Aggressive Focus on Innovation
August 1, 2008 – Today’s NY Times has an interesting front-page article on China’s focus on innovation. The crux of the article is that due to Chinese government incentives and disincentives, many low / no-tech product manufacturers are closing or leaving China; while Chinese companies are focusing on technological innovation. That China has such ambitions isn’t a surprise. What disturbs me is the pace at which China hopes to accomplish a significant transition.
The article points out that in April, Credit Suisse forecasts one-third of all export-oriented manufacturers in China would close within three years.
Part of policymakers’ rationale for spurring the shift is that they want to create high-tech, high-skill jobs. Given that manufacturing semiconductors is less labor intensive than manufacturing T-shirts, even if each low-tech factory closing were matched by a high-tech factory opening, it appears that there could be a lot of laborers out of work. If CS’ forecast above is correct, how does encouraging a rapid shift away from low-tech product manufacturing jibe with the authorities’ primary goal of ensuring social stability?
