Forum is told it's time to combine US innovation capabilities and Chinese investment, reports FELDA CHAY

ONE way China can allay the fears of its rise is to adopt a strategy of complementary growth – where the world works with China and benefits from its rise, said Wu Jianmin, executive vice-chairman of the China Institute for Innovation and Development Strategy.

Speaking at the FutureChina Global forum held at the Ritz Carlton yesterday, Mr Wu said that the United States and China, for instance, can "complement" each other, with the former being an innovation superpower and the latter a nation flush with funds needed to kickstart the invention engine.

Innovation, said Mr Wu, is crucial to the growth of the world economy given the need for new energy sources, and a more sustainable way of life and development. It is therefore an area in which both parties can cooperate and benefit from it. "Looking down the road at US-China relations, we need to be more imaginative, for instance, to combine American innovation capabilities and Chinese investment," said Mr Wu.

But broader than that, China needs to identify new growth areas with other countries and regions around the world. "In other words, we have to build up over the next 20 years, gradually growing a community of interest on a win-win basis.

"I think in that way, when the world benefits more and more from China's rise, it would, undoubtedly, accept with pleasure China's rise," said Mr Wu.

A second challenge that China faces from its astronomical growth is the international outcry over its use of resources and the environmental strain this has caused.

On this, Mr Wu said that the international community needs to show more understanding towards China.

"I think the world has to understand that China needs resources for China certainly, but also for the world. Sixty per cent of China's exports come from multinational companies in China. We need resources also for these companies.

"So China needs that kind of understanding from the outside world," said Mr Wu.

To deal with the environmental degradation, more cooperation would be needed between China and the developed world – which has undergone the same development stages and therefore has the necessary technology to contain the environmental damage, said Mr Wu.

A third issue – one that stems from within China this time – is the rising inequities that stem from China's development, said Mr Wu. The widening rich-poor gap, differing development paces between China's Eastern and Western regions and the rural-city standard of living difference are issues that the Chinese government needs to deal with.

Mr Wu said that China needs to tap into outside help for this. On top of this, the emergence of a civil society is also crucial.

"How to improve societal governance is a big issue facing us," said Mr Wu. "To improve societal governance, maybe we need to give more room for the civil society to play its role."

But while the solutions are out there, they are not easy to implement.

In a separate dialogue on China's economic strategy, Elizabeth Economy, director of Asia studies at the US Council on Foreign Relations, said that the will to cooperate to further economic growth may not be present – at least, on the ground level.

Touching on Mr Wu's point that the US and China can cooperate to spur innovation, Ms Economy said: "But I will say that there has been concern, I think in the US and elsewhere in the international community, about a different strain in Chinese thinking, and that is the thinking about indigenous innovation and the idea that perhaps everything, beginning with the R&D, running through the scale of and implementation of manufacturing, has to be Chinese."

On top of this, there are "discussions that in fact it is worth sacrificing upfront on the environment for a while in order for the Chinese to catch up in terms of their clean energy technology development and capture their own market," said Ms Economy.

The jury, she said, is still out on these issues.

She added that policy innovation is the "Achilles' heel" of China's efforts to protect the environment. The government, she said, has enacted policies to deal with these problems but faces the challenge of poor enforcement.

The lack of openness and government transparency also shrouds efforts to protect the environment, she said.

"So I think there is good intention, there is a recognition of the challenge and the real question is whether they will be able to put into place the innovation, technology and policies to ensure that China moves from being one of the world's largest polluters to one of the world's leading players in sustainable growth."

Another problem is that China, despite its attempts to import foreign technology, has often hit the wall of protectionism.

Chen Siqing, Bank of China's executive vice-president, said in Mandarin: "We want to import foreign technology, but we face the problem of intellectual property protection.

"This is a problem that we need to solve."


Courtesy of The Business Times, 13 July 2010.

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