Wander around Beijing today and you're likely to see local government posters exhorting its citizens to display "patriotism, innovation, inclusiveness, virtue."

Innovation--the latest buzzword in China--has been gaining traction from the Chinese government's desire to turn its economy into a technology powerhouse by 2020 and a global leader by 2049 (the centenary of the communist takeover). The government recognizes that long-term prosperity comes not from merely manufacturing existing designs but from creating original intellectual property.

Innovation in China does not correspond exactly to the Western model, which focuses on creating completely new inventions, such as the Internet or Apple's iPhone. Rather, China is concentrating on making incremental improvements to existing technologies, mostly in the electronics sector, according to researchers at The Georgia Institute of Technology, who visited and assessed scores of Chinese companies, publishing their findings in the 2011 book, "Run of the Red Queen."

China's strategy has been working well because novel product innovation is actually not the most direct path to achieving broad economic growth, the researchers found.


"China's companies are extremely efficient at creating new versions, often simpler, cheaper and more efficient, of technologies and products shortly after they are invented and marketed elsewhere in the world," researcher Dan Breznitz told the New York Times. These advances are helping lift Chinese tech companies such as Huawei and Lenovo into dominant global positions.

Chinese innovation is powered by a rapid increase in educational attainment and big investment in research and development (R&D), with about 30 percent of R&D spending in China carried out by Western multinationals taking advantage of China's growing pool of science and engineering graduates.

In 2010, China was the fourth largest filer of patent applications to the World Intellectual Property Organization. Under a linear projection of current trends, China could be the world's largest patent filer by 2015, according to a report last year by researchers from the UK Institute for Fiscal Studies (IFS).

Still, some observers contend that China's political and educational systems, as well as its Confucian culture--which they say sees imitation as 'giving face' to the original creator--do not encourage creativity. Central government anxiety over the "severe challenges" facing China's technological development show just how high the stakes are and how far the country still has to go.

The debate about innovation in China is likely to continue for some time. Meanwhile, big Chinese companies continue to gain market share in industries such as PC and white goods manufacturing, and large Western firms continue to invest in the country, opening R&D centers and global offices in China--all indicating that China's innovation efforts must be doing something right.