Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China

Citation

Lv, J. (2012), "Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China", Journal of Science and Technology Policy in China, Vol. 3 No. 3, pp. 264-266. https://doi.org/10.1108/jstpc.2012.3.3.264.1

Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China has a central argument that it is wrong to equate innovation solely with the creation of breakthrough products so that China has to make it clear what “indigenous innovation” means and how to pursue “sustainable growth based on and driven by innovation”. It is undoubtedly an interesting and eye‐catching book that researchers from fields of management, policy science, sociology and so on will be likely attracted by its title, key issues and the most important, its explanation of China's innovation trajectory in the specific political and economic context.

First, as the authors emphasize several times, the purpose of the book is to bust two interlinked myths. The first is the narrow definition about innovation which always means the creation of new technologies, services and products, and it has been the holy grail of economic growth in Chinese context. The second is that China should pursue the similar innovation model as Silicon Valley has done, namely, there must be a large amount of cutting‐edge technologies and services occupied the top of the industrial value chain so as to claim possession of a strong innovation capacity. Instead of emphasizing the absolute novel‐product creation, the authors illustrated that China has taken great advantage of globalization, which has provided fragmented positions for the China's manufacture actually, so China is already a world leader in second‐generation, process and production innovation. Given its location in the global production and innovation network and division of labor among various players, China is ideally placed to be the world's middleman which is close enough to the frontier of innovation to keep up with the latest developments and skilled at fast adapting new ideas for the mass market. The trend will likely continue and the policy choice for China, therefore, is not to be obsessed with the whole new products but to master second‐innovation, including the mixing of established technologies and products to come up with new solutions, plus organization and process innovation.

Second, what the most excellent analysis in this book is the advancement of a “structured uncertainty” concept to characterize China's political and institutional environment. This concept is of great sociological sense since it reveals the structural framework within which entrepreneurs, officials, policy‐makers and scholars are all forced to shorten their time‐horizon, hedge their bets on activities that could generate instant and visible outcomes and juggle different political connections and corporate ownership structures so as to secure themselves against potential changes. Structured uncertainty, essentially, creates a free space which can be utilized on someone's privilege and moreover, it obscures the necessary regulation process as well as makes chaos normal and certain.

There is another reason why the structured uncertainty should be paid more attention. That is, the essence of the relationship between the national innovation system and region innovation system could be cleared through it. According to the authors, China's national innovation system and regional national innovation systems are running separately. IT industry is a right example, which first illustrates that since the absence of definite regulations on its development, so many government departments and sections are eager to seek benefits from the dominance and interference of the IT industry. Second, because innovation policies had never been coordinated by a powerful central government body, various provinces had developed its own IT industry along distinctive development trajectories, thus creating free room as above mentioned. As a result, the existing industry layout as well as resource allocation are repetitive and inevitably, and competition among regions has become vicious.

As to the structured uncertainties, it has a similar story here. Xiaohe Su, a famous writer on finance, said that although some Chinese excellent entrepreneurs have been making huge success during the past several years for their enviable wealth and novel idea – especially their thinking and criticism refers to the system construction and the ideology – who have been integrating economic capital, political capital and social capital perfectly, it is of a pretty significant distinction from their counterpart in the West. That is to say, essentially, the very mission for the Western entrepreneurs is to innovate while their Chinese counterparts have to deal with various uncertainties, Su suggests, come from both the market side and the policy side, far beyond the technological and commercial ones. What the structured uncertainty the Chinese entrepreneurs encountered, like Su pointed out, has been hampering the innovation in technological and advanced services, and moreover, it explains why there are neither Jobs nor Apple in China.

Of course, the uncertainty according to Su is simpler than the structured uncertainty alluded by Breznitz and Murphree, although both reflect the obscure context in which Chinese innovators are forced to choose the safest way to operate, which also minimizes their traction cost.

Third, in this book, we can find some interesting stories about regional technological development in Beijing, Shanghai and the Pearl River Delta, where more than 200 interviews had been taken. In this way the authors presented a pretty true picture about China's innovation map nowadays. As we know, Beijing, especially Zhongguancun Science Park, has been famous for its rich resources on S&T and education; Shanghai, which positions itself as China's most sophisticated financial center, heavily depends on government's planning and control and has the most abundant capital brought in by MNCs; and PRD, greatly different from the former, roots its industrial chain deeply in specific regions, such as Shenzhen and Dongguan. Thus, it is obvious that the authors wanted to sketch different regional innovation systems with distinctive characters. Basically, we can trace the efforts of the authors to apply the structured uncertainty theory to the analysis of the formation and operation of a region innovation system.

Generally, this book explains how China has become the global Red Queen. With very high structured uncertainties and center‐province tensions, the Chinese innovation system consists of different models, each of which follows a different “Red Queen run” strategy, but together they constitute a competitive national innovation system.

In the matter of fact, however, is it as perfect as the book's description of China's innovation capacity even though the second generation one and fragmented production? Let us take a moment to rethink about a question that Cong Cao, a seasoned scholar of China's S&T and innovation policy, raised, and indeed, the authors try to rebut. That is, has China's high‐tech development experienced “growth pains” or entered a stage of “premature senility”. Cao pointed that after a flourishing growth since the early 1990s, China's high‐tech parks have been facing an embarrassing situation, which on the one hand, they are so prosperous that more and more high‐tech parks have wanted and become national ones (the scope has been enlarging increasingly); on the other hand, the lack of institutional support for innovation and the indigenous technological capabilities necessary to be competitive, plus unclear ownership, lack of venture capital, and the overwhelming role of government, have impeded the efforts of China's high‐tech parks to duplicate the success of their role models in Silicon Valley and even in Hsinchu. Thus, it is very much possible that the China's high‐tech parks and high‐tech development do encounter some sort of premature senility without growing completely.

Here is a gap that the authors may have missed out. To a large extent, China's Red Queen could not support the innovation model constantly; that is to say, what they called “structured uncertainty” have been determining not only the shortage in original innovation but at the same time, the second‐generation will hardly last without a hitch. Briefly, in terms of path dependency, there are so many obstructions for the country to take the greatest advantage of the Red Queen. So, there is a huge space for us to discuss the structured uncertainty further to connect both the more empirical approach and especially, the intrinsic institutional environment and the corresponding mechanism.

Last but not the least, the book presents a useful prescription for China's innovation. Within the current globally fragmented production system, China has been sustaining its fast “run” in economic growth through innovating in many stages of production, but not in novel‐product innovation. According to the authors, abandoning China's focus on second‐generation innovation would almost certainly damage the economy and if the policy makers insist on forcing structural changes and concentrating resources on novel‐production, China will probably lose its existing comparative advantages in manufacture but also will not climb to a higher position in the global innovation chain. Could China find a way out? This is the challenge that will test the wisdom of Chinese policy makers as well as entrepreneurs in the years to come.

About the reviewer

Jialing Lv received her Doctor degree from Tsinghua University in 2009, and is now a researcher in the Institute of Policy and Management, Chinese Academy of Sciences. Her research interests focus on innovation sociology especially the innovation on system.