Will China Be the Home of the Next Great Innovation Revolution?

Will China Be the Home of the Next Great Innovation Revolution?

Tom “The World is Flat” Friedman, noted NYTimes columnist, has launched a shot across America's bow.  His recent column, “The New Sputnik,” outlines a future in which China goes green – and cleans our clock on innovation.  If that happens, and the next innovation revolution occurs in China, the wealth that flows from it won’t be lapping at our shores the way it did following the internet revolution.

Why China, a country that lags far behind America in R&D? Because that country’s new emphasis on going green (through alternative, clean energy sources) demonstrates a clear recognition that this is where the next great innovation revolution lies.  Not only is it targeting low-cost manufacturing of solar, wind, and batteries, but considering the horrid pollution that plagues China, it has potentially the world’s biggest market for these clean products. 

And, as Friedman notes, “research will follow the market.”  He says:

“… when China decides it has to go green out of necessity, watch out. You will not just be buying your toys from China. You will buy your next electric car, solar panels, batteries and energy-efficiency software from China.”

Some may question what difference it makes where R&D occurs, or where our electric cars, or our batteries, or our solar panels (China has the largest manufacturer in the world, Suntech) come from.  It makes a huge difference.  There is clear evidence that geography matters (one reason why you see “innovation clusters” occurring around this country). Where you see R&D investments, not only do you see innovation, you see investments in new equipment, higher productivity, higher paying jobs, and investments in education and training.  Ultimately, you see higher living standards from the new wealth that is created – a wealth that doesn’t flow so easily across national borders.

The Chinese understand this, which is why that country’s government continues to do what is necessary to building a strong manufacturing base and lure R&D to its shores.

There is some hope.  David Sandalow, assistant secretary for policy at DOE, observes, “If they invest in 21st-century technologies and we invest in 20th-century technologies, they’ll win. If we both invest in 21st-century technologies, challenging each other, we all win.”

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