China drives tech as US becomes the backseat driver

A report released from the National Science Foundation (NSF) and Georgia Tech today link to pdfs, shows that China will soon overtake the US as the driver of high technology innovation. Press release. Anyone following the economy in the last year or two knows that China’s demand for raw materials (high oil prices) has already caused a dramatic shift in our daily lives.

Over the next week or so the government will work out details of a stimulus package to put dollars into the hands of Americans to avoid or delay a recession. When it finally is signed, people should see checks by late spring. I’m not going to debate the value of it here, or justify bailing out those who took risky mortgages. I have no idea, but maybe we can get the stimulus in an oil voucher? or if this report is right, in Chinese Yuan?

Back to the report. The have been studying these high tech indicators since the 80’s. It started as a way to measure what country would become the next Japan. In the last 14 years (93-07) the US has dropped some, but China has gained a HUGE amount. See their chart below.

Today the US has some leverage over China. We innovate and they manufacture. Even with the lost value in knock-off or bootlegged material, we still get value out manufacturing our goods there.

In the near future, they will not only manufacture, but innovate and create new products to sell to us, possibly keeping both slices of pie. China is growing fast and the younger leaders in charge are slowly opening up their economy embracing a more western outlook. I think its too soon to tell what the impact of this inevitable change in the world economy will have for us here in the US.