Why Would We Fear China?

When I was a kid, we feared Japan.  Now we fear China. Why?  Perhaps because they are mysterious to us as Westerners and capable. They both like to save money and are risk averse.  That led to buying US Treasury bonds in large amounts.

Instead of saying thank you, we start to fear.  Take a look at this quote from the China Law Blog.  The topic is Chinese level of innovation and investment.

The position of Chinese companies as compared with the rest of the world is illustrated by Booz & Company’s recently issued 2012 Global Innovation 1000 study. The Study shows that China has a long way to go in all areas of innovation. First, consider the intangible side. The Study lists the 10 most innovative companies in the world. Headed by Apple, eight of the top ten come from the United States, with Samsung from Korea (at number  four) and Toyota from Japan (at number seven) rounding out the list. No European company nor any BRIC company made the list.  The list shows that when it comes to the intangible side of innovation, the United States remains the overwhelming leader in the area of technical innovation.

The Study shows that not only are Chinese companies nowhere to be seen in the intangible side of innovation, they also are nowhere to be seen on the investment side.  Simply stated, Chinese companies do not spend a significant amount on innovation. The Study lists the top twenty spenders on innovation and none are Chinese. Toyota of Japan heads up the list on spending in 2011 at 9.9 billion dollars. The top six on the list all spent at least nine billion dollars on R&D in 2011. The top twenty spent $153.6 billion as a group on R&D, a 9.9% increase over the previous year. In terms of geographic distribution, eight companies are European, eight are from North America, three are from Japan and one is from Korea.

How does China measure up? The number of Chinese companies in the Global 1000 has grown from 15 in 2008 to 47 in 2011.

China is not going to overwhelm the US.  China will be a more and more reasonable commercial and international partner with the West, and poses no threat that we should fear. They are not a rogue country like North Korea nor do they want to be.

One day, we will all laugh at how we feared China would overwhelm us, and we may one day be sorry that they are not yet stronger.

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Posted in: China, Chinese Culture

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