International ties

West should embrace competition

By Li Ruogu (chinadaily.com.cn)
Updated: 2011-01-11 16:45

Indigenous innovation and IPR protection are two aspects that reinforce each other. In business surveys, American and European firms all admit that China's indigenous innovation policy is not exclusive, and may even benefit foreign companies. As a matter of fact, out of the 71 models of new energy vehicles enjoying government subsidies, foreign brands take up the majority.

China has been strengthening its IPR protection measures to safeguard its own interests and to stimulate innovation initiatives of its companies. China's IPR protection policies apply to all industries, including those currently dominated by foreign companies and brands. It is therefore illogical and unfaithful to say that China's indigenous innovation policies have weakened its IPR protection.

China's indigenous innovation will fuel global economic growth.

It is incorrect to say that China's indigenous innovation policies may shorten the profit cycle of patented products of developed countries, such as aviation, telecommunications and automobiles, and would discourage the momentum of global technological innovation. Patent protection does not always encourage innovation.

Research shows that prolonged patent protection of certain scientific discoveries, such as human genome sequencing, undermined further development and the application of existing discoveries. Under the precondition of IPR protection, China's increased investment in indigenous innovation is bound to boost research and development globally. The cost and feature of Chinese products and technologies cater to the needs of emerging markets.

Hence, China's indigenous innovation will inject vitality into global technological innovation and economic growth, and benefit developing countries. Competition is the engine of economic growth and technological improvement. Excessive IPR protection does not protect progress, but shields backwardness.

A leading role in development

The root cause behind the debate over China's investment climate and indigenous innovation policies is not whether China has adopted sufficient IPR protection methods or whether its government and SOE procurement is fair. Instead, in the post-financial crisis era and under the circumstance that de-coupling exists during mid-term growth of developed and developing countries, the debate is which country and what kind of concept should take the leading role in global economic growth.

In the post-financial crisis era, China's economic growth will rely more on technological innovation. Trade and investment among developing countries will play a bigger role in the world economy. With the increasing innovation capacity of emerging markets, such as China, developing countries will be more empowered to dominate world economic growth.

It is understandable that developed countries, facing grim economic prospects and massive structural unemployment, will try to stimulate growth by increasing exports. However, it is not a workable plan for developed countries to secure their monopoly by changing the market conditions of developing countries while still relying on the same market for profits. And it is less practical to maintain their dominance in economic growth by challenging and oppressing indigenous innovation in developing nations.