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China’s Technology Policies

The Sunday, July 4, 2004 New York Times Magazine has a good essay on technology and industrial policy, innovation, and the 21st century economy of China.

An excerpt:

“The government is pouring resources into creating the world's largest army of industrialists. China has 17 million university and advanced vocational students (up more than threefold in five years), the majority of whom are in science and engineering. China will produce 325,000 engineers this year. That's five times as many as in the U.S., where the number of engineering graduates has been declining since the early 1980's. It is hard to imagine Americans' enthusiasm for engineering sinking lower. Forty percent of all students who enter universities on the engineering track change their minds.

The case for the ability of American industry to stay ahead of its international competition rests on the national gifts and resources that the U.S. devotes to innovation. Certainly, the confidence of big American companies like Motorola, General Motors and Intel, all of which have billion-dollar-plus stakes in China, is based on the brainpower they have at home. The research gap between the U.S. and China remains vast. In December, Washington authorized $3.7 billion to finance nanotechnology research, a sum the Chinese government cannot easily match within a scientific infrastructure that would itself take many more billions (and years) to build. Yet, when it comes to more mainstream, applied industrial development and innovation, the separation among Chinese, American and other multinational firms is beginning to narrow.

Last year, China spent $60 billion on research and development. The only countries that spent more were the U.S and Japan, which spent $282 billion and $104 billion respectively. But again, China forces you to do the math: China's engineers and scientists usually make between one-sixth and one-tenth what Americans do, which means that the wide gaps in financing do not necessarily result in equally wide gaps in manpower or results. The U.S. spent nearly five times what China did, but had less than two times as many researchers (1.3 million to 743,000).”

Read the whole thing.

Note: The discussion in the excerpt above on how “wide gaps in financing do not necessarily result in equally wide gaps in manpower or results” provides an excellent example of the differences between market exchange rates (MER) and purchasing power parity (PPP) discussed in an earlier post.

Last Note: For a perspective on the Chinese government’s position on technology policy see this post.