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Howling
at the moon
America should keep its cool about the technological threat posed
by China and India
This week China showed
off two of the trappings of an aspiring technological power. It pitched a
satellite into orbit around the moon and sent the share price of an
internet firm into the stratosphere on the Hong Kong exchange. Alibaba.com,
China's biggest e-commerce site raised almost as much money on its first
day of trading as Google drummed up in its flotation in 2004. Meanwhile,
China's Chang'e 1 satellite, launched in October, began its first lap of
the moon, marking another step towards a manned lunar mission.
China's technological
enthusiasm is matched by that of India, which hopes to circle the moon
with its own satellite next year. As the special report in this issue
shows, both countries believe they can succeed in high-tech markets that
America, Europe and Japan have long regarded as theirs by right.These
ambitions are viewed with alarm by the leading technological powers, not
least America. Policymakers and industry groups quake at the number of
scientists and engineers the two populous Asian countries turn out.
In 2005 the American Electronics Association called for a
“Sputnik Summit”, which it hoped would stir the country to meet
China's challenge, much as it responded to the Soviet Union's first
satellite 50 years ago. Daniel Rosen of China Strategic Advisory, a
think-tank, has heard dark murmurings on Capitol Hill, such as the
suggestion that America should “nationalise whatever is left of the
machine-tool industry” to stop firms decamping overseas. So much for the
fears. The facts suggest an altogether cosier accommodation between the
aspirants and the incumbents. Japan and the West invent stuff and market
it; emerging Asia makes stuff, customises it and services it. Sure, that
formula misses some important nuances (foreign firms are, for example,
doing some of their R&D in India and China). But insofar as any one
sentence can sum up the elaborate division of labour that has evolved
between these vast economic blocks, which is it. And although China and
India have much to offer the world of technology, they have more still to
gain from it.
The great bargain:
Indeed, China's and India's ascent is much less scary than that of Japan
and South Korea. Those two countries stole customers from complacent
Western firms in the car, phone, electronics and computer industries. But
China and India see foreign firms as clients and investors, not just
rivals. Likewise, foreign firms eye China's and India's big and relatively
open markets as a source of customers as well as competition. Besides,
suppose America were to hold a Sputnik (or a Chang'e) summit. What would
it conclude? That a big country with a well-drilled cadre of white-coats
can pull off some impressive scientific feats? Technological creativity is rooted in a country's
institutions as well as its people's ingenuity. The rules that govern a
society must police ideas just enough to reward innovation, without
stifling diffusion and collaboration. China and India have yet to show
they can crack that problem. “Governance is itself a kind of
technology,” Mr Rosen points out. So far, America's governance has
served its high-tech firms admirably well. Wild over-reaction, such as
nationalising the machine-tool industry, would be rather like crashing
into the moon.
— David Angel
www.economist.com
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