Source: Binessweek
By Bruce Einhorn
The country is making a move to be a leader in science, medicine, technology, R&D, and energy -- and the government is behind the charge
Looking for the cutting edge of stem cell science? Instead of Stanford or Cambridge or Singapore, consider Shenzhen. That's where Chinese entrepreneur Sean Hu has set up one of the most radical businesses in the field. Hu is chairman of Beike Biotech, a joint venture involving the Shenzhen government, Peking University, and the Hong Kong University of Science and Technology.
Launched last year, Beike specializes in stem cell treatments that doctors in the U.S. wouldn't dare to try experimentally, let alone commercially: taking stem cells from aborted fetuses and implanting them into patients with otherwise incurable diseases.
In the U.S., simply using stem cells from embryos is controversial. That's not the case in China, where regulators are also far more permissive about experimental therapies than their U.S. counterparts. So far, Hu and his doctors have treated more than 100 patients suffering from autism, ALS (Lou Gehrig's disease), crippling strokes, and other severe problems. Now, Hu plans to make Beike a nationwide company with global reach. "We will be able to apply the most advanced stem cell technology and use our network to collaborate with foreign biotech companies," he says.
IT'S A SCIENCE. Hu's ambitions -- and the regulations that allow him to operate -- indicate just how far China is going in its attempt to build a more modern, flexible economy. In Beijing, innovation is the buzzword. President Hu Jintao set the tone in January with his call for China to make the transition from a manufacturing-based economy to an innovation-based one. Innovation was a major theme at the recently concluded National People's Congress, with the government unveiling its latest five-year plan calling for big increases in spending to nurture innovation.
China is targeting a broad range of sectors, including some controversial areas such as stem cells, gene therapy, and genetically modified crops; and some areas that the U.S. has long dominated, including software, semiconductors, and space exploration. And China aims to become a leader in emerging technologies such as renewable energy sources ranging from solar, hydro, and wind power to fuel cells. By 2050, China intends to surpass the U.S. and become the biggest player in the world of science.
There are many reasons that Beijing wants to push the innovation agenda. One is national pride: As a great nation that was coming up with innovative breakthroughs when Europe was in the Dark Ages, China believes it should be a leader, not a follower. Another reason is national security. The Communist regime doesn't like being at the mercy of foreigners for key technologies.
CALL TO INNOVATE. There are solid economic reasons for China to reduce its reliance on smokestack industries that have devastated the environment and dramatically increased China's consumption of oil. "The leadership has been searching for a new, more sustainable model for growth for some time," says Richard Zhang, a director at McKinsey & Co. in Shanghai. "With innovation, the hope is that the environmental cost will be much lower."
As a result, the government is aggressively boosting the profile of China's scientists and engineers. Top government officials routinely exhort scientists and business leaders to get with the program and become more innovative. In January, for instance, Vice-President Zeng Qinghong spent the day visiting government-backed labs working on agritech and biotech projects and China's space program.
In typical Chinese fashion, the government has unveiled an ambitious long-term plan to build its innovation economy. A big part of the strategy is money: Today, China devotes only 1.2% of its GDP to R&D spending, and the government has announced its intention to boost that figure to 2% by the end of the decade and 2.5% by 2020, with the government pitching in about 40% of the total, and the private sector contributing the rest. By then, China will be spending $110 billion annually on R&D, putting the country in the same league as the U.S. and Japan.
PROJECT PROPAGANDA. To their credit, the Chinese recognize that more money alone won't put the country in the major leagues. So the government is also talking about the need to reform the financial and tax systems in order to promote the growth of cutting-edge industries.
The regime is even planning to launch propaganda campaigns to educate the Chinese masses. The Party propaganda department has organized online discussions on the topic, and has put together an "innovation demonstration team" to tour the country promoting the idea. In March, the State Council, China's cabinet, said that improving "people's scientific knowledge is a basic social project in building an innovation-oriented country."
Of course, China faces plenty of obstacles. For instance, the government is throwing money at Chinese-born academics from the U.S., luring them back to China to help boost the country's R&D base. But some are skeptical of the effort. One academic last year published an article in a Beijing newspaper complaining about "irresponsible" foreigners wasting China's money.
MONOPOLY MONEY? China has been suffering through several academic scandals involving homegrown talent, with local professors accused of faking their achievements. One case in the news now involves Chen Jin, a high-flying professor at Jiaotong University in Shanghai who in 2003 led the team that developed China's first locally made digital signal processor. The government is now investigating charges that Chen stole his DSP design from Motorola (MOT).
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