In the three decades since it opened to the world economy, China has become a serious global competitor, not only in terms of price, but also technology. China's accelerating innovation efforts have been truly impressive. Patent applications by Chinese companies are up dramatically, as are R&D investments and the number of science and engineering PhD graduates. China has become one of the leading countries in science and technology publications and in high-tech industry exports. The US government believes that markets should drive innovation, while China's government emphasizes the critical role of public policy in fostering indigenous innovation. But China's innovation policy is not a threat to US leadership in science and technology. Instead, China's progress in innovation should be seen as a wake-up call for America. Both the US government and the private sector need to join forces and develop a national strategy to upgrade its own innovation system in order to cope with the challenge of China's innovation policy from a position of strength.

The views expressed in this publication are those of the author and not necessarily those of the Center.