Five reasons why China will rule tech

Recent development points to growing concern in Washington about China's tech moves, but here's why it may be unstoppable

China's focus on science and technology is relentless, and it's occurring at all levels of its society. Its labor pool is becoming increasingly sophisticated, its leadership is focused on innovation, and the country is adopting policies designed to pressure U.S. firms to transfer their technology.

The trend is causing increasing worry in Washington, but there are five reasons why China may yet succeed in its goal to achieve world dominance in technology.

1. China's leadership understands engineering
In China, eight of the nine members of the Standing Committee of the Political Bureau, including the Chinese president, Hu Jintao, have engineering degrees; one has a degree in geology.

Of the 15 U.S. cabinet members, six have law degrees. Only one cabinet member has a hard-science degree -- Secretary of Energy Steven Chu, who won the Nobel Prize in physics in 1997, has a doctorate in physics. President Barack Obama and Vice President Joe Biden have law degrees.

2. China's leadership wants to out-innovate the U.S.

China's political leadership has made technological innovation a leading goal in everything from supercomputers to nanotech. One highlight of this is China's investment in clean energy technologies.

In March, the Pew Charitable Trusts reported that China led the U.S. in clean energy investments. Last year, the country invested $34.6 billion in clean energy, nearly double the U.S. total of $16.8 billion, Pew said.

"It's very sad that Americans spend more on potato chips than we do on investment in clean energy R&D," said John Doerr, a partner at venture capital firm Kleiner Perkins Caufield & Byer, at a forum in June with Microsoft Chairman Bill Gates. He warned of a threat to U.S. future if the country doesn't increase its contribution to clean energy research.

3. China's science and technical talent pool is vast

The technical labor pool in China is so large that Shanghai-based offshore outsourcing company Bleum Inc. can use an IQ test to screen applicants, with a cutoff score for new computer science graduates in China of 140. Less than 1% of the population has a score that high.

Bleum has started hiring a U.S. workforce but sets an IQ score of 125 as a screening threshold because of the smaller labor pool. The company employs 1,000 people in China.

One data point to note: In 2005, the U.S. awarded 137,500 engineering degrees, while China awarded 351,500, according to a workforce study last year.

4. The U.S. is failing at science and math education

A stark assessment of the U.S. failure in science and math education was made by U.S. Sen. Kay Bailey Hutchinson (R-Texas) at a Senate hearing in May, when she compared the performance of students in Texas to those in China.

"In my home state of Texas, only 41% of the high school graduates are ready for college-level math (algebra), and only 24% are ready for college-level science (biology)," said Hutchinson. "Furthermore, only 2% of all U.S. 9th-grade boys and 1% of girls will go on to attain an undergraduate science or engineering degree. In contrast to these troubling numbers, Mr. Chairman, 42% of all college undergraduates in China earn science or engineering degrees," she said.

5. China is getting U.S. technology, all of it

In 2008, Sony Corp. closed what was identified as the last television manufacturing plant in the U.S., in Westmoreland, Pa. It shifted work to an assembly plant in Mexico, but the vast majority of TVs' electronics components are made in Asia. (Dell sources $25 billion annually alone in components from China, for example).

One year prior to the television plant's shuttering, Alan Blinder, a professor of economics at Princeton University and former adviser to the Clinton administration, told lawmakers at a congressional hearing that TV sets had become a commodity and that the loss of the manufacturing jobs was an indication of economic success, since it demonstrated that the U.S. had moved on to the production of higher-value goods.

"If we are to remain big exporters as the rest of the world advances, we must specialize in the sunrise industries, not the sunset ones," he said.

But Andy Grove, co-founder of Intel, wrote in an article this month for Bloomberg that he believes Blinder got it wrong.

The loss of the TV manufacturing wasn't a success, Grove contended. "Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution," he wrote.

China's goal is not to just build TV sets and computer components. It has established what it calls an indigenous innovation policy, meaning it wants Chinese-origin technology that is owned by Chinese companies.

This policy, "designed to encourage technology transfer and force U.S. companies to transfer R&D operations to China, will force U.S. companies to transfer technology in exchange for access to its markets," U.S. Commerce Secretary Gary Locke testified at a Senate hearing in June.

China's indigenous innovation policy may be showing results.

One Chinese-owned company, Dawning Information Industry Co., which makes servers for China's market and some foreign markets, just built the world's second-fastest supercomputer. The company includes a photo on its Web site of President Hu Jintao during a visit, illustrating the attention China's government is giving to supercomputing.

China built this system, which it called Nebulae, using Intel chips, but China has its own developing chip technology, and if it follows through on its innovation policy, it's only a matter of time before a Chinese-origin chip is used in future supercomputers.