China's Information Tech Spending Third Highest
In 2003
China's information technology spending was the third
highest in the world in 2003 at US$290 billion. According
to projections, if China's information technology growth
and spending continue at current rates, it will become
the world's leader in the field in 2010.
Most Chinese companies, which started as manufacturers
without core patents, have now spent more to develop their
own technology. Now, China is one of the leading countries
for applications to the US Patent Office. China's universities
currently graduate more than 600,000 engineers annually.
When they join the workforce, their average starting montnly
wage is about US$500.
IT spending in the US has been depressed since spring
2001, while China's has continued at a robust rate. California's
Silicon Valley has been a major employer of technical
talent, which comes mainly from India, China and Taiwan.
As US companies laid off their technical personnel because
of the economic downturn, many ethnic Chinese from China
and Taiwan returned to their homeland to start new businesses,
where funding was comparatively easy to come by. In Taiwan,
most of the funding came from venture capital sources
(some of which have government ties) or friends and family.
In China, most of the funding came from the government,
which has been anxious to fund the field.
Intel's retired CEO Andy Grove has frequently complained
that the US is losing its technology leadership position,
but has not mentioned that many of the new companies in
China, Taiwan and India are founded by people who formerly
worked in the US for American companies, including Intel.
Occasionally, the US media will latch on to a case of
industrial spying or stolen technology secrets, which
creates the impression among many Americans that China's
technology success is based on espionage.
The last business recession demonstrated that IT spending
in the US was driven by business demand, and is now subject
to capital expenditure cuts, just like other discretionary
items. Before this recession, IT spending was not subject
to such large cuts and blood-letting.
Another benefit for China is that, because of the recession,
US businesses which have survived, have severely cut the
cost of their products and services in order to stimulate
their sales. Chinese businesses and government ministries
now know that they have their greatest negotiating leverage
at the end of the quarter, when US companies are closing
their books for the quarter. Because of China's robust
growth, all have done their best to close deals in China
Last week, the Bush administration said that it was looking
into the establishment of a permanent base on the moon
for the US. It did not mention how much this would cost,
or how it would be funded. Nor did it mention why the
US has taken a sudden interest in a moon presence, when
the last US astronauts landed on the moon in 1972. The
most likely scenario is that the administration felt it
had to do something after China successfully orbited its
first astronaut, and announced that it planned to land
a man on the moon by 2020.
It's a sad truth to say that for the most part, the US
government has lost its long-term technology vision, and
is driven more by reaction to overseas events and domestic
public opinion.
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