Chinese Innovation: You Get What You Pay For

In May I posted Rent Seeking in China's Robotics Industry, a look at government funding for robotics companies. Innovation is in part a result of funding. If the government is indiscriminately funding "innovation" then plenty of companies will find ways to "innovate" and collect subsidies or tax breaks.

SCMP: Is China’s innovation boom producing too many useless inventions?

The article discusses a lot of failure in the hunt for a major disruptive innovation, but China has a lot of success:

“Every time someone is going to China and manufacturing something at a 20 per cent lower cost, that’s an efficiency innovation … and China has been very good at it,” he said. “This is a very important type of innovation and that’s what leads China to grow.”

...In a report on China’s effect on global innovation last year, consulting firm McKinsey concurred that it could be a global leader in efficiency-driven and customer-focused innovations, while saying it needed to catch up in science- and engineering-based ones.

Chinese innovators used China’s massive consumer market to commercialise new ideas quickly, and its consumers enable innovation by accepting early iterations of products and services and providing feedback for rapid refinement, it said.

China has the right attitude and doesn't need to foster a culture of innovation. Over time, innovators will find ways to better satisfy market demand. In order to speed the process along, the government needs to increase the role of the market in the economy and reduce the role of government. Lower taxes will achieve much more than subsidies for "robotics" companies.