China Law Blog

This reminds me of when I last flew into Beijing and saw nearly a dozen migrant workers literally just pulling out weeds on a small patch of grass by the side of the runway. I think this lack of 'creativity and innovation' results mainly from the fact that this surging economy fosters an attitude of instant gratification - local Chinese are not willing to take the time to invest in the long term benefits of R&D or more skilled management. This is especially true if you take into account the cheap cost of labour. I mean if it were alot faster and cheaper for me to dig a hole with 40 people using their bare hands than to invest in or develop a backhoe of some sort, I wouldn't choose the latter.

Pete: Although I don't mean to be (too) facetious, how do you know they weren't out there collecting herbs for cooking? This goes on all the time, in China, and other countries. In the USA, elderly Chinese can be seen doing this, and occasionally picking off fungus from trees ("mu er"). Maybe they were civil aeronautical types, just taking a breather out on the runways.

Even if they were "min gong" hired simply to do weeding, how is this a lack of innovation and creativity? I also pluck weeds by hand from my lawn on rare occasion (rare because I'm lazy, not rare because the weeds don't exist). Would creativity and innovation keep weeds out of my lawn, any more than out of the BJ Airport's lawn? Or would employing all sorts of chemicals on the lawns constitute innovation and creativity?

It seems amazing to me that so many newly-created China hands and observers don't take into account how recently China came onto the "scene" and the mindset from which China came. As recently as mid/late 1989, many Chinese, well-educated and not exactly powerless, were concerned that the gains of the prior ten years might be lost in new tumult. Some of us may remember Chinese, up to the mid-1980's, congratulating each other at dinners that they had made it alive through the Cultural Revolution of the 60's and 70's. That isn't so long ago.

The point is that, when you look at China's activity to date, in proper perspective, the progress is astounding, and the innovation and creativity is there. It may be beneath the surface in some cases, and right in view in other cases. It is developing, and the Think Tanks in the USA and Europe know it. I suspect that relatively few student visas are authorized and issued by the US CIS and State Dept. not because of the fear that Chinese students won't go back to China to live and work but instead look for work here (as might have been the concern in the 1980's and 1990's), but rather that they will come here in hordes, study too well, and all return to China with U.S. technical educations to create and innovate on a scale to challenge U.S. hegemony. What so many scintillating articles fail to take into account is the remarkably pragmatic resilience of the Chinese. As I have said time and again in this and other fora, the Chinese will do it their way, and if you are clever (not merely observant) enough, you may notice.

"I think this lack of 'creativity and innovation' results mainly from the fact that this surging economy fosters an attitude of instant gratification - local Chinese are not willing to take the time to invest in the long term benefits of R&D or more skilled management."

@Todd;

It is not that Chinese want instant gratifictation or will do it "their way", it is that the CCP does not want to take the time to foster organic R&D, it needs to placate the people to justify its existence. That means new buildings NOW, modern conveniences NOW, access to high tech consumer goods NOW and building a modern military to retake lost territories and rebuild Chinese glory IN THE NEAR FUTURE. This means rampant IP piracy in non-media areas is not just circumstantial but state sponsored and promoted.

The Chinese way is to do whatever they want because we are just barbarians and they deserve it all.

Todd,

Points taken about perspective, but if China needs hordes of students studying in US institutions to challenge the US's superiority in innovation, doesn't this say something rather negative about the China model? How beneficial to a country is it to permanently outsource its elite education? I think most Chinese people earnestly believe that a Chinese person has never won a Nobel prize, such is the gulf within the pool of world-wide Chinese talent caused by this system.
Often I wonder how successful Chinese educators are at encouraging students to be creative in their science classes and then to just shut up and listen in their politics and history classes. My gut feeling says that's not really possible -but I could be wrong.

With regard to resilience, yeah, "the Chinese" are like that. But can you think of anywhere where people aren't?

Todd:

Perhaps my airport gardening example was a little too crass - it certainly wasn't the best way to prove my point (although I know they probably weren't collecting herbs for cooking because they were wearing airport authority safety vests.)

I also realize that perspective is needed here. My grandparents were displaced by the cultural revolution and my parents suffered through it first hand. I also spent a good chunk of my childhood living in a Beijing hutong (one that has now been replaced by a giant condo complex), so I am personally aware of the progress that has been made and am no way trying to downplay it. That being said, the lack of homegrown creativity and innovation is a major problem that has been further exacerbated by the cheap cost of labour and overall short-sightedness.

There are an increasing number of high-end R&D facilities in China and there's plenty of academic talent to fill them, but how many of them are owned and managed by domestic enterprises? Another approach you could take would be to look at the VC transactions taking place. Very few of the domestic technology companies that have been targeted by VC capital are actually very "innovative" in the sense that they're not churning out 'original' technical breakthroughs. Having been part of a legal team that regularly represents PRC enterprises in VC transactions, the general consensus I've gotten is that most of these are simply exploiting existing technologies and riding the wave of China's vast consumer market.

Accidentally hit the post button but had one more thing to say:
I should mention that I do think progress is being made, and that there will probably be some major changes over the next little while - especially given China's booming (or bubbling) stock exchange. Whether there its a bubble waiting to burst or not, recent stock market activity is an unmistakable sign of China's future direction...

1. The consolidation of SOEs taking place via M&A transactions will definitely focus efforts to compete internationally rather than locally (meaning more long term investment, and more efforts to innovate). Not to mention that you're probably going to see more M&A along the lines of the IBM consumer division acquisition by Lenovo.

2. This surge of successful IPOs means a new wave of wealthy investors who are not going to want to put all their eggs in one basket. Domestic private equity is just getting going and also obviously being encouraged by China's lawmakers. This will likely mean more capital for research-intensive companies, capital that's not foreign and probably more interested in China's future development.

This is a good read, the most comprehensive discussion I've seen in quite a while on the "China Model."

I don't agree with Dan's assessment that it talks mostly about China's shortcomings. It actually covers in much detail on what China has accomplished so far, despite more pessimistic predictions, and the China Model's influence on many developing countries. It raised a host of fair and legitimate questions about its sustainability.

I think it's useful to distinguish the two types of "China Model" that are implied in this article, as well as in numerous other articles.

The "China Model" for developing countries and transition economies is a successful and convincing model. It's not entirely China's creation, but more an extension and further development of the East Asian Model. It has been proven much more successful than what was prescribed by "Washington Concensus" or IMF. There is enough empirical evidence and history to show that.

On the other hand, the "China Model" as an ultimate challenge or alternative to the Western model of market-based capitalism plus liberal democracy is unproven yet, and the history is simply not long enough to produce convincing and conclusive evidence. China Model has to pass many crucial tests and be more successful in many areas to be legitimate. Innovation and creativity are one of them.

But the so-called "China Model" has not completely taken shape yet, it is still evolving. And the key to its ultimate success is adaptability. The Chinese leadership and society so far have proved to be quite pragmatic, resilient and adaptable. Each generation of the Chinese leadership in the last 30 years have tried to be responsive to the changing environments and realities (Deng Xiaoping's "Black or white Cat," or "To get rich is glorious" theory, Jiang Zemin's "Three Representatives" theory and more recently, Hu Jintao's "Harmonic Society" and "Scientific development")

In general, these theories are quite boring and the languages it adopts are full of cliche to most people, but the messages nonetheless are important.

I suspect, in the end, if the "China Model" can show any sustainability, it would probably have adopted many elements of the Western model.

Will respond to you all after Thanksgiving. Enjoy, turkeys.

Japan in the 1980s lowered manufacturing costs by removing labor and replacing it with machines. China has done the opposite: lowered manufacturing costs by adding labor. That is not sustainable in the long term if China wants to move up the economic development ladder -- as it patently does. My own two-cents worth on how China is tackling this question can be found here in an article called Outsourcing Innovation: http://www.forbes.com/opinions/2007/05/21/outsourcing-china-innovation-oped-cx_pm_0529china.html