and emerges as an innovative challenger or leader in new technology fields/sub-fields. China improves its capacity to develop and produce components for Western commercial and defense industries.
Under the second scenario, national technological standards and practices increasingly isolate Chinese industry and scientific communities from global trends, ideas, and leading innovative processes. China’s leading technologists and scientists are engaged globally but indirectly, because of fewer close industrial partnerships or collaborative ventures. Over time, China’s spurt in S&T innovation slows or stalls, and advanced foreign investment and interest diminishes and diverts to other global hot spots. Western commercial firms and defense industries remain engaged with, but wary of and generally unchallenged by, Chinese counterparts.
In the third scenario, China’s efforts to develop a national innovation system are somewhat successful but confined mainly to the eastern provinces. Central and western provinces fall short of China’s aspirations in developing R&D bases and competitive techno-industrial clusters. China’s education system remains a critical obstacle to faster, more advanced S&T and R&D capabilities that are commensurate with Western advances and remains reliant on inputs from foreign experts. The world’s leading scientists collaborate with their Chinese counterparts, but mainly in areas of mutual interest or in promising new areas of exploration and often as part of larger international teams. Overall, innovative and inventive abilities trail global standards. However, China remains a key supplier to the West of Chinese-produced components that it grows slowly and sporadically as a producer of Chinese-designed parts and, potentially, systems.
The outcome of the above scenarios could be significantly affected by the following internal and external factors:
Corruption. Current surveys suggest that corruption is endemic across China’s scientific and industrial communities and undermines China’s interaction and integration with international counterparts.
Export controls and Tiananmen sanctions. If current barriers to Chinese access to advanced Western dual-use and munitions technologies are lowered or eliminated, then new S&T and R&D possibilities will emerge for Chinese commercial and defense industries. However, this might diminish China’s current enhanced capabilities at systems integration, due in part to the necessity of technologically integrating diverse sources of dual-use foreign technology into new, Chinese-made products or components.
Resource competition. As with other powers, China’s future scientific and technological advancement is heavily reliant on continued access to critical material and minerals, whether through domestic supply, stockpiling, and/or import. The competition for rare earth elements is already underway; China is a significant competitor by virtue of its U.S.-size demand and market. If resource availability becomes a strategic restriction on global S&T, this could seriously impact which of the above scenarios comes to pass.
Globalization advances to incentivize offshored or outsourced S&T. Globalization may begin to affect the scientific community such that, much like industry R&D, scientific fields of study become modularized across a global innovation community based on different states’ comparative advantages. China could stand to benefit considerably from such a trend and may seek to promote it. China’s size, investments, aspirations, and potential in terms of S&T would likely make it a highly attractive base for a more globalized scientific community, particularly in basic sciences.
FINDINGS AND RECOMMENDATIONS
The pace and extent of China’s S&T achievements have been surprising to most observers, including China’s own experts. There remain several unpredictable factors that could seriously disrupt or reverse China’s progress and could, in turn, impact U.S. national security interests. This uncertainty slows the ability of government, industry, and academia to understand, effectively respond to, and leverage such rapid and dramatic changes and represents a critical challenge to leveraging the emerging global S&T landscape.
Finding 4-1. Because of its size and economic role, China’s future outcomes have great potential impact on the global economy and on U.S. national security—but, lack of knowledge about the direction of China’s future development makes it difficult to predict the extent of the impact.
It is highly likely that China will continue to advance its S&T capabilities at a fast pace and on a large scale for years to come. Additionally, the size, scope, and potential of China’s human resources, level of government spending, market size, and territorial breadth represent a critical competitive advantage that few other countries possess (the United States being a notable exception). China benefits from having many opportunities for S&T collaboration and, barring an unexpected upheaval, will likely continue to benefit from them for many years. The present and prospective level of national and international S&T interaction taking place in China (by both Chinese and non-Chinese), therefore, holds the potential for possible S&T breakthroughs that are multidisciplinary and transformative in nature. The more open China is to international S&T and R&D, the greater the risk that China will become not only an S&T competitor but also an S&T alternative to the United States among countries and corporations. This would represent a threat to continued U.S. S&T leadership.
Finding 4-2. If China can continue to increase its openness to, and opportunities for, international collaboration while providing access to its human and economic resources and ensuring the protection of intellectual property, then it could become a substantial S&T competitor to the United States and a destination for basic S&T for other countries and corporations, which would constitute a threat to U.S. national security.
Recommendation 4-1. The United States should actively seek out opportunities to leverage China’s S&T advances, resources, and networks and foster closer cooperation and integration where it serves U.S. national interests.
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