ITIF Assessments Challenge the Notion that ‘China Can’t Innovate’

A recent report from the Information Technology and Innovation Foundation (ITIF), an American think tank, reveals that while Chinese firms and industries have traditionally lagged behind global leaders in developed democracies, they are rapidly catching up. The scale of innovation efforts in China is immense, and in many cases, advancements are occurring at an unprecedented pace.

The ITIF report states, “It’s time to reject the often ideologically based view that ‘China can’t innovate.’” Despite being ruled by a communist party, China is not analogous to the Soviet Union; rather, its firms operate with a considerable degree of autonomy, especially when aligned with the goal of establishing China as a global innovation leader. The current landscape suggests that China resembles the Asian Tigers—Hong Kong, South Korea, Singapore, and Taiwan—two decades ago. However, in this instance, China is not merely a tiger but a “fire-breathing dragon” fueled by substantial government support, a perfect analogy provided by the report.

The Hamilton Index, developed by the Hamilton Center on Industrial Strategy at ITIF, presents a clear picture of the changing dynamics between China and the U.S. The index tracks national shifts in global output shares across seven industry sectors, including pharmaceuticals, medicinal and chemical products, electrical equipment, machinery, motor vehicle equipment, transport equipment, computer, electronic and optical products, as well as information technology and information services.

The diagrams in the report illustrate the evolving trends and highlight the increasing competitiveness of Chinese industries on the global stage.