In technology race, China has powerful strategy

They graduate four times as many engineers as we do.

They lavish generous tax breaks on tech firms.

They support local manufacturers.

They don't respect intellectual property.

They, of course, refers to China. And the gripes from Silicon Valley business leaders capture in stark and accurate terms the key underpinnings of the growing tech rivalry between the United States and China.

None of these things happened by accident. They happened because China has something that the United States lacks and badly needs: a national technology policy.

China's policy is comprehensive. It is frequently fine-tuned to respond to technological changes. It lays out specific roles for national and local governments, as well as the country's burgeoning private sector. And it takes the long view.

It is also the main reason that China's tech revolution went from zero to 60 in record time. And China still has its foot planted firmly on the gas pedal.

The country long ago made a strategic decision that technology was paramount to its development and put in place a systematic policy to create a world-class technology sector. It sometimes runs roughshod over trade agreements or international law, which is wrong. But on the whole, the policy is simply smart.

And it's just plain dumb for the United States to think it can compete in the tech race against China and other nations without a technology policy of its own.

In China, the importance of tech is articulated at the highest levels of government. ``Science and technology are the decisive factors in the competition of comprehensive national strength,'' Premier Wen Jiabao said just last month. When is the last time we heard something remotely similar coming out of the Bush White House -- or, for that matter, the supposedly tech-friendly Clinton White House?

The premier's statements may sound like bombastic Communist Party propaganda, but they translate into very specific policies. It's not by accident that China's universities are graduating so many engineers. It's because as early as the 1980s, the government began an aggressive push to ``establish world-class technology education centers across the Chinese university system,'' said Gary Rieschel, the executive managing director of Mobius Venture Capital. Rieschel has moved from the valley to China to manage his firm's investments there.

Here, the nation's world-class public universities are aging. Few new ones are being built. And the pool of American students adequately schooled in math and science is dwindling.

In China, the Politburo gets together to celebrate innovation breakthroughs by the nation's scientists. Here, presidents invite sports stars to the White House. Perhaps it's no coincidence that Chinese students recently won an international programming contest in which the best American students fell to 17th place.

The days when China's tech policy was all rigid central planning are long gone. China now has a sophisticated understanding of markets and is fostering a highly competitive private sector, fueled in part by venture capital. It evolved rapidly from crude manufacturing to sophisticated design and is now poised to create some of technology's marquee global brands.

China's willingness to skirt international law has helped that evolution. The country's tech firms are known to steal intellectual property, often with the government's tacit approval. Officials use trade barriers, from illegal subsidies to artificial standards, to protect domestic manufacturers. They exclude foreign firms from some state contracts and force others to partner with Chinese companies.

The U.S. response to these challenges is haphazard at best.

It's not too much of a stretch to say that on a national level, the U.S.-China tech rivalry is a race between a bumbling and complacent giant and a nimble start-up with a clear mission and sense of purpose. In this valley, we know all too well how those races turn up.

By Miguel Helft - Posted on Wed, May. 04, 2005 [1] - MIGUEL HELFT is a Mercury News editorial writer. His column on technology policy appears on the first and third Wednesdays of each month.