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China's tech buildup: Peril and promise

Reader comments on China’s drive to build its own Silicon Valley fell broadly into two categories: what’s wrong with China and what’s wrong with us.

As always, Practical Futurist readers produced a full medley of responses to last week’s column. I described China’s drive to build its own Silicon Valley — and my suspicion that China may be the first country that actually pulls it off. Broadly speaking, reader comments fell into two categories: what’s wrong with China and what’s wrong with us. First: what’s wrong with China.  

Robert Pascal, Toronto, Ontario: The biggest drawback to all the Chinese universities is the lack of freedom of thought. I worked and lived in China for almost fifteen years. The people are great and their politics are as corrupt as can be. China will always remain backward until there are checks and balances in the government.Tom Simchak, Houston, TX: One important aspect you left out in this puff piece is the blatant theft of intellectual property rights and software piracy that the Chinese are known for ... or is that what you consider to be the "entrepreneurial spirit"?Sunil Misra, Baltimore, MD: China is a fascist state. They oppress religions, commit cultural genocide in Tibet, and saber-rattle at the drop of a hat. They refuse to allow independent unions, which is why multinational corporations love them. They crush, ironically, workers themselves. They have executed prisoners for body parts. Need I go on? By these means, as Machiavelli notes, one may gain power but not honor. The Chinese are a model for no one. They will fail as all fascist governments do. Jonathan B. Rogers, Tianjin, China: My wife and I have been living in China and teaching English for almost six years. There are so many things that your article DOESN'T say about the real China, its students, and its people. As so many 'foreigners' have said after living here: "How are these people ever going to be able to do anything? They can't even wait in line at McDonald's." It takes more than math to make the world go around, and it's going to take more than math and technology to make China anything more than a third-world country. We are so sick of hearing about the Chinese students' math scores. Just for the record, math is about the ONLY thing that some of them can do. Thirty percent of Chinese can't even write their name. From our and other expats' experience, if China "makes it", it will probably be because they lied, cheated, and stole to get there.Alan Burger, Houston, TX: Your opinion paints a pretty picture of the China and its people. The fact is the government is extremely corrupt and anything there that resembles Silicon Valley has been built by U.S. companies, all for slave labor and no EPA restrictions. They have stolen just about everything they build. It's sad to see there are Americans like you who choose to make evil look good. You are American, aren't you?Dan DeLucca, Seattle, WA: All of this pro-Communist Chinese rubbish that continuously appears in the American media gives me the impression the Communist Chinese know how to make the American media monkey dance.

China is a nation with a remarkable capacity for change, and anyone who still carries around Cold War notions of the “Communist Chinese” is far out of date.  Just take a look at Newsweek International’s fascinating piece on how the Party is remaking itself with a leadership training academy that “looks like an American business school.” Many of the most successful entrepreneurs in China are Party members: It’s less a question of ideology than belonging to the ruling class. 

That said, however, it is certainly the case that China remains a totalitarian state, with all that means for civil liberties and individual rights. It also has a corrupt banking system controlled by Party leaders. In the long term that will certainly throttle China’s internal growth, but for now — well, when you’re doing massive urban renewal, for example, the lack of due process certainly makes it easy to move the local residents around. Fascism may not be to American tastes, but it’s not clear that such a government is necessarily bad for either economic or technologic progress. 

It’s absolutely true that intellectual property protection is currently almost non-existent in China. In fact, it’s absolutely amazing what Chinese companies are willing to counterfeit, frequently to the detriment of their own citizens. My favorite example last year was in Shanghai, where a company made counterfeit “official” test pencils for the crucial middle school exam that determines every student’s future. There apparently wasn’t enough graphite in the pencil lead to work with the grading machines, so hundreds of thousands of students simply flunked. Counterfeit pharmaceutical drugs are rampant as well. 

Every technology conference I attend in China has sessions on intellectual property protection, and it’s clear that the government is at least giving lip service to the concept. In the long run, rampant piracy will begin to damage China’s role in the world economy, and the government will have to take more decisive steps. But the final impetus for IP protection will occur when the Chinese themselves develop intellectual property they wish to protect. 

Perhaps most importantly on the debit side, China faces an enormous internal challenge that will begin to demand more attention and resources in the near future. Eight hundred million of its citizens still endure increasing poverty in the countryside. At least a half billion of them will likely move to the cities over the next decade. A majority of those new urban arrivals are likely to be unemployed single young men, the classic ingredient for political unrest. The Chinese leadership will have its hands full trying to accommodate this cohort.

The problems at home
On the other side, readers had plenty of thoughts about how the United States is faring as a technology leader:

Kevin Phillips, Indian Land, SC: In two decades or less China will be the dominant world power economically, politically, financially and have the strongest military. The U.S. is far too preoccupied, arrogant, lazy, narrow-minded, presumptuous and complacent to realize this. China is destined to become the next "super power." Let's hope they will wield this power graciously.M. Kevin Tutor, San Mateo, CA: Your comment: “even as school boards debate how to teach evolution” — touché! I have twin babies with a wife from Beijing and we’re VERY seriously considering sending them to China so that they can be properly educated. Americans who say bad things about China generally have not been there, and worse, lack the intellectual curiosity to consider what they may be missing.Eric, MN: My parents left Southeast Asia for France in 1977 chasing better opportunity.  Too late my dad realized that the U.S. was the place to be an entrepreneur. I saw he was right so although born in France, I came to the U.S. in 1997. It was a good choice. However, if I had to do it again, I would go to China. I don't want to be part of the future, I want to build a part of the future.Michael Deal, Nashville, TN: As long as our kids think the best way to success is to be a "star" actor, musician or athlete instead of an engineer or scientist, we will fall further and further behind the countries we blindly refer to as Third World.Robert Harris, Reading, PA: I share your thoughts and concerns about the direction the United States is going re: education, science and technology. I blame my generation for much of what is happening. We gave our kids too much and thus they have a "We don't have to work hard for what we have" attitude. I also think the lack of discipline in the home has overflowed into our schools and, as I'm sure you know, good education requires discipline.Brian Terho, Rochester, NY: I think we should stop spending so much money trying to make the rest of the world follow our political ideals and put that money into refurbishing our own educational system and infrastructure.

J.F., Shanghai, China: I have lived in China for two years. I am originally from the U.S. The Chinese are driven by a desire to have those things which they were denied for so long during the Cultural Revolution. China, at one point in history, was the most advanced place on Earth. They want it back. America and Europe have become so over-developed that there isn't much room for opportunity. Modern lifestyles create complacency and overconfidence in one's culture and standard of living.Steven Kreuzer, Case Western Reserve University: As a native engineering student I am in a constant state of foreboding about what will come of America's current technological edge. I am shocked by the mindset and general ignorance that students these days have towards the impending loss of America's advantage.Gary, Washington D.C.: I am considering getting a second degree in engineering, but if someone in China will work for a tenth of what I am willing to, what can I do? It just costs too much to employ an educated workforce in America.Anonymous: I believe that the problem in the U.S. is that the salaries for engineers are far lower than those of lawyers, bankers and the like — even though the studies for engineering are often more difficult than other fields. Until that trend changes, there will be fewer and fewer going into the engineering field. I speak from experience, since I have been an engineer in the semiconductor field for over 25 years, and frankly am tired of seeing people in different fields with far fewer skills make two to three times more in salary. When my daughter heads to college in two years, I am directing her to a more lucrative field.

These last two comments raise a very interesting point, and one I’ve often heard discussed —especially as young electrical engineering graduates increasingly find themselves asking, “Where are the jobs?”  Dan Gillmor, Silicon Valley’s most merciless observer, recently wondered about this in his blog: “It insults people's intelligence when top technology officials complain about current or looming talent shortages after their actions have made it plain that those very workers can expect extremely short "careers" in the tech industry.”

Roger: Why didn’t you mention Hong Kong and Taiwan. ... Don't you think smart Taiwanese entrepreneurs are doing business in China?

Oh, they most certainly are. In fact it’s the huge Taiwanese investment — both financial and intellectual — on the Mainland that will probably keep both the PRC and Taiwan from doing anything stupid about their relationship. Politics aside — and I think the Chinese are very good at separating politics and business — I consider Hong Kong, Taiwan and China all part of one immensely powerful economic whole.

Richard Reyes: One thing that struck me is your opinion that Japan "never became a global technology innovator." How can Japan be considered a non-innovator if they continue to lead the world in many of the latest technologies like automotive hybrid technology, DVD blue laser technology, plasma display technology, etc?

Good point — I shouldn’t have said “innovator.” Japan is indeed a constant and highly successful innovator — but it’s not a country that for the most part has produced fundamentally new technology ideas. Just looking back over the last few decades, game-changing concepts like recombinant DNA and the commercial Internet came from the United States. That’s the role that I think China is ultimately shooting for and if they manage it, that will be a sea change in the world’s intellectual power balance.

Further reading
Thomas Friedman’s "The World is Flat" has become a best-seller in pointing out the enormous competitive challenges that the U.S. faces globally. Not a best-seller, but an extremely thoughtful meditation on ways that U.S. firms might adapt to this competition is "The Only Sustainable Edge" by John Hagel III and John Seely Brown. (Their solutions, however, depend on a highly-educated and creative workforce in this country, and it’s not at all clear that the government’s current priorities are much fixed on that goal.) And there’s a newly published book, "Rice Bowl and Chips," by Philippines-based analyst Dennis Posadas, that looks at the rise of Silicon Valley-style developments in Asia. Posadas proposes that they might best prosper by meeting the technology needs of their own populations rather than trying to build solutions for advanced Western markets. Finally, there’s even — of course — a blog devoted to Zhongguancun, China’s Silicon Valley,, with some interesting English translations of Chinese articles; blogger Tyler Rooker is a graduate student completing a thesis about the area and its prospects.