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China Is Rapidly Becoming a Leading Innovator in Advanced Industries

There may be no more important question for the West’s competitive position in advanced industries than whether China is becoming a rival innovator. While the evidence suggests it hasn’t yet taken the overall lead, it has pulled ahead in certain areas, and in many others Chinese firms will likely equal or surpass Western firms within a decade or so.

China attaining global competitive advantage in virtually all advanced manufacturing industries requires significant “learning,” as the production “recipes” to make, for example, a wide-body jet, a computer chip, a genomics sequencer, a robot, or a biotech drug are incredibly complex and cannot be obtained from scholarly journal articles or other widely available sources of technical knowledge. [37] Likewise, a Washington Post series featuring experts reflects the new preferred wisdom that China faces a demographic crisis: Its young people are discontent and its economy has hit the wall, in part because of the current banking and real estate challenges; and the Chinese Communist Party (CCP) is only interested in its own power, not innovation. And even if Western nations could find the political will to completely decouple (they won’t because some countries, especially in Europe, refuse, seeking their own short-term gains in China at the expense of the collective good of the West), the resulting share of the global economy would be modest in size and gradually shrinking, given the much-faster expected growth rates of the non-Western world over the next multiple decades.

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