China’s Need for Innovation

Minxin Pei, professor of government at Clairmont McKenna College in California recently wrote an article “Nixon Then, China Now” explaining China’s weaknesses hindering its ability to truly compete as a world power. He argues that China’s one-party regime results in the inability to innovate and keeps it from being a true contender against the minds and ideas of the West and Japan.

Since Nixon’s visit in 1972, China has emerged from its self-imposed isolation to become a rival power to dominant industrialized countries politically, economically, and militarily. It has strategically exploiting the benefits of free trade, and it is often remarked that China may soon take the place of the United States as the hegemonic power in the international system. However Pei argues that China is unprepared for deeper integration with the globalized world.

Institutionally, China’s policy weaknesses keep it from effectively addressing issues of concern. The ineffectiveness of Chinese aid in Asia and Africa results in Chinese efforts being perceived as resource exploitation, while a lacking immigration policy fails to attract high-skilled workers, who instead go to the West and Japan. The political censorship and inability to criticize the party mean that no critical review of policy by an objective agency can be made. Therefore it continues without the review or improvement needed to be most effective.

China’s state capitalism also keeps Chinese companies from being competitive with Western corporations. China’s industries, though powerful, are only basic assembly and processing operations. The sophisticated and more profitable operations, product design, branding, and marketing, are left to companies belonging to industrialized powers. In order for Chinese businesses to succeed internationally, China needs to release the legal monopolies that give companies no incentive to innovate their products.

Pei argues that on top of addressing these structural deficiencies, for China to be truly competitive in the globalized world it needs talented people to lead and innovate in all sectors of society. Presently, the out-of-date education system fails to foster creativity, critical-thinking, and analysis, all skills needed to compete with the world’s forward-thinking leaders in policy and business.

According to Pei, the one-party regime is a major obstacle to the achievable task of addressing these deficiencies. While competing in a liberal international regime, China remains hostile to liberal political and economic values. However before China can become a true contender for hegemonic status in the world, it will have to allow space for critical thinking and competition to come up with creative and innovative solutions and strategies for its political and economic challenges.

For more reading, see this recent article by Meng Zhao on The Social Enterprise Emerges in China at the Stanford Social Innovation Review.

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2 Responses to China’s Need for Innovation

  1. Aditya says:

    i generally buy this argument, but would like some more contextualization of where india sits in all this… does it mean that we should avoid these pitfalls etc…? also, what is the innovation argument wrt the rise / non-rise of china? look forward to hearing back!

  2. Sedona Chinn says:

    India is both at an advantage and disadvantage by not having the state involvement that China has in the economy. On the one hand, it means businesses must be more competitive and create better products, on the other hand, they are not protected and can be drowned out by international corporations. In India as well as China, major innovation can be done to education and infrastructure to foster creativity and entrepreneurship that will challenge globalized countries.

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