The Washington Post: What should we really fear about China? (Photo)

The Washington Post: What should we really fear about China? (Photo) Core Tip: The other translated versions of this article reprinted on the Chinese Internet are titled "&...

Core Tip: The other translated versions of this article reprinted on the Chinese Internet are titled ""Beware of China's Next Generation with Unlimited Potential"". Compared with the common "China Threat Theory," the views of this article are more practical and unique. However, the translations of other versions are incomplete. This is the complete translated version.

>Original text: What we really need to fear about China

Author: Vivek Wadhwa

[Original text with pictures Image source: JASON LEE/REUTERS]

U.S. policymakers are worried about the substantial increase in the number of academic papers published and patent applications by Chinese researchers. They believe these papers and patents will give China a daunting competitive advantage in innovation. After all, China is now second only to the United States in terms of academic publications, and by around 2015, China will file more patents than the United States each year.

Our policymakers are right to be worried, but they are worried about the wrong thing.

Most of China's academic papers are irrelevant or plagiarized. They do nothing but enhance national pride. Basically no innovation emerged from state-funded research institutes. At the same time, the number of patents in China is not an indicator of innovation, but merely a toll gate for taxing foreign companies in China. The Chinese have learned what American technology companies and the patent system do: use patents to extort other industry participants in the form of licensing fees.

China's real advantage lies in its next generation of students who graduate from China's top universities and become entrepreneurs. These children are very similar to their Western peers. They are smart, active and ambitious. Zao, a child who grew up during the Cultural Revolution, now works in a government research office and leads a state-owned enterprise that dominates the industry. Zao knows not to challenge authority and strictly abides by government regulations, while the new generation acts without restrictions. They even knew nothing of the brutal atrocities that had occurred before. They don't hesitate to think outside the box, take risks, and be ambitious. Unlike their parents, this generation has the ability to innovate.

During my many trips to China over the past six years, I have seen the entrepreneurial landscape change dramatically. In the past, Chinese graduates sought to enter Western multinational companies. And because failure is taboo and start-ups are less respected by society, parents don’t encourage their children to become entrepreneurs. Never again. In a context where entrepreneurs such as Jack Ma and Kai-Fu Lee have lagged in success and the previous generation of technology startups have made huge fortunes, China's young people have role models, and parents are gradually becoming more accepting of entrepreneurship. Now in China, as in Silicon Valley, joining a new company is the "fashionable thing to do," and society is becoming increasingly more accepting of failure and starting over.

There are incubators for entrepreneurial companies that have sprung up in big cities in China. According to information provided by Lux Research, China's venture capital investment reached $5.4 billion in 2010, a 79% increase from the previous year. There are so many angel funds and VCs that they have to compete with each other to invest in [good projects]. I visited an incubator in Beijing called Garage Cafe, which provides startups with free office space and Internet access so it can get a head start on investment.

During my most recent trip to China, I also lectured at Tsinghua University, a program run by the University of California, Berkeley Entrepreneurship Center. The students there were very similar to what I encountered at Duke and Berkeley. They are hungry for knowledge, connections and ideas. The only difference I noticed was in answering one question: Why do you want to be an entrepreneur? Students in the United States often talk about building wealth or changing the world. Chinese students say they see entrepreneurship as a way to rise to the top of the “system,” becoming their own boss or finding their own path to success. Clearly, they are not too keen on working for a rigid state-owned enterprise, an authoritarian government, or a foreign company they regard as opportunistic.

The tens of thousands of highly educated immigrants returning to China from the United States every year provide another boost to China's entrepreneurial ecosystem. These returning immigrants are teaching the Chinese how to build Silicon Valley-style companies.

Take Robert Hsiung as an example. This student who graduated from Stanford in 2008 has received job offers in Silicon Valley, Singapore and Hong Kong. But he chose to become an entrepreneur and moved to Beijing because the economy was booming and China's Internet users were growing rapidly. Robert's first startup was a social media company called OneCircle.cc, which had modest success.他的下一个公司, FoxFly则失败了，因为更大的行业玩家进入了他的市场。 In August, he launched his third startup to develop a dating application for professional white-collar workers. Robert told me he had no trouble hiring top computer engineering students. And even though he failed, Chinese investors were quick to pour hundreds of thousands of dollars into his latest venture.

China has the opportunity to harness all this new energy and lead the world in innovation. But that doesn't mean it will. I asked my students and local entrepreneurs what obstacles they expected to face. Nearly everyone listed two fears: that big Chinese companies like Baidu or Tencent would steal their technology because China's intellectual property laws don't work; and that if they achieve major success, government officials would suddenly step in to take control of the company or demand a shutdown.

Until China’s rule of law is strengthened and entrepreneurs can get the freedom they need, there may be a lot of entrepreneurial activity in China, but there will be no world-changing innovations. But once China clears these final hurdles, we'll have to watch out.