the can't innovate canard drives me a bit nuts...I was on a CNN show in 2015 arguing that just because there was internet censorship in China people should not assume there would be no innovation https://www.cnn.com/2015/03/25/asia/china-internet-censorship-kristie-lu-stout/index.html "“I haven’t really come across anybody who would say that yes, because we don’t have a free Internet, therefore we can’t innovate,” says Bishop." it struck me then and strikes me now as wishful thinking
This one drives me nuts as well, its ignorance and wishful thinking.As one of many examples, I first set foot in China in 2011, back then, cash was king, you used cash for everything, everywhere. Credit cards worked badly. As smartphones took off, cash got replaced by QR codes, which have taken over completely. Instead of copying or relying on western credit card infrastructure and payment systems, China invented it's own, easier, cheaper and better payment system, years before West had anything like it. There is innovation everywhere, it's more about which innovation makes headlines and it's perceived value.
One more example, something that did make headlines, in the west, for all the wrong reasons, some years back, was the facial recognition public toilet paper dispenser. (Not sure how common these actually are. I've never seen one.) Headlines were all about surveillance state and potential tracking of people through their use of public toilets. 🤔 What was completely missed, was the brilliant and innovative solution to the problem of public toilets running out of paper due to over use of toilet paper by some individuals. In contrast to payment systems, this might not change the world, but it's an example of trying to solve actual problems in new ways.
“facial recognition public toilet paper dispenser” haha I have never seen that. But there are some "smart urinals" now that can supposedly measure your health while you are doing that thing. I will need to scan the QR code to get the health report though. I think that's a sham.
I recently heard a US based researcher (Singaporean I think) praise China’s research output (overtaken the US) but saying the one area where the US still leads is the “going from zero to one”. The concept here is that once an idea becomes known, Chinese researchers will work on it and improve it, but it’s still the Americans who have an edge in coming up with a truly innovative idea in the first place.
I think it’s something that Chinese researchers themselves acknowledge and you also seem to have that view (I think) as you once commented that there are no “Elon Musks” in China (or something to that effect).
Just passing along an interesting observation. My own view is that China is fast catching up, and there is no reason why Chinese innovators won’t go from “zero-to-one” one day.
I have the same impression, and sometimes I wonder if it's cultural; I see evidence of that sometimes, but not so much evidence that I can't chalk it up to confirmation bias. For instance, I was having a conversation with a Chinese colleague, who mentioned that our company will be pursuing a certain retail angle which both of us are leery of. However, he then said that none of our competitors are doing it, which for him was a reason not to do it- but when he said that, I immediately felt *better* about the plan, because going places that our competitors don't is (potentially) how we surpass them. Now, maybe we'll fail, and maybe he and I are right to have reservations, but I thought it was an interesting window into our respective thought processes. Obviously our perspectives on this one issue can't be generalized, especially not to entire nations, but it makes me wonder. As Robert says, though, it would be a poor investment to bet against Chinese capacity for innovation, regardless of our personal observations.
You have a very clear eye that sees both the challenges and the optimism of China. Furthermore, you have not been captured by “the Thucydides trap” that views armed conflict between China and the USA as inevitable.
I only wish you wrote more about India. I am joking, of course, but I wish that I could find writers like yourself who could see the clear challenges as well as the fledgling efforts to solve those challenges, in my country of birth
Also, in fact, I wish to see "clear-eyed" writing about India too. I am super interested in learning more about that great country, but what I seem to find (including the top substack on India) all seem to be ideologically tinted, to either sides.
Sometimes western dogma makes is too anti state and ignores the finer points. Not only did the soviets send the first people into space under a state run program, but so did the US with NASA. Many of these other tech startups mentioned only got big through state subsidies anyway.
I would think China is in an ideal position for innovation where entrepreneurs have access to several supply chains as well as high quality infrastructure.
The concepts of 'Innovation' and 'Free Market' could benefit from a transformation in traditional business schools (where I was 'overly' educated with MBA degrees) to include more non-Western perspectives. Innovation isn't confined to a single model from Silicon Valley (where I used to live as an entrepreneur and industry observer), nor is the free market always the optimal approach.
Well written! But I'm not sure bout this: "If compared with the West, judged by the kind of power the state has in China and the sheer number of state-owned enterprises in China, yes, China is quite “statist”" as that depends on how one defines "state". The USA has an odd sort of semi-heavily-cartelized economy that engages in private sector semi-central planning. It has less over all competition than what is found in China, our private sector's coordination with each other and top down management of the economy, may exceed China's state, also, at least, since city gov in china can effect the behavior and management of state owned firms, at least there's some variability there. Given how deeply involved our highly concentrated private sector is with the formulation and then implantation of of gov interventions, like the IRA, we may be, just in a different way, more statist than China
Excellent commentary. I should like to add something. Looking closely at China, then it appears that it was the absence of regulation that spurred innovation. Either regulation was non-existent, or it was ignored, notably between 2002 and 2012.
If I remember correctly, during the period there was a commission active which every year proposed thousands of outdated regulations for cancellation. I have not heard of it since.
Generally and broadly speaking, during that time state, party and bureaucracy retreated and (inadvertently) gave free practise to the economy. I watched central government regulation literally evaporate on Beijing city limits, as implementation was viewed entirely optional on local levels. This of course led to massive problems which could not be ignored. Enter Xi Jin Ping and the "Age of Compliance."
During the "Age of Compliance" one can't help noting that overseas returnees, having left research and development assignments abroad in order to serve the nation at home, became frustrated with R&D in China having to comply with political objectives/frameworks. Quite a few gave up, airing their frustrations publicly.
Bureaucracy killing innovation is not a privilege of China alone, other countries have it as well. The EU, for example, develops straight-jacket regulation based on the technological status quo for industries that do not even exist. The pinnacle of overbearing bureaucracy has been reached.
Aspirations of academic and personal freedom fundamentally collide with the ideological postulates of Document No. 9 (2012) of the 17th Central Committee of the Communist Party of China, which also forms the base of Xi Jin Ping Thought. It is important to note that I do not suggest bad faith or bad intent, but it is what it is.
I would also argue that CCP cells in each company exceeding 25 employees, designed to make sure the party has a lid on things, apart from being a poor substitute for an in-house union as the company CEO/owner can also be the company party secretary, may not necessarily encourage free spiritedness.
Ideological thinking eroding the fundamentals of academic or other R&D activity seems not to be a China-only. Just yesterday I had a run-in with a seasoned political scientist from Europe, who is fully immersed in an ideological fog, willingly accepting false stereotypes if these only comply to his ideological bias.
the can't innovate canard drives me a bit nuts...I was on a CNN show in 2015 arguing that just because there was internet censorship in China people should not assume there would be no innovation https://www.cnn.com/2015/03/25/asia/china-internet-censorship-kristie-lu-stout/index.html "“I haven’t really come across anybody who would say that yes, because we don’t have a free Internet, therefore we can’t innovate,” says Bishop." it struck me then and strikes me now as wishful thinking
This one drives me nuts as well, its ignorance and wishful thinking.As one of many examples, I first set foot in China in 2011, back then, cash was king, you used cash for everything, everywhere. Credit cards worked badly. As smartphones took off, cash got replaced by QR codes, which have taken over completely. Instead of copying or relying on western credit card infrastructure and payment systems, China invented it's own, easier, cheaper and better payment system, years before West had anything like it. There is innovation everywhere, it's more about which innovation makes headlines and it's perceived value.
One more example, something that did make headlines, in the west, for all the wrong reasons, some years back, was the facial recognition public toilet paper dispenser. (Not sure how common these actually are. I've never seen one.) Headlines were all about surveillance state and potential tracking of people through their use of public toilets. 🤔 What was completely missed, was the brilliant and innovative solution to the problem of public toilets running out of paper due to over use of toilet paper by some individuals. In contrast to payment systems, this might not change the world, but it's an example of trying to solve actual problems in new ways.
“facial recognition public toilet paper dispenser” haha I have never seen that. But there are some "smart urinals" now that can supposedly measure your health while you are doing that thing. I will need to scan the QR code to get the health report though. I think that's a sham.
I recently heard a US based researcher (Singaporean I think) praise China’s research output (overtaken the US) but saying the one area where the US still leads is the “going from zero to one”. The concept here is that once an idea becomes known, Chinese researchers will work on it and improve it, but it’s still the Americans who have an edge in coming up with a truly innovative idea in the first place.
I think it’s something that Chinese researchers themselves acknowledge and you also seem to have that view (I think) as you once commented that there are no “Elon Musks” in China (or something to that effect).
Just passing along an interesting observation. My own view is that China is fast catching up, and there is no reason why Chinese innovators won’t go from “zero-to-one” one day.
I have the same impression, and sometimes I wonder if it's cultural; I see evidence of that sometimes, but not so much evidence that I can't chalk it up to confirmation bias. For instance, I was having a conversation with a Chinese colleague, who mentioned that our company will be pursuing a certain retail angle which both of us are leery of. However, he then said that none of our competitors are doing it, which for him was a reason not to do it- but when he said that, I immediately felt *better* about the plan, because going places that our competitors don't is (potentially) how we surpass them. Now, maybe we'll fail, and maybe he and I are right to have reservations, but I thought it was an interesting window into our respective thought processes. Obviously our perspectives on this one issue can't be generalized, especially not to entire nations, but it makes me wonder. As Robert says, though, it would be a poor investment to bet against Chinese capacity for innovation, regardless of our personal observations.
This is a very relevant anecdote
I agree. It's the reality for now. But there is no fundamental reason why China can't catch up in this regard as well.
You have a very clear eye that sees both the challenges and the optimism of China. Furthermore, you have not been captured by “the Thucydides trap” that views armed conflict between China and the USA as inevitable.
I only wish you wrote more about India. I am joking, of course, but I wish that I could find writers like yourself who could see the clear challenges as well as the fledgling efforts to solve those challenges, in my country of birth
Thank you Sridhar!
Also, in fact, I wish to see "clear-eyed" writing about India too. I am super interested in learning more about that great country, but what I seem to find (including the top substack on India) all seem to be ideologically tinted, to either sides.
Thomas Easton has a nice Substack, but it is not as detailed as yours.
okay, let me give it a try
Sometimes western dogma makes is too anti state and ignores the finer points. Not only did the soviets send the first people into space under a state run program, but so did the US with NASA. Many of these other tech startups mentioned only got big through state subsidies anyway.
I would think China is in an ideal position for innovation where entrepreneurs have access to several supply chains as well as high quality infrastructure.
I’d say each country has its own plus and minus
The concepts of 'Innovation' and 'Free Market' could benefit from a transformation in traditional business schools (where I was 'overly' educated with MBA degrees) to include more non-Western perspectives. Innovation isn't confined to a single model from Silicon Valley (where I used to live as an entrepreneur and industry observer), nor is the free market always the optimal approach.
Well written! But I'm not sure bout this: "If compared with the West, judged by the kind of power the state has in China and the sheer number of state-owned enterprises in China, yes, China is quite “statist”" as that depends on how one defines "state". The USA has an odd sort of semi-heavily-cartelized economy that engages in private sector semi-central planning. It has less over all competition than what is found in China, our private sector's coordination with each other and top down management of the economy, may exceed China's state, also, at least, since city gov in china can effect the behavior and management of state owned firms, at least there's some variability there. Given how deeply involved our highly concentrated private sector is with the formulation and then implantation of of gov interventions, like the IRA, we may be, just in a different way, more statist than China
Excellent commentary. I should like to add something. Looking closely at China, then it appears that it was the absence of regulation that spurred innovation. Either regulation was non-existent, or it was ignored, notably between 2002 and 2012.
If I remember correctly, during the period there was a commission active which every year proposed thousands of outdated regulations for cancellation. I have not heard of it since.
Generally and broadly speaking, during that time state, party and bureaucracy retreated and (inadvertently) gave free practise to the economy. I watched central government regulation literally evaporate on Beijing city limits, as implementation was viewed entirely optional on local levels. This of course led to massive problems which could not be ignored. Enter Xi Jin Ping and the "Age of Compliance."
During the "Age of Compliance" one can't help noting that overseas returnees, having left research and development assignments abroad in order to serve the nation at home, became frustrated with R&D in China having to comply with political objectives/frameworks. Quite a few gave up, airing their frustrations publicly.
Bureaucracy killing innovation is not a privilege of China alone, other countries have it as well. The EU, for example, develops straight-jacket regulation based on the technological status quo for industries that do not even exist. The pinnacle of overbearing bureaucracy has been reached.
Aspirations of academic and personal freedom fundamentally collide with the ideological postulates of Document No. 9 (2012) of the 17th Central Committee of the Communist Party of China, which also forms the base of Xi Jin Ping Thought. It is important to note that I do not suggest bad faith or bad intent, but it is what it is.
I would also argue that CCP cells in each company exceeding 25 employees, designed to make sure the party has a lid on things, apart from being a poor substitute for an in-house union as the company CEO/owner can also be the company party secretary, may not necessarily encourage free spiritedness.
Ideological thinking eroding the fundamentals of academic or other R&D activity seems not to be a China-only. Just yesterday I had a run-in with a seasoned political scientist from Europe, who is fully immersed in an ideological fog, willingly accepting false stereotypes if these only comply to his ideological bias.