The Return of Technological Innovation to China

Last year, a friend from China who works in China’s investment banking industry in Shanghai came for a visit. She earned her MBA in the UK, and speaks fluent English. While in California, she decided to see how efficient America’s was compared to China’s Alibaba, and when it took more than a week for the average order to arrive from Amazon, she declared Alibaba the winner, because when she ordered a product in Shanghai through Alibaba in the morning, it was delivered to her front door that same afternoon and without the use of drones.

The rest of this post is mostly about Zhongguancun, China’s Silicon Valley, which is located in Beijing’s Haidian District and was first developed in the late 1990s.

Here are a few pictures of the concrete, glass and steel canyons of Zhongguancun taken by Steve Hsu, a professor of physics at the University of Oregon.

Recently I have read several times on Blogs and in Op-Ed pieces in the Western media that China doesn’t have a chance to match California’s Silicon Valley, because China lacks freedom.

This is simplistic and flawed thinking.

The Chinese have every economic freedom that many Americans have and the few that they don’t have are not economic in nature—for instance, freedom of religion and limited political expression. It isn’t as if these few limits to freedom are a secret since they are part of China’s Constitution, which is taught in the public schools. In China, the people are free to follow five officially sanctioned religions: Catholicism, Christianity, Buddhism, Taoism and Islam. In comparison the U.S. has about 313 religions and denominations to choose from.

Other than that, since money and freedom are linked, the growing Chinese middle class has as much freedom to live the same consumer lifestyle as many Americans do, but in the United States poverty is on the rise and with poverty comes less freedom unless you include hunger and being homeless as an example of freedom.

For instance, in 1985, the poverty rate in the U.S was 14% (33.3 million of 237.9 million people), and today (2015) reports that the mean poverty rate in the U.S. is 15.13% (48.5 million of 321 million people). How does that compare to China? In 1985, the poverty headcount rate in China was 30.7% (317 million of 1 billion people).  Today, the CIA reports it’s 6.1% (about 79.3 million of 1.3 billion people).

In addition, if democracy is so precious, why do so many Americans not vote? A 2010 survey by the California Voter Foundation found that 51 percent of nonvoters (in the U.S.) grew up in families that did not often discuss political issues and candidates. Does that mean in the U.S., we are also free to give our freedom away?

Where is the evidence that total freedom of religion and/or political expression is necessary for entrepreneurial innovation? Good luck, because you won’t find that evidence, but in the next few paragraphs you will find evidence that shows that total freedom of religious choice and political expression are not necessary to prosper and innovate.

“Shenzhen has never hidden its ambition to be China’s answer to Silicon Valley. Last year (2014), the city saw more than 64 billion yuan (HK$80.46 billion) invested in research and development, accounting for 4 per cent of GDP, only matched by South Korea and Israel.” – South China Morning Post

This 2008 video takes us to a lab in Tsinghua University in Beijing where students are discussing solar technology.

Ye Yuming, an award-winning student at Tsinghua University said, “China lags behind other countries in the solar power industry. The solar PV will help us improve and break the monopoly held by foreign businesses. The solar PV has great market potential, especially in China. The market size is huge.”

What Ye Yuming said in 2008 was true, but two years later, China became the world’s largest solar power manufacturer.

Bloomberg Business reports, “Along with the new companies, China is also experiencing a surge in technological innovation. The country had more than 660,000 effective invention patents last year, up 12 percent from a year earlier …”

And The Wall Street Journal says, “Increasingly, China’s own technology companies are challenging market leaders and setting trends in telecommunications, mobile devices and online services.”

In conclusion, British scientist, historian and sinologist Joseph Needham proved with his Science and Civilisation in China Series that China led the world in technological innovations for about 1,500 years until the 16th century. Then the West led the world in innovation. Is that about to change again?


Lloyd Lofthouse is the award-winning author of My Splendid Concubine [3rd edition]. When you love a Chinese woman, you marry her family and culture too. This is the lusty love story Sir Robert Hart did not want the world to discover.

IMAGE with Blurbs and Awards to use on Twitter

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