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Issue 42, January 2012
Welcome

Happy New Year! This newsletter is a monthly supplement to ChinaAnalysis.Com, providing up-to-date analysis about China-related issues.

ChinaCompass Featured Article


A Look Back at Chinese Innovation in 2011

The year 2011 was a bumpy one for the global economy: recovery in the US has been disappointing, and Europe is struggling with its sovereign debt crisis.  The Chinese economy has been consistently outperforming the rest of the industrialized world, maintaining a growth rate above 9% even when the government is fighting inflation. The enormous expansion has been supported by industrial innovation, which we at ChinaAnalysis.com, have been watching closely.

In 2011, China’s high-tech exports continued to be dominated by information and communication technology (ICT) products, as the country maintains the global manufacturing hub of computers, cellphones, and most consumer electronics. The flourishing manufacturing activities have helped China to become a world leader in flexible production and process innovation. Yet Chinese capabilities do not stop there. As part of a continued effort to master core ICT technologies, i.e., microprocessors and operating systems, in February the Chinese government renewed its industrial promotion policies on computer chips and software originated ten years ago. The new policy is accelerating the rise of the Chinese fabless industry, while Chinese chip manufacturing now has a decade of experience. These efforts are translating into industrial innovation. For example, in late November, Chinese manufacturer released the world’s first $99 Android 4.0 tablet, running on a Chinese-designed MIPS processor.

While ICT is still the focus of technological innovation, China is stepping ahead in investing in emerging technologies, including renewable energy, electric vehicles, and new materials. In its most recently announced plan in November, China is going to invest $1.7 trillion in emerging technologies in the next five years. Certainly, there are huge risks embodied in these investments in innovation, but China now possesses substantial innovative capabilities in universities, research institutes, and innovative enterprises. For example, in the emerging electric vehicle industry, Chinese companies like BYD are already accumulating sizable capabilities, and even developing their own distinctive ways of innovation.

Since 2009, there have been growing concerns that rising wages will hurt Chinese competitiveness. Indeed, since the financial crisis, massive industrial restructuring has occurred in the traditional export centers of the Southeast coast. Yet overall in 2011, China demonstrated that it has the capabilities to adjust to the transition well. While low wage factories move into the hinterland, industries that choose to stay in the developed coastal area are rapidly increasing their technological complexity and moving to higher-value-added segments. Even China’s inland provinces are now generating more and more innovative companies that are especially good at heavy industry manufacturing.

As we argued in our September issue, China’s growth has passed  through the stages of infrastructure investment and technology transfer that have positioned it to engage in indigenous innovation. With new investment coming in and new players coming out, China will further strengthen its indigenous innovation capabilities in 2012. We hope you, our readers, will be watching the exciting news with together with us. Stay tuned.

 

China in Last Month
Dec 01 China manufacturing suffers first fall in 32 months
Dec 11 China commemorates 10th anniversary of WTO entry, vows to open further
Dec 12 China to set up first military base abroad
Dec 14 Foreign investment in China down first time in 28 months
Dec 16 China issues guidelines to boost development of hi-tech service industry
Dec 20 China tops U.S, Japan to become top patent filer in 2011
Dec 26 China tests 500 kmph super high-speed train
Dec 27 China's indigenous global navigation network starts providing services
Dec 27 China and Japan agree to new currency dealings
Dec 30 China unveils ambitious plan for space exploration
 
Editor's Pick of Books
Creativity and Its Discontents: China's Creative Industries and Intellectual Property Rights Offenses

By Laikwan Pang

“ Creativity and Its Discontents is a sharp critique of the intellectual property rights (IPR)–based creative economy, particularly as it is embraced or ignored in China. Laikwan Pang argues that the creative economy—in which creativity is an individual asset to be commodified and protected as property—is an intensification of Western modernity and capitalism at odds with key aspects of Chinese culture. ” – from Duke University Press, December 2011

 

By Masuma Farooki, Raphael Kaplinsky

“ Drawing on a large number of diverse sources, How China Disrupted Global Commodities comprehensively and systematically evidences the trends in the prices of different sets of commodities, analyses the drivers of China’s demand for commodities the factors constraining global supply and in the role which the financialisation of commodities is playing in constraining commodity production.  ” – from Routledge, December 2011
   
China's Exchange Rate Variation: Impact of Structural Changes on Industry

By Gu Kejian, Yu Jian

“This books analyzes China’s current industrial restructuring affected by the exchange rate variation, and shows trends of China’s exchange rate system reform and how it affects the trends of industrial restructuring. ” – from Enrich Professional Publishing, December 2011
 
From the Editor

Dear Readers,

Starting from this issue, we will longer offer a list of upcoming events in our newsletter. Instead, our readers can check these events by following our twitter @china_events.

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