Is China Winning the Innovation Race?
Over the past two millennia, Chinese ingenuity has spawned some of humanity's most consequential inventions. Without gunpowder, guns, bombs, and rockets; without paper, printing, and money printed on paper; and without the compass, which enabled ships to navigate the open ocean, modern civilization might never have been born.
Today, a specter is haunting the developed world: Chinese innovation dominance. And the results have been so spectacular that the United States feels its preeminence threatened.
Yet China lapsed into cultural and technological stagnation during the Qing dynasty, just as the Scientific Revolution was transforming Europe. Western colonial incursions and a series of failed rebellions further sapped the Celestial Empire's capacity for innovation. By the mid-20th century, when the Communist triumph led to a devastating famine and years of bloody political turmoil, practically the only intellectual property China could offer for export was Mao's Little Red Book.
After Deng Xiaoping took power in 1978, launching a transition from a rigidly planned economy to a semi-capitalist one, China's factories began pumping out goods for foreign consumption. Still, originality remained a low priority. The phrase "Made in China" came to be synonymous with "cheap knockoff."
Today, however, a specter is haunting the developed world: Chinese innovation dominance. It first wafted into view in 2006, when the government announced an "indigenous innovation" campaign, dedicated to establishing China as a technology powerhouse by 2020—and a global leader by 2050—as part of its Medium- and Long-Term National Plan for Science and Technology Development. Since then, an array of initiatives have sought to unleash what pundits often call the Chinese "tech dragon," whether in individual industries, such as semiconductors or artificial intelligence, or across the board (as with the Made in China 2025 project, inaugurated in 2015). These efforts draw on a well-stocked bureaucratic arsenal: state-directed financing; strategic mergers and acquisitions; competition policies designed to boost domestic companies and hobble foreign rivals; buy-Chinese procurement policies; cash incentives for companies to file patents; subsidies for academic researchers in favored fields.
The results have been spectacular—so much so that the United States feels its preeminence threatened. Voices across the political spectrum are calling for emergency measures, including a clampdown on technology transfers, capital investment, and Chinese students' ability to study abroad. But are the fears driving such proposals justified?
"We've flipped from thinking China is incapable of anything but imitation to thinking China is about to eat our lunch," says Kaiser Kuo, host of the Sinica podcast at supchina.com, who recently returned to the U.S after 20 years in Beijing—the last six as director of international communications for the tech giant Baidu. Like some other veteran China-watchers, Kuo believes neither extreme reflects reality. "We're in as much danger now of overestimating China's innovative capacity," he warns, "as we were a few years ago of underestimating it."
A Lab and Tech-Business Bonanza
By many measures, China's innovation renaissance is mind-boggling. Spending on research and development as a percentage of gross domestic product nearly quadrupled between 1996 and 2016, from .56 percent to 2.1 percent; during the same period, spending in the United States rose by just .3 percentage points, from 2.44 to 2.79 percent of GDP. China is now second only to the U.S. in total R&D spending, accounting for 21 percent of the global total of $2 trillion, according to a report released in January by the National Science Foundation. In 2016, the number of scientific publications from China exceeded those from the U.S. for the first time, by 426,000 to 409,000. Chinese researchers are blazing new trails on the frontiers of cloning, stem cell medicine, gene editing, and quantum computing. Chinese patent applications have soared from 170,000 to nearly 3 million since 2000; the country now files almost as many international patents as the U.S. and Japan, and more than Germany and South Korea. Between 2008 and 2017, two Chinese tech firms—Huawei and ZTE—traded places as the world's top patent filer in six out of nine years.
"China is still in its Star Trek phase, while we're in our Black Mirror phase." Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon.
Accompanying this lab-based ferment is a tech-business bonanza. China's three biggest internet companies, Baidu, Alibaba Group and Tencent Holdings (known collectively as BAT), have become global titans of search, e-commerce, mobile payments, gaming, and social media. Da-Jiang Innovations in Science and Technology (DJI) controls more than 70 percent of the world's commercial drone market. Of the planet's 262 "unicorns" (startups worth more than a billion dollars), about one-third are Chinese. The country attracted $77 billion in venture capital investment between 2014 and 2016, according to Fortune, and is now among the top three markets for VC in emerging technologies including AI, virtual reality, autonomous vehicles, and 3D printing.
These developments have fueled a buoyant techno-optimism in China that contrasts sharply with the darker view increasingly prevalent in the West—in part, perhaps, because China's historic limits on civil liberties have inured the populace to the intrusive implications of, say, facial recognition technology or social-credit software, which are already being used to tighten government control. "China is still in its Star Trek phase, while we're in our Black Mirror phase," Kuo observes. By contrast with Americans' ambivalent attitudes toward Facebook founder Mark Zuckerberg or Amazon's Jeff Bezos, he adds, most Chinese regard tech entrepreneurs like Baidu's Robin Li and Alibaba's Jack Ma as "flat-out heroes."
Yet there are formidable barriers to China beating America in the innovation race—or even catching up anytime soon. Many are catalogued in The Fat Tech Dragon, a 2017 monograph by Scott Kennedy, deputy director of the Freeman Chair in China Studies and director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies. Among the obstacles, Kennedy writes, are "an education system that encourages deference to authority and does not prepare students to be creative and take risks, a financial system that disproportionately funnels funds to undeserving state-owned enterprises… and a market structure where profits can be made through a low-margin, high-volume strategy or through political connections."
China's R&D money, Kennedy points out, is mostly showered on the "D": of the $209 billion spent in 2015, only 5 percent went toward basic research, 10.8 percent toward applied research, and a massive 84.2 percent toward development. While fully half of venture capital in the States goes to early-stage startups, the figure for China is under 20 percent; true "angel" investors are scarce. Likewise, only 21 percent of Chinese patents are for original inventions, as opposed to tweaks of existing technologies. Most problematic, the domestic value of patents in China is strikingly low. In 2015, the country's patent licensing generated revenues of just $1.75 billion, compared to $115 billion for IP licensing in the U.S. in 2012 (the most recent year for which data is available). In short, Kennedy concludes, "China may now be a 'large' IP country, but it is still a 'weak' one."
"[The Chinese] are trying very hard to keep the economy from crashing, but it'll happen eventually. Then there will be a major, major contraction."
Anne Stevenson-Yang, co-founder and research director of J Capital Research, and a leading China analyst, sees another potential stumbling block: the government's obsession with neck-snapping GDP growth. "What China does is to determine, 'Our GDP growth will be X,' and then it generates enough investment to create X," Stevenson-Yang explains. To meet those quotas, officials pour money into gigantic construction projects, creating the empty "ghost cities" that litter the countryside, or subsidize industrial production far beyond realistic demand. "It's the ultimate Ponzi-scheme economy," she says, citing as examples the Chinese cellphone and solar industries, which ballooned on state funding, flooded global markets with dirt-cheap products, thrived just long enough to kill off most of their overseas competitors, and then largely collapsed. Such ventures, Stevenson-Yang notes, have driven China's debt load perilously high. "They're trying very hard to keep the economy from crashing, but it'll happen eventually," she predicts. "Then there will be a major, major contraction."
"An Intensifying Race Toward Techno-Nationalism"
The greatest vulnerability of the Chinese innovation boom may be that it still depends heavily on imported IP. "Over the last few years, China has placed its bets on a combination of global knowledge sourcing and indigenous technology development," says Dieter Ernst, a senior fellow at the Centre for International Governance Innovation in Waterloo, Canada, and the East-West Center in Honolulu, who has served as an Asia advisor for the U.N. and the World Bank. Aside from international journals (and, occasionally, industrial espionage), Chinese labs and corporations obtain non-indigenous knowledge in a number of ways: by paying licensing fees; recruiting Chinese scientists and engineers who've studied or worked abroad; hiring professionals from other countries; or acquiring foreign companies. And though enforcement of IP laws has improved markedly in recent years, foreign businesses are often pressured to provide technology transfers in exchange for access to markets.
Many of China's top tech entrepreneurs—including Ma, Li, and Alibaba's Joseph Tsai—are alumni of U.S. universities, and, as Kuo puts it, "big fans of all things American." Unfortunately, however, Americans are ever less likely to be fans of China, thanks largely to that country's sometimes predatory trade practices—and also to what Ernst calls "an intensifying race toward techno-nationalism." With varying degrees of bellicosity and consistency, leaders of both U.S. parties embrace elements of the trend, as do politicians (and voters) across much of Europe. "There's a growing consensus that China is poised to overtake us," says Ernst, "and that we need to design policies to obstruct its rise."
One of the foremost liberal analysts supporting this view is Lee Branstetter, a professor of economics and public policy at Carnegie Mellon University and former senior economist on President Barack Obama's Council of Economic Advisors. "Over the decades, in a systematic and premeditated fashion, the Chinese government and its state-owned enterprises have worked to extract valuable technology from foreign multinationals, with an explicit goal of eventually displacing those leading multinationals with successful Chinese firms in global markets," Branstetter wrote in a 2017 report to the United States Trade Representative. To combat such "forced transfers," he suggested, laws could be passed empowering foreign governments to investigate coercive requests and block any deemed inappropriate—not just those involving military-related or crucial infrastructure technology, which current statutes cover. Branstetter also called for "sharply" curtailing Chinese students' access to Western graduate programs, as a way to "get policymakers' attention in Beijing" and induce them to play fair.
Similar sentiments are taking hold in Congress, where the Foreign Investment Risk Review Modernization Act—aimed at strengthening the process by which the Committee on Foreign Investment in the United States reviews Chinese acquisition of American technologies—is expected to pass with bipartisan support, though its harsher provisions were softened due to objections from Silicon Valley. The Trump Administration announced in May that it would soon take executive action to curb Chinese investments in U.S. tech firms and otherwise limit access to intellectual property. The State Department, meanwhile, imposed a one-year limit on visas for Chinese grad students in high-tech fields.
Ernst argues that such measures are motivated largely by exaggerated notions of China's ability to reach its ambitious goals, and by the political advantages that fearmongering confers. "If you look at AI, chip design and fabrication, robotics, pharmaceuticals, the gap with the U.S. is huge," he says. "Reducing it will take at least 10 or 15 years."
Cracking down on U.S. tech transfers to Chinese companies, Ernst cautions, will deprive U.S. firms of vital investment capital and spur China to retaliate, cutting off access to the nation's gargantuan markets; it will also push China to forge IP deals with more compliant nations, or revert to outright piracy. And restricting student visas, besides harming U.S. universities that depend on Chinese scholars' billions in tuition, will have a "chilling effect on America's ability to attract to researchers and engineers from all countries."
"It's not a zero-sum game. I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."
America's own science and technology community, Ernst adds, considers it crucial to swap ideas with China's fast-growing pool of talent. The 2017 annual meeting of the Palo Alto-based Association for Advancement of Artificial Intelligence, he notes, featured a nearly equal number of papers by researchers in China and the U.S. Organizers postponed the meeting after discovering that the original date coincided with the Chinese New Year.
China's rising influence on the tech world carries upsides as well as downsides, Scott Kennedy observes. The country's successes in e-commerce, he says, "haven't damaged the global internet sector, but have actually been a spur to additional innovation and progress. By contrast, China's success in solar and wind has decimated the global sectors," due to state-mandated overcapacity. "When Chinese firms win through open competition, the outcome is constructive; when they win through industrial policy and protectionism, the outcome is destructive."
The solution, Kennedy and like-minded experts argue, is to discourage protectionism rather than engage in it, adjusting tech-transfer policy just enough to cope with evolving national-security concerns. Instead of trying to squelch China's innovation explosion, they say, the U.S. should seek ways to spread its potential benefits (as happened in previous eras with Japan and South Korea), and increase America's indigenous investments in tech-related research, education, and job training.
"It's not a zero-sum game," says Kaiser Kuo. "I don't think China is going to eat our lunch. We can sit down and enjoy lunch together."
If you look back on the last century of scientific achievements, you might notice that most of the scientists we celebrate are overwhelmingly white, while scientists of color take a backseat. Since the Nobel Prize was introduced in 1901, for example, no black scientists have landed this prestigious award.
The work of black women scientists has gone unrecognized in particular. Their work uncredited and often stolen, black women have nevertheless contributed to some of the most important advancements of the last 100 years, from the polio vaccine to GPS.
Here are five black women who have changed science forever.
Dr. May Edward Chinn
Dr. May Edward Chinn practicing medicine in Harlem
George B. Davis, PhD.
Chinn was born to poor parents in New York City just before the start of the 20th century. Although she showed great promise as a pianist, playing with the legendary musician Paul Robeson throughout the 1920s, she decided to study medicine instead. Chinn, like other black doctors of the time, were barred from studying or practicing in New York hospitals. So Chinn formed a private practice and made house calls, sometimes operating in patients’ living rooms, using an ironing board as a makeshift operating table.
Chinn worked among the city’s poor, and in doing this, started to notice her patients had late-stage cancers that often had gone undetected or untreated for years. To learn more about cancer and its prevention, Chinn begged information off white doctors who were willing to share with her, and even accompanied her patients to other clinic appointments in the city, claiming to be the family physician. Chinn took this information and integrated it into her own practice, creating guidelines for early cancer detection that were revolutionary at the time—for instance, checking patient health histories, checking family histories, performing routine pap smears, and screening patients for cancer even before they showed symptoms. For years, Chinn was the only black female doctor working in Harlem, and she continued to work closely with the poor and advocate for early cancer screenings until she retired at age 81.
Alice Ball
Pictorial Press Ltd/Alamy
Alice Ball was a chemist best known for her groundbreaking work on the development of the “Ball Method,” the first successful treatment for those suffering from leprosy during the early 20th century.
In 1916, while she was an undergraduate student at the University of Hawaii, Ball studied the effects of Chaulmoogra oil in treating leprosy. This oil was a well-established therapy in Asian countries, but it had such a foul taste and led to such unpleasant side effects that many patients refused to take it.
So Ball developed a method to isolate and extract the active compounds from Chaulmoogra oil to create an injectable medicine. This marked a significant breakthrough in leprosy treatment and became the standard of care for several decades afterward.
Unfortunately, Ball died before she could publish her results, and credit for this discovery was given to another scientist. One of her colleagues, however, was able to properly credit her in a publication in 1922.
Henrietta Lacks
onathan Newton/The Washington Post/Getty
The person who arguably contributed the most to scientific research in the last century, surprisingly, wasn’t even a scientist. Henrietta Lacks was a tobacco farmer and mother of five children who lived in Maryland during the 1940s. In 1951, Lacks visited Johns Hopkins Hospital where doctors found a cancerous tumor on her cervix. Before treating the tumor, the doctor who examined Lacks clipped two small samples of tissue from Lacks’ cervix without her knowledge or consent—something unthinkable today thanks to informed consent practices, but commonplace back then.
As Lacks underwent treatment for her cancer, her tissue samples made their way to the desk of George Otto Gey, a cancer researcher at Johns Hopkins. He noticed that unlike the other cell cultures that came into his lab, Lacks’ cells grew and multiplied instead of dying out. Lacks’ cells were “immortal,” meaning that because of a genetic defect, they were able to reproduce indefinitely as long as certain conditions were kept stable inside the lab.
Gey started shipping Lacks’ cells to other researchers across the globe, and scientists were thrilled to have an unlimited amount of sturdy human cells with which to experiment. Long after Lacks died of cervical cancer in 1951, her cells continued to multiply and scientists continued to use them to develop cancer treatments, to learn more about HIV/AIDS, to pioneer fertility treatments like in vitro fertilization, and to develop the polio vaccine. To this day, Lacks’ cells have saved an estimated 10 million lives, and her family is beginning to get the compensation and recognition that Henrietta deserved.
Dr. Gladys West
Andre West
Gladys West was a mathematician who helped invent something nearly everyone uses today. West started her career in the 1950s at the Naval Surface Warfare Center Dahlgren Division in Virginia, and took data from satellites to create a mathematical model of the Earth’s shape and gravitational field. This important work would lay the groundwork for the technology that would later become the Global Positioning System, or GPS. West’s work was not widely recognized until she was honored by the US Air Force in 2018.
Dr. Kizzmekia "Kizzy" Corbett
TIME Magazine
At just 35 years old, immunologist Kizzmekia “Kizzy” Corbett has already made history. A viral immunologist by training, Corbett studied coronaviruses at the National Institutes of Health (NIH) and researched possible vaccines for coronaviruses such as SARS (Severe Acute Respiratory Syndrome) and MERS (Middle East Respiratory Syndrome).
At the start of the COVID pandemic, Corbett and her team at the NIH partnered with pharmaceutical giant Moderna to develop an mRNA-based vaccine against the virus. Corbett’s previous work with mRNA and coronaviruses was vital in developing the vaccine, which became one of the first to be authorized for emergency use in the United States. The vaccine, along with others, is responsible for saving an estimated 14 million lives.On today’s episode of Making Sense of Science, I’m honored to be joined by Dr. Paul Song, a physician, oncologist, progressive activist and biotech chief medical officer. Through his company, NKGen Biotech, Dr. Song is leveraging the power of patients’ own immune systems by supercharging the body’s natural killer cells to make new treatments for Alzheimer’s and cancer.
Whereas other treatments for Alzheimer’s focus directly on reducing the build-up of proteins in the brain such as amyloid and tau in patients will mild cognitive impairment, NKGen is seeking to help patients that much of the rest of the medical community has written off as hopeless cases, those with late stage Alzheimer’s. And in small studies, NKGen has shown remarkable results, even improvement in the symptoms of people with these very progressed forms of Alzheimer’s, above and beyond slowing down the disease.
In the realm of cancer, Dr. Song is similarly setting his sights on another group of patients for whom treatment options are few and far between: people with solid tumors. Whereas some gradual progress has been made in treating blood cancers such as certain leukemias in past few decades, solid tumors have been even more of a challenge. But Dr. Song’s approach of using natural killer cells to treat solid tumors is promising. You may have heard of CAR-T, which uses genetic engineering to introduce cells into the body that have a particular function to help treat a disease. NKGen focuses on other means to enhance the 40 plus receptors of natural killer cells, making them more receptive and sensitive to picking out cancer cells.
Paul Y. Song, MD is currently CEO and Vice Chairman of NKGen Biotech. Dr. Song’s last clinical role was Asst. Professor at the Samuel Oschin Cancer Center at Cedars Sinai Medical Center.
Dr. Song served as the very first visiting fellow on healthcare policy in the California Department of Insurance in 2013. He is currently on the advisory board of the Pritzker School of Molecular Engineering at the University of Chicago and a board member of Mercy Corps, The Center for Health and Democracy, and Gideon’s Promise.
Dr. Song graduated with honors from the University of Chicago and received his MD from George Washington University. He completed his residency in radiation oncology at the University of Chicago where he served as Chief Resident and did a brachytherapy fellowship at the Institute Gustave Roussy in Villejuif, France. He was also awarded an ASTRO research fellowship in 1995 for his research in radiation inducible gene therapy.
With Dr. Song’s leadership, NKGen Biotech’s work on natural killer cells represents cutting-edge science leading to key findings and important pieces of the puzzle for treating two of humanity’s most intractable diseases.
Show links
- Paul Song LinkedIn
- NKGen Biotech on Twitter - @NKGenBiotech
- NKGen Website: https://nkgenbiotech.com/
- NKGen appoints Paul Song
- Patient Story: https://pix11.com/news/local-news/long-island/promising-new-treatment-for-advanced-alzheimers-patients/
- FDA Clearance: https://nkgenbiotech.com/nkgen-biotech-receives-ind-clearance-from-fda-for-snk02-allogeneic-natural-killer-cell-therapy-for-solid-tumors/Q3 earnings data: https://www.nasdaq.com/press-release/nkgen-biotech-inc.-reports-third-quarter-2023-financial-results-and-business