China is gaining quickly in technological innovation by several significant indicators: research and development spending, new patent applications and scientific academia. China's R&D coffers weighed in at $409 billion in 2015, nearing $497 billion for the United States and increasing at a far faster rate of 18 percent annually versus 4 percent for the United States. If current trends continue, China will overtake the United States for R&D spending by 2019, predicts the U.S. National Science Board, which does an annual report card of research and development trends.
China also is getting ahead in engineering talent. For the science and engineering field, China has 22 percent of bachelors degrees, while the United States has 10 percent. Additionally, China counts 34,000 doctoral degrees, not far behind the United States, at 40,000, the U.S. National Science Board finds. In a further indicator, the board notes that China overtook the United States in scientific articles published, with 18.6 percent of the total, compared with 17.8 percent for the United States.
In patent applications China bumped Japan from second place globally for patent applications in 2017, gaining 13.4 percent to 48,882 applicants, or 20 percent of the world's total, according to the World Intellectual Property Organization. Longtime leader U.S. claims a 29 percent share, at 56,624, WIPO statistics show. Just a decade ago China was ranked 7th worldwide, with 4,546 patent filings.
China's strides are boosted by the advantages of scale. China claims the world's largest number of internet users (772 million) and smartphone users (663 million), according to Statista. Plus, China has the biggest online commerce market — more than $1 trillion in 2017, as measured by China's Ministry of Commerce.
Still, huge potential remains untapped in China, since internet penetration is only 52 percent compared with 88.5 percent in the United States, a report by the Boston Consulting Group notes.
China's digitally savvy millennials and Gen Z, who comprise 54 percent of the country's population, are driving online consumer trends, points out investor Tung.
"Silicon Valley remains the epicenter of innovation in the world, but China — and increasingly India and other emerging markets — are catching up as the Net starts to globalize," said Nazar Yasin, founder of emerging markets investor Rise Capital, based in San Francisco. As he contends, it's just a matter of time.