Without Drastic Changes, China Could Become Like Japan

RCM ^ | 06/04/2014 | Derek Scissors

[SeekAndFind]

Front page news concerning Chinese economic weakness and accusations of large-scale cyber-espionage against the U.S. both involve the capacity to innovate. Cyber-stealing other people's knowledge, rather than developing it yourself, helps right away but discourages the innovation at home that can contribute to national wealth for the long term.

Vice-President Biden repeated last week that he believes China doesn't innovate, which is an oversimplification. It is true, though, that China still relies almost entirely on foreign technology. Becoming a truly innovative nation is the key to China eventually becoming a rich one, since its other sources of growth are slipping away. And at the moment, the outlook is dim.

The economy has been weakening and may continue to weaken. Natural resources are inadequate, the population is aging, and the country is starting to sink into debt. China in 2014? Yes, also Japan in 1994. The conclusion many observers drew then was that Japan had to sharply boost innovation to renew economic expansion. Unfortunately, it hasn't happened yet.

It is important to note that Japan is not a failure when it comes to innovation; in fact, it ranks fairly high. Japan is a rich country with a generally sound education system and it protects intellectual property well. But Japanese innovation has not been nearly enough to carry the economy forward against the dead weight of public debt and demographic contraction.

[RedStateRocker]

Yes, economic crisis in China would hurt us, short term.

But, as Ray Kroc, founder of McDonalds said: “When you opponent is drowning, hand ‘em a fire hose”

[Jack Hammer]

China and Japan?

Uh... doubt it.