Sunday, August 15, 2010

BREAKING NEWS: China surpasses US in population!

Does anyone think about quality anymore?

I came across this article to which someone linked on Twitter this morning. The article, entitled "China has Already Surpassed the U.S. in Cleantech" convincingly lists nine areas in which China is quantitatively miles ahead of the US:
  • IPOs
  • M&As
  • Solar
  • Rare earth elements
  • Stimulus
  • R&D
  • Speed
  • Nukes
  • Investment
I would add more items to this list as well:
  • Population
  • Food consumption
  • Particulate pollution
  • Carbon output
  • Land mass
  • Squat toilets
  • etc...
The point is that, when you compare China to other countries in strictly quantitative measures, it will increasingly come out on top. But what does that mean?

China is very good at mobilizing when the central government gives the orders. When Mao told Chinese to build furnaces in their backyards to make steel during the Great Leap Forward, that's exactly what everyone did. And, as it turned out, almost all of the steel was crap because no one really knew how to make steel.

This is not to say that Chinese people are incapable of innovation. Indeed, much of the innovation coming out of the US has the involvement of people of Chinese ethnicity. But the difference is in the environment for innovation.

To this day, China still lacks either the educational system or the political freedom to encourage innovation. There is a lot of talk about innovation, and there is a lot of money being thrown at it, but in the end, where is the innovation? Aside from a way to turn an iPod Touch into a cell phone, what innovations have come out of China?

What about BYD's hybrids and electric cars, you may ask. What about them? Out of the 400,000-plus cars they sold last year, only a hundred or so did not have traditional gasoline engines. So far this year, they've sold a few hundred more of their new energy cars, mostly to taxi fleets. By this time next year, there will be thousands more Chevy Volts and Nissan Leafs in the hands of consumers than BYD hybrids or electric vehicles.

In a previous post on ChinaBizGov, I referred to a quote from the Economist that, when it comes to cleantech, ultimately China will still do most of the manufacturing and the US will still do most of the inventing. This is what these two economies are set up to do.

China will not suddenly become a hotbed of innovation simply because the central government repeats over and over that it wants innovation. And the US is not going to stop innovating simply because it is going through a difficult recession. The underlying environments of these two countries have not changed.