April 21, 2005 4:48 PM PDT

China closing the tech gap?

STANFORD, Calif.--China is rapidly becoming a major force in developing new technology, posing a significant economic threat to the United States.

Alternately, the authoritarian country faces key hurdles in its quest to transform into an innovator, including its lack of free speech.

Both arguments were made here on Thursday at a meeting of the U.S.-China Economic and Security Review Commission, a 12-member panel set up in 2000 to advise the U.S. Congress.

A group of Silicon Valley business leaders and academics from around the country gave varied accounts of China's high-technology development and how the United States should respond to maintain its tech leadership.

Former U.S. Secretary of Defense William Perry expressed doubts that China's rise as a tech powerhouse will carry over to it making its own breakthroughs. Perry, now a senior fellow at the Hoover Institution, told members of the commission that it appears China is not engaging in fundamental research and lacks a culture that encourages innovation.

Trained like the Taiwanese
"What I see from China today is product development," Perry said.

Carl Everett, a partner at venture capital firm Accel Partners, offered a different view. He argued that Chinese technologists are gaining expertise in much the same way the Taiwanese did prior to becoming experts in semiconductor manufacturing. "In the future, China will provide a substantial amount of innovation in our industry," Everett said. "They are being trained today just as the Taiwanese were trained in the 1970s."

In the past few years, China has emerged as a major player in the computer industry. Chinese companies such as Lenovo, which is buying IBM's PC division, are seeking to expand their presence in the world market. In addition, many U.S. tech companies are establishing research centers in China. China's growing technology economy is part of a broader pattern of tech work being shipped abroad that worries some U.S. labor advocates.

Although China's economy has been expanding quickly, doing business there has its hazards, according to Alan Wong, senior counsel for chipmaker Nvidia. Wong, a former U.S. State Department official who stressed that he was not speaking on behalf of Nvidia, said he has heard that China requires companies to use an encryption system to which the government retains a key. The result, he suggested, is that corporate intellectual property may be at risk when data is zapped in and out of the country. "My assumption is anything you put in there, the government can have," Wong said.

Wong also suggested national security may be a real issue in reviewing China's technological growth. "In an effort to assure Western companies that power sources and road access to a given site will be plentiful and well-maintained, Chinese promoters sometimes let slip that infrastructure in the area will receive consistent support and priority because the government wants to attract certain technologies that can be used in the Chinese defense and military industries," Wong said in written testimony to the commission.

13 comments

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It's simple...
They're buying, we're selling.
Posted by TheMidnightCoder (61 comments )
Reply Link Flag
China will surpass the US
if they think that the Chinese will be unable to innovate in the near future. One only needs to look at Japan, Taiwan and South Korea to see just how stupid that line of thinking is.

Additionally, Government-assisted industrial espionage isn't anything new. France has always had a law that requires all companies doing business in France to use their own French encryption. And... Suprise! Surprise! They have the keys too!

Yes, China is still a Communist country that reguates much of its citizen's form of free speech, but they have two intangibles that can quickly overcome that:
1) They have the hunger to be the best in Asia, and then the world.
2) They are also pragmatic. If it will make money, they will do it.

With today's porous borders, it isn't hard for someone to make money in China, and retire elsewhere in comfort.
Posted by Tex Murphy PI (165 comments )
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What are they buying; Food, Concordes or Excursion Fares for Space Travel!
As per the above subject line - one should consider international business as just international business... why should some people in some countries be willing to just through their hands up in the air at the first sign of impending social, economic, technological and scientific challenges (after all after a tornado, an earthquake, a tsuname, a hurrricane... the survivors pick themselves up and attempt to continue with their live again). China is not the Universe - Be prepared to stand up and fight back America just as what was done in the automotive industry a few years ago!

;-)
Posted by (187 comments )
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Oops... correction!
Sorry... "Throw" not "through". Regrets
Posted by (187 comments )
Link Flag
Automotive example
Didn't the Americans lose that fight? Chrysler is no longer American, it's German.

Ford and GM just announced record losses AND have managed to lose even more market share.

That doesn't look like winning to me.
Posted by Tex Murphy PI (165 comments )
Link Flag
You still believe in corporate [America]?
It left us a few years ago. It's now "Global Corporations". Meaning they have no allegiance to any country. They have there very own deity call "The Business". This deity drives their decisions, and relives them of any ethical troubles. The head of Intel says in one breath, you need better education, and then in the next breath, if you don't reduce taxes, I'll build my next plant in another country, like I've all ready done. We're selling out America, and China is buying! It's a different world with Global trade. New rules are being made as we go. Economists are stymied because they have no tried and proven models to work from. Those that predict either doom or prosperity are just guessing. I hope for prosperity, but have very little faith in the Ken Lays of the US.
Posted by TheMidnightCoder (61 comments )
Link Flag
Who will do a better job at this!
With compliments

Who will take us back to aviation history/future; the USA, France, the United Kingdom, Russia or China?

Please see link:

<a class="jive-link-external" href="http://www.onera.fr/cahierdelabo/english/asup_ind01.htm" target="_newWindow">http://www.onera.fr/cahierdelabo/english/asup_ind01.htm</a>

:-D :-D :-D
Posted by (187 comments )
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Says it in the I Ching
As the ancient, venerable I Ching says, "Many men bite, but fu manchu." I got your feng shui right here.
Posted by HansinYabutay (31 comments )
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Relatively Speaking!
Experience also teaches us wisdom in "decision making" (STS - Columbia)... the world knows that Albert Einstein gave us the "Theory of Relativity". In this modern information technology age... why not let the world see where the social and economic values are plugged in (who will be plugging these in anyway; also, on what? "Boxes" that are not ready for this!)... What do the Economic Rate of Returns (ERRs) suggest? Also, lets see the global effects of "product activation codes" from places like Redmond!
Posted by (187 comments )
Reply Link Flag
Closing the Tech Gap
China is obviously closing the tech gap with the US --- but unless it changes its political systems, never can it surpass the US.

Innovation requires freedom as the principal ingredient --- and this is sorely lacking in China; and to certain extent even the rest of the Asian countries.

China can continue to copy, steal and be a good follower of the West. It's very unique character of a bully in Asia will prevent itself from ever becoming a respected nation of innovation.
Posted by Robert Wiseman (19 comments )
Reply Link Flag
Totalitarian Governments Can Innovate Too
Someone above said that China (and other Asian countries) will
never match US levels of innovation because they aren't free/
democracies. On what do you base that premise?

Germany before World Wars I and II was widely acknowleged to
be putting every other country on Earth in it's rearview mirrors,
in both science/technical developments as well as industrial
engineering prowess. The British weren't matching them, and
neither were we. Our huge resource base - in men and material
- is what eventually provided the means to win out against them
in both world wars - NOT some innate technical or scientific
superiority.

The same could be said about Imperial Japan in the run up to
WWII. They certainly started out that war ahead of us, in terms of
technical design of many weapons, and absolute numbers of
those weapons produced. It was only years later, after we had
mobilized and used government economic decrees to fight the
war itself, that our technical and industrial prowess started to
outstrip theirs. And it can be argued this was possible also
because we were exhausting them with our massive resource
base in the first place, as we did the Germans.

Now consider present day China. They aren't a democracy or
free, but history shows that isn't really necessary for being a
technological innovator OR an industrial powerhouse. Further, in
a head-to-head comparison with the US, it is China which has
the edge in resources now. In terms of people, minerals, ...
almost everything but oil (in which we are both about equally
deficient) ... they are in the position we once had vis a vis the
Germans and Japanese during the years encompassing the world
wars.

Is this important? The follwing quote from the article would
seem to indicate that it is:
"Chinese promoters sometimes let slip that ... the government
wants to attract certain technologies that can be used in the
Chinese defense and military industries," Wong said in written
testimony to the commission." Who do you think that defense
capability is supposed to counter? Tiawan? Japan? Or perhaps
their avowed defender - the United States.

I believe in freedom and democracy - it is the best and most
peaceful way for humankind to tend to it's affairs. The Chinese
people would benefit from it just as much as anyone else.
However, it seems to me we should stop waving flags and
spouting platitudes about ourselves here, about our supposed
superiority, and get down to the necessary business of proving it
in deed as well as in word.

Educating our people, investing in infrastructure, R&#38;D, health
care, etc ... supporting other DEMOCRACIES with our economic
cooperation, and doing whatever is necessary to rebuild our
manufacturing base - these are the only things that will ensure
not only the spread to others of these ideals we claim to hold so
dear, but their protection at home as well.

Absent that effort, we will find out - in no uncertain terms - just
how well and how fast this totalitarian Chinese government can
and will innovate their way to international dominance. And
given our current ridiculous trade and economic policies, it will
be totally at our own expense.
Posted by bcsaxman (69 comments )
Reply Link Flag
Update: Dynamic Capitalism Without Democracy
Read this for some more perspective on this issue:

<a class="jive-link-external" href="http://slate.msn.com/id/2117169/" target="_newWindow">http://slate.msn.com/id/2117169/</a>

These aren't the middle ages anymore. There should be no
doubt that capitalism no longer needs democracy to thrive.
However, unless one believes that 'man can live on dollars
alone', then this in no way means that democracy is no longer
necessary for human progress.

Democracy is the only way known to simultaneously and
effectively protect both the rights of property AND the rights of
liberty. It's continued existence and spread is essential for
humanity to thrive. For that reason, we should be wary of
strengthening any competing system which - either in ideal or in
practice - works to the contrary.
Posted by bcsaxman (69 comments )
Reply Link Flag
 

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