Scott Gibson - Mistrust can choke progress
The rise of China as an economic powerhouse has been one of the great events of the late 20th Century and early 21st Century. Through a combination of intense educational expansion, conversion to a market economy, and adoption of first-world practices, China has seen a meteoric rise. But to date, China has excelled at making things cheaply rather than creating new products. So what is the future of Chinese innovation?
With a hard-working and increasingly well educated population, it would seem that China is poised to surpass the United States in new business concepts and products. But China has deep-seated problems that may increasingly prove to impede its potential for innovation.
The fundamental problem afflicting China, at both the individual and institutional level, is theft. For years the Chinese government has encouraged economic progress through industrial espionage. Intellectual piracy — of movies, software, industrial designs, virtually anything of value — became the springboard for growth. Industrial cybertheft is so pervasive that "The Economist" has has labeled China’s hackers its “army of thieves.” The resultant kleptocracy has permeated Chinese government, business and society.
A friend of mine, who until recently worked for Hewlett-Packard, got an inside look at the workings of research and development in China when he visited a Chinese company purchased by HP. The research facility had Pentagon-level security against theft. Before my friend could enter the building, he had to surrender any laptops or other electronic equipment so that special tape could be placed over any USB or other access ports. If he had tampered with any of the tape, the devices would have been confiscated.
Engineers and designers in this Chinese research facility were not allowed to have Internet access or portable memory devices at work. If they needed to do a Google search, they had to fill out a form, submit it to management, wait up to a week, then go to a basement computer where their search could be watched by a security guard. This barrier to accessing the world’s knowledge base slows innovation and impairs their ability to create the best products. Fear of theft has eviscerated trust.
This pervasive mistrust extends to personal and political arenas as well, as discussed in a recent National Public Radio story about Chinese internal spying. There are 20 to 30 million surveillance cameras in China, and people are spying on each other at an astonishing rate by bugging homes, cars and phones. Even at the highest levels of government, officials are planting bugs to find dirt on their political opponents.
The degree of official corruption in China is difficult to quantify, but appears staggering. The web site of China’s official bank recently reported that since 1990, about 18,000 corrupt Chinese officials have funneled $120 billion out of the country. The web post was quickly taken down.
Even recent efforts to curb corruption highlight its prevalence in Chinese society. In 2011, China’s anti-corruption commission investigated 137,859 cases that led to disciplinary action, revealing that corruption has been woven into the fabric of the country. Theft, corruption and absence of trust are different faces of a society trying to coopt rather than create.
Can the Chinese turn this around? History suggests they can, at least in part. The human spirit, if left unhindered, seems to devolve more to trust and cooperation than suspicion and theft.
Germany and Japan emerged from authoritarian police states to build highly collaborative and innovative societies after World War II, though still lacking the creative energy of the United States. Eastern Europe, under repression for decades, has had a slower recovery but is moving forward. China will have to act swiftly to avoid having corruption and mistrust become written into the DNA of the country.
It remains to be seen if China will turn away from a pattern of appropriation to one of collaboration needed to sustain a vibrant, creative economy. The United States enjoys a business culture of economic freedom, trust and innovation of inestimable value, even as its political system becomes increasingly sclerotic and dysfunctional. Such a creative culture will be an enormous challenge for China to replicate, especially in a one-party system jealous of power.
The change China needs is seismic. The political elite would need to cede vast power to the entrepreneurial masses. Then there would be a chance that trust could be established and ingenuity might thrive. But if self-interest wins the day, the Chinese will have a long, long road catching up with the innovative power of the United States.
Guest writer Scott Gibson is a physician, photographer, school board member, occasional writer and recently a first-time grandfather. His passions are hiking, exploring the Northwest, and getting his last two kids out of graduate school and into full-time employment.