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Power in Numbers: China Aims for High-Tech Primacy

David Barboza and John Markoff
Tuesday, 6 Dec 2011 | 5:57 AM ET

In an otherwise nondescript conference room, Wu Jianping stands before a giant wall of frosted glass. He toggles a switch and the glass becomes transparent, looking down on an imposing network operations center full of large computer displays. They show maps of China and the world, pinpointing China’s IPv6 links, the next generation of the Internet.

Martin Puddy | The Image Bank | Getty Images

China already has almost twice the number of Internet users as in the United States, and Dr. Wu, a computer scientist and director of the Chinese Educational and Research Network, points out that his nation is moving more quickly than any other in the world to deploy the new protocol.

IPv6 — Internet Protocol version 6 — offers advanced security and privacy options, but more important, many more I.P. addresses, whose supply on the present Internet (IPv4) is almost exhausted.

“China must move to IPv6,” Dr. Wu said. “In the U.S., some people don’t believe it’s urgent, but we believe it’s urgent.”

If the future of the Internet is already in China, is the future of computing there as well?

Many experts in the United States say it could very well be. Because of the ready availability of low-cost labor, China has already become the world’s dominant maker of computers and consumer electronics products. Now, these experts say, its booming economy and growing technological infrastructure may thrust it to the forefront of the next generation of computing.

For China, the quest to develop advanced computing centers is not simply a matter of national pride. It is an attempt to lay the groundwork for innovative Chinese companies and to reshape the technological landscape by doing something more than assembling the world’s desktop PCs.

Never mind that there may be no Chinese Steve Jobs, said Clyde V. Prestowitz Jr., president of the Economic Strategy Institute.

“There are different kinds of innovation,” he said. “We tend to equate innovation with companies that start from garages based on brainstorms.

“There is another kind of innovation that results in constant improvement that we are not good at — and they are.”

The view is not universal. Still, other experts say it would be a mistake to underestimate China’s capacity for rapid progress.

“When I went to China for the first time in 1978, I saw workers stringing together computer memories with sewing needles,” said Patrick J. McGovern, the founder of the International Data Group, an early investor in Tencent Holdings, one of the most successful Chinese Internet companies. “Now innovation is accelerating, and in the future, patents on smartphones and tablets will be originated by the Chinese people.”

A New Kind of Challenge

Going back six decades — to Eniac, considered to be the first electronic computer — the United States has set both the pace and the path of modern computing and communication. From mainframes to iPhones, from the Arpanet to WiFi, innovation has been as American as Norman Rockwell.

And for more than a generation, the hub of innovation has been Silicon Valley, a multicultural melting pot that has supported the singular amalgam of computer-hacker ethos and entrepreneurial aggressiveness that made it the envy of the world.

Probably the most serious challenge to the Valley’s dominance came in the late 1980s from Japan, which seemed on the brink of taking command of the semiconductor and computer industries until its economy foundered.

Today, China poses a very different kind of challenge. While Japan’s economy has long been driven by exports, China will soon have the world’s largest domestic market for both Internet commerce and computing.

The world took notice of Chinese technological prowess in late 2010, when a Chinese supercomputer, the Tianhe-1A, briefly became the world’s fastest. Though it was made from American processors and was soon surpassed by a Japanese machine, it was still indisputable evidence that the Chinese had achieved world-class computing designs.

Then, this October, another Chinese supercomputer, the Sunway Bluelight MPP, broke the petaflop barrier — a quadrillion calculations per second — putting it among the world’s 20 fastest computers.

This machine proved even more surprising in the West. Not only was it based on a Chinese-made microprocessor, but it also achieved a significant advance in low-power operation. That might indicate the Chinese now have a significant lead in “performance per watt” — a measure of energy-efficient computing that will prove crucial to reaching the next generation of so-called exascale supercomputers, which are computers that will be a thousand times faster than the world’s fastest today, and which are scheduled to arrive by the end of this decade.

“This is what Chinese companies need to do,” said Hu Weiwu, a professor at the Chinese Academy of Sciences who is the chief designer of another Chinese family of microprocessor chips. “We can send a spaceship to space. We can design high-performance computers.”

American officials agree, saying the Chinese government’s investment in supercomputing is paying off.

“The overall point of all of this is that the Chinese understand the importance of high-performance computing,” said Donna Crawford, the associate director of computation at the Lawrence Livermore National Laboratory. “They are executing on the plan as a key enabler for their whole society.”

Obstacles to Dominance

Last year, in an interview that would have been seen as extraordinary if the remarks had been made by a United States president, Prime Minister Wen Jiabao committed China to creating an “Internet of things.”

Connecting homes and smart power grids has been a driving principle behind the next-generation Internet in the United States. And it goes hand in hand with “ubiquitous computing,” the idea that computing power transforms everyday devices like smartphones and digital music players.

But China’s efforts at dominance are hardly without obstacles. The country has fallen far short on a decade-long commitment to build the world’s leading semiconductor industry, and it still imports a vast majority of microchips for the products it assembles. Its best chip factories are two to three generations behind world leaders like Intel, in the United States, and T.S.M.C., in Taiwan.

China’s great weakness may prove to be too much government control. Chinese innovation may also be limited by the relative lack of intellectual property protection, discouraging entrepreneurs from breaking new ground.

The 13th International Conference on Ubiquitous Computing, in Beijing in September, left American technology experts underwhelmed.

“There was nothing that really leaped out at me,” said John Seeley Brown, who directed the Xerox Palo Alto Research Center in the 1980s, when the concept was invented.

In contrast, he said, he observed true innovation at companies like Foxconn, the Taiwanese manufacturing firm with extensive operations in mainland China that has done much of Apple’s assembly work.

“There is the deep embedding of the research and design culture driving a place like Foxconn to do things that they would never have done on their own,” he said. “We’ve now combined the best thinkers in the U.S. sitting side by side with the people who are best at manufacturing in the world.”

Still, other investors have glimpsed similar possibilities in China itself. Ruby Lu, a Beijing-based partner in DCM, a venture capital firm with investments in China, described a semiconductor firm begun with lead designers in San Diego and support engineers in Shanghai, working at one-sixth the cost.

“It was the Shanghai team who came up with a groundbreaking solution to an existing problem,” she recalled in an e-mail. What scares competitors is that China has begun producing waves of amazing hardware engineers and software programmers, winning international competitions and beginning to dominate the best engineering programs in the United States. The University of California, Berkeley, is about to announce a deal to create an engineering campus in Shanghai, raising fears about transferring technology from one of the best American engineering schools.

Much has been made of computer science “returnees,” most notably Andrew Chi-Chih Yao, who left Princeton to create an institute at Tsinghua University in Beijing that has already made breakthroughs in game theory and computer security.

“Overnight there is lots of activity coming from Beijing,” said Christos Papadimitriou, a computer scientist at Berkeley.

And there is little question that the structure of Chinese industry is becoming more innovation-oriented. This summer Dieter Ernst, senior fellow at the East-West Center, testified before a Congressional commission that the Chinese had overtaken South Korea and Europe in total patents and were catching up with the United States and Japan.

Moreover, China is now the world’s second-largest venture capital market, growing to $7.6 billion from just $2.2 billion in 2005, while the American venture capital market has remained largely stagnant, according to Rebecca A. Fannin, author of the new book “Startup Asia” (Wiley).

Researchers at the Stanford Program on Regions of Innovation and Entrepreneurship recently mapped the investment activity of 769 firms investing in 2,203 Chinese companies and found patterns reminiscent of Silicon Valley.

“You have lead individuals and firms that have established beachheads of success and power,” said Marguerite Gong Hancock, a professor at the Stanford Graduate School of Business, who directed the study. “They are the same firms that were successful in Silicon Valley that have transplanted their expertise to China.”

The similarities to Silicon Valley can be eerie. “All the symptoms of a bubble are here,” said Anne Stevenson-Yang, co-director of J Capital Research, a technology investment research firm in Beijing. “It’s an unsettling instability.”

At the same time, there is a consensus that China’s entrepreneurs have a workaholic culture that is unmatched anywhere in the world.

“What I found in doing five startups in China is the culture makes Silicon Valley look laid-back and slow,” said Tom Melcher, an entrepreneur who left California a decade ago to move to Beijing. “In Beijing, if you want to find a chief executive at 7:30 p.m. on a Friday, it’s guaranteed you will find him at the office.”

Not every China specialist buys such comparisons.

“When we look at China through the lens of American decline, we see the Chinese ascendancy, we see the modern skylines and the fastest computers and the new airports, and we see an invincible force building,” said Orville Schell, director of the Center on U.S.-China Relations at the Asia Society. “Through Chinese eyes it looks tremendously uncertain and provisional. They are not filled with self-confidence.”

But Mr. McGovern, the investor and venture capitalist, thinks that may be an advantage. In the United States, he says, he is often approached by overconfident entrepreneurs who walk off in a huff when he is less than impressed by their ideas.

The Chinese entrepreneurs he deals with are different.

“They will come to me and show me their language-translation software that will convert Mandarin to English and back again,” he said. “Then I will tell them that I don’t think there is a market because it is too difficult to protect the intellectual property.”

Rather than send them away, however, he might ask them if they would be interested in working on a different idea that his firm has been considering.

“They will respond, ‘Can I get rich?’ When I tell them that I think that there is a good chance, they say, ‘O.K., I’ll do it!’ ”

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