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COMMENTARY: Chinese Science, Technology Prowess Rising Quickly

How the U.S. chooses to act, with cooperation or confrontation, will determine much of the economic performance of both countries.

Mark Melnicoe
    Jul 07, 2018 5:00 PM  PT
COMMENTARY: Chinese Science, Technology Prowess Rising Quickly

Chinese researchers' successful cloning of two monkeys sent shockwaves through the scientific community in January and served as the latest reminder that China is on the frontier of matching Western technological research prowess.

The birth of Zhong Zhong and Hua Hua, identical long-tailed macaques, marked the first time scientists were able to clone a primate, the order of mammals to which we humans belong. The researchers hurdled technical barriers that had hindered international efforts at cloning primates for more than 20 years.

The feat by researchers in Shanghai not only conjures the specter of human cloning — and all of the ethical pitfalls that raises — but, in the shorter term, holds the promise of studying diseases in groups of genetically identical monkeys, a boon to medical research. Doctors have met with limited success when using non-primate animals while trying to solve the mysteries of certain diseases, including Parkinson's and Alzheimer's.

Beyond that, the cloning success illustrates the phenomenal growth of science and technology (S&T) research in China over the past decade. China, in fact, already has or is on a fast track to overtake the U.S. in several key ways.

For one, China is spending huge amounts on research and development and now accounts for fully one-fifth of total world R&D spending. Its growth rate greatly exceeds the U.S. and the EU, and it has risen to No. 2 in the world behind the U.S. in total R&D spending. Tax breaks and other incentives form a key part of the country's national industrial policy, directed by the central government, to catch up to the West in a number of important S&T industries.

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(Source: Crunchbase News)

One result: Chinese companies win more patents than any other country in the world. There are more than 2 million researchers in China, more than any other country. Over 2 million university students in China majoring in S&T, more than any other country, assure a continuing supply of researchers. Additionally, some 350,000 Chinese students are studying in America, many of them in STEM majors.

Gold Rush for China's Startups

With all this in mind, venture capitalists are flocking to China's industrial parks and scientific centers from Shanghai to Chengdu. In the second quarter of 2018, in fact, China surpassed North America in VC funding for the first time, according to an analysis by Crunchbase. Nearly half of the world's VC dollar volume poured into China against just over one-third going to the U.S. and Canada. Some 2,000 VC firms have taken up residence in China, mostly along the eastern coastal cities, the hotbed of Chinese research. Technology parks are springing up all over the country, offering tax incentives and free rent for startups.

Take the healthcare industry as one example. There is so much VC money that innovative Chinese pharmaceutical and medical device companies are finding themselves awash in cash in what feels like a modern-day gold rush.

"It's almost crazy if you're in China," Greg Scott, founder and chief executive officer of ChinaBio Group, a Shanghai-based consultant and investor firm, told me last year. "All the VCs say there's just too much money around. It makes it difficult."

Globally, this is having a big effect.

"Facilities in China are attracting interest due to the cutting-edge platforms established via increased government investment," Bryan Leaw wrote last month in an online post for Watermark Intellectual Property, an Australian law firm.

Leaw, an attorney who holds a Ph.D. in neuroscience, noted that the Beijing Genomics Institute is the world's largest sequencing center "where scientists regularly perform whole-genome sequencing."

He said the center is attracting international researchers in part because it has very low service costs compared to Western countries.

The U.S. Choice

What's happening in China provides both risk and opportunity for the United States. The risk, of course, is the erosion of American competitiveness as indigenous Chinese companies surge to the top in sectors from biological drugs to artificial intelligence to advanced transportation, including an electric vehicle program that is poised to explode.

Yet there is another way to view it. The U.S. could benefit because it's always had an open system of collaboration on science with other countries. America recruits from a huge pool of Chinese graduate students to boost research at home. Chinese researchers contribute to a growing number of medical and technological breakthroughs.

The big question is whether, in the age of Trump, that will all stop. It's not hard to see how more restrictive immigration policies and a sense that the U.S. is pulling in the welcome mat could derail many of these collaborative efforts.

China itself is not without its own serious problems. Plagiarism mars student papers at many universities, which have been told to clean up the acts of their researchers. The quality of research also comes into question at times. A big scandal erupted late in 2016 when the data resulting from drug clinical trials was challenged. A big majority of companies pulled back their applications when the China Food and Drug Administration told them to do self-evaluations of their trials data. Credibility took a hit, but healthcare attorneys said the incident should improve data in the long run.

One thing is certain. China still wants American technology to help develop its key industrial sectors, and cooperation in science works much better than confrontation. How this U.S.-China dance plays out may well determine the fate of important economic sectors for decades to come in each of the world's two largest economies.

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