Against the backdrop of a technology race between China and the US, Liang, a sustaining sponsor of the forum and a renowned innovator in his own right, reminded both countries to maintain effective dialogue and mutual respect, to realise the best possible result for each country, and humanity at large. “We are here to promote mutual understanding, open dialogue, close cooperation, and healthy competition, between entrepreneurs and scholars between the two nations,” he said.
Although confident that China’s innovation capacity is gradually approaching that of the US, driven by the country’s competitive advantages in population and scale, Liang urged policymakers not to become complacent. “During the period in which Japan’s population aged, investment in innovation and technology also experienced a significant decline. Once well-ahead of the US, Japan’s innovation capacity is now less than a quarter of that of the US. China cannot afford to risk the same fate by becoming complacent over the next twenty years,” said Liang.
Between the 1950s and 1980s, Japan’s economy experienced exponential growth, and annual GDP growth of more than 8%. At its peak, the country far surpassed the US in various industries, and became the world leader in innovative technologies. Following a sharp decline in birth rates and an ageing population, however, Japanese society has struggled to maintain its innovative edge as it attempts to cope with the challenges presented by the country’s demographic trends.
“The fundamental reason for Japan’s long-term economic decline can be found in the country’s dysfunctional demographic build-up. Due to this, innovative capacity has all but diminished,” said Liang.
Over the past two to three decades, Japan has indeed fallen behind the US in terms of innovative capacity, while China has quickly caught up, in large part owing to the country’s massive population. According to Liang, “China is catching up in terms of R&D investment, but is already well-ahead of the US in terms of R&D personnel.” At present, the number of college graduates in China, and the number of R&D personnel at the doctorate level are both three times that of the US. In terms of high-level talent, China currently accounts for one third of all enrolments at the postgraduate level at top institutions in the United States.
Liang predicts that overall, current investment in education will see the continued improvement of overall education levels in China over the next two decades, which will help to sustain innovation capacity in the short-term.
In the long-term, however, China’s alarmingly low birthrates pose a real threat to the country’s demographic build-up. If the current trend continues, China will face the same challenges as Japan, but on a much larger scale. This will mean increased economic pressure on the working-age population, says Liang, and will be detrimental to innovative capacity.
“In Japan, the ageing population has resulted in tremendous pressure on taxation and innovation, as well as having a significant impact on the lives of the elderly. As most families in China have only one child, the burden will be further increased if the country does not effectively address its declining birthrates. The burdens of pensions and medical costs will further complicate coping with an ageing population,” said Liang.
Both China and the US can learn from Japan’s experience, says Liang. In order to avoid the pitfalls of an ageing population and maintain its innovative advantage into the future, China needs to take measures to encourage families to have more children. The US, on the other hand, must avoid the temptation to close its doors to immigrants, and should remain open to the brightest minds from across the world to drive its innovation in the future.
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