International ties

West should embrace competition

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

4. How to seize initiative in international competition

The above analysis shows that Sino-US and Sino-EU debate on investment climate and indigenous innovation policies is in fact a competition for dominance in global economic development.

As one trying to catch up, China's efforts in indigenous innovation are justified. And for foreign companies, they have played an important role in promoting China's technological imports, and have meanwhile gained considerable profits from the Chinese market. Facing the future, instead of making the issue political, the two sides should cooperate in an open and honest manner to encourage competition and collaboration on technological innovation, which will be mutually beneficial.

First, indigenous innovation is closely related to China's development rights and interests, and is key to its economic growth mode transformation and scientific development.

China is justified in defending its rights and adopting further measures to support innovation. Owing to the high threshold set by previous industry monopoly, the commercialization of many high-tech products, such as jumbo jets, has to go through a market exploitation period, during which it goes down the cost curve or moves up the learning curve.

In a market where fair competition is not guaranteed, reasonable interventions, including policy financing, can help many emerging industries in China to overcome thresholds and initial cost barriers, and finally benefit from scaled production.

Second, China will strengthen its legislation and implementation of IPR protection laws.

China is as determined as Europe and the US concerning IPR protection and has been striving to do so. Domestic and foreign companies are treated equally under China's IPR protection practices. Therefore, China's progress in IPR protection will also facilitate companies from Europe and the US to seek profit opportunities in its investment market.

Meanwhile, developed countries should understand that everything, including IPR protection, should be conducted properly to certain limits. Excessive protection will protect monopoly and oppress competition, which is detrimental to scientific and technological development. Hence, IPR protection should always be in moderation.

Third, major developed countries should have an objective view on China's technological improvements. A huge gap remains between China and the US and Europe in terms of economic strength, per capita income and level of science and technology. The dominance that developed countries have in the high- and new-technology field is still firmly rooted.

However, the rise of China has become an inevitable trend and cannot be stopped by opposition from old market leaders. Having always been an advocate of competition, European countries and the US should adjust their attitudes toward China, the new competitor, instead of completely blocking contests.