Havingbecomeworkshoptotheworld，isChinapoisedtostormthebastionsofitshigh－technologyindustries？ThankspartlytoforeignexpansionbyHuawei，telecommunicationsequipmentmaker，andafewotherChinesecompanies，theideaisstartingtobetakenseriouslyabroadaboveallintheUS，everjealousofitstechnologicalpre－eminence。

SomecommentatorspredictChinamayrivalUSinformationtechnologyleadershipinonlyadecade。Itsscientificachievementsalsoprovokeawe。StephenMinger，astem－cellscientistwholedaUKfact－findingmissiontoChinalastyear，sayshewasstunnedbythesophisticationofitsmedicalresearchandlaboratories。

Sincethelate1980s，thenumberofscienceandengineeringdoctoratesawardedinChinahasexploded。ItnowhasmoreresearchersthanJapan。Itsannualresearchanddevelopmentspending，thoughstillwellbelowUSlevels，isrisingfivetimesfaster，whiletheOrganisationforEconomicCo－operationandDevelopmentsaysChina‘sbiggestexportsarenowhigh－techproducts。Butthosedazzlingstatisticsmaskanoftenmoremundanereality。ThebulkofChina‘shigh－techexportsareactuallylow－margincommodityproductssuchaspersonalcomputersandDVDplayers，assembledfromimportedcomponentsthataccountformostoftheirvalue。

Incontrasttothehome－grownITindustriesofJapanandSouthKorea，two－thirdsormoreofthoseexportsarefrompartlyorwhollyforeign－ownedplants。China‘sstate－ownedcompaniesspendrelativelylittleonR&Dandhavealmostnointernationalbrandsordistributionnetworks，adrawbackacknowledgedbyLenovo‘spurchaseofIBM‘sbarelyprofitablePCbusiness。

Ah，saytheChina－boosters，butallthatismereprologue。China‘sabundantcheapbrainpower，energyanddeterminationtosucceedmakeitonlyamatteroftimebeforeitgrowsintoaformidableknowledgeeconomy。Again，appearancesmaydeceive。R&Deffortisonlyarathercrudemeasureofinput。Itseconomicvaluedependsonthequalityofoutputandhowitiscommercialized。Onbothcounts，Chinastillhasmuchtoprove。

Itsengineers‘highcalibreandlowcosthavespurredwesterncompaniessuchasGeneralElectricandInternationalBusinessMachinestosetuplaboratoriesthere。ButChina‘sstate－ownedenterprisesseemlessadroitatexploitingthoseassets。TheOECDlastyeargavemostSOEslowmarksforinnovationandfortrainingandorganizingresearchers。McKinsey，themanagementconsultancy，saysChina‘ssoftwareindustrylagsbehindIndia‘s，becauseofitsfragmentedstructureandpoormanagement。Thatmaychangeasmoreforeign－trainedITengineerswithbusinessexperiencereturnfromabroad。However，theyfacebigbarrierstodisseminatingtechnologyacrossindustry。NotonlyareforeigncompaniesoperatinginChinaincreasinglycarefultokeepcoretechnologiestothemselvesbutChinesecompaniescollaboratelittlewitheachotherorwithuniversities。

Weakintellectualpropertylaws，longassailedbywesterncompanies，arealsoaself－inflictedhandicapbecausetheyprovidenorewardsforinnovation。China‘sinternationalpatentapplications，thoughgrowing，arestilllessthan1percentofthetotalfiledintheUSandEurope。Andwhilestart－upcompaniesaboundinChina，theyarepoorlysupportedbyitsfinancialsystem。Itsbiggerbanksfavourlendingtostate－ownedindustries;venturecapitalisinitsinfancy，andthecountry‘simmatureequitymarketfailstoofferthedependableexitroutedemandedbysophisticatedearly－stageinvestors。

Thatcompelsmanycompanyfounderstorelyonfundsraisedfromrelatives。SomemanagementgurusbelieveChina‘smodeloffamily－basedcapitalismisashakyfoundationforenduringcorporatestructures。Japan‘sKenichiOhmaesayshissuccessfulChinesefriendscaremoreaboutgettingrichquicklythancreatingworld－beatingbusinesses。

Historianspuzzleoverwhy，for500yearsafterinventinggunpowder，Chinainventedsolittleelse。Nocountry，ofcourse，isboundtorepeathistory，andChinahasshedcenturiesofinsularitytoembraceforeigninvestment，tradeandtechnology。Butwhetheritsfutureisasahigh－techpowerhouseinitsownrightorastheworld‘sbiggestbranch－planteconomyremainsanopenquestion。