An Innovation Dilemma

It is likely take a generation for China’s per capita GFP to approach even half that of the US. The crux of the matter is technology. The world’s five technology powerhouses, in terms of spending on research and development are the US, Germany, Japan, South Korea and China. Although China has the benefit of scale, after adjusting for the size of its population and economy, it lags behind the other four. It is South Korea that punches above its weight. The technology race is shaped by three factors, investment, human capital and institutions.

Although China’s corporate-driven R&D spending has grown rapidly as a proportion of its economy, it still lags behind many East Asian and Western counterparts. South Korea, Japan and Germany have higher R&D intensity while the US is still the foremost in scale. Contrary to perceptions, a lower proportion of R&D in China is directly funded by the government than that in Germany or the US according to OECD data.

China has been producing many science and engineering graduates; in 2016 it produced 4.7 million graduates in STEM (science, technology, engineering and mathematics), greatly surpassing America’s 568,000, according to World Economic Forum data. However, despite the rapid expansion of its higher education system, the overall quality of Chinese universities still lags behind the US.

China’s population is ageing while the US is being replenished by immigrants. The US has a distinct advantage in attracting talent from around the world. From graduate students to faculty universities. Can China attract international talent?

Hong Kong is the obvious destination of choice in China for global talent, especially in finance and law, given its open media access, low tax and wide English usage. Unfortunately Hong Kong is not known for its hi-tech industries and it is expensive place to live.

There are vibrant hi-tech ecosystems in many Chinese cities, where, housing is more affordable. Preferential housing for talent is already in place in Shenzhen and elsewhere, but taxes are much higher and access to the global internet is restricted.

China should consider setting up “special innovation zones’ – such as in the Greater Bay Area or Hainan – where international internet access is unfettered and qualified foreign talent may pay low taxes. However, good and affordable international schools are also essential to make these zones attractive.

Chinese companies could set up R&D centres around the world. Just as multinational corporations have set up R&D centres in China to access its large pool of engineering talent, Chinese firms may do the same overseas. Russia or Spain, for example, may offer value for money. Importantly, what China needs is quality rather than quantity.

Besides financial reward and career prospects, global talent is also attracted to lifestyle, China could set up international innovation parks in places such as Bali, Jeju Island in South Korea, or New Zealand. At the same time, while based in resort-like facilities near beaches or mountains in these locations, international talent could undertake projects for Internship.

Tsinghua University and Peking University have long been top feeder schools for science and engineering PhD programmes in the US. China needs to attract more of its best and brightest graduates to return home. Whether trained locally or overseas, China has the largest pool of young engineers and scientists. China’s engineers have achieved formidable technological progress so far. The issue is whether they can develop their potential to the fullest.

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Antibiotics pipeline is falling behind in war on superbugs

The World Health Organization has warned that none of the antibiotics currently being developed against antimicrobial resistance are enough to tackle drug-resistant bacteria that are expected to kill millions by 2050.

In a report published recently, the WHO said none of the 43 such drugs in the pipeline addressed the 13 most dangerous superbugs it had identified.  Antimicrobial resistance (AMR) has been described by experts as a silent pandemic.

Research suggests the spread of bugs that tolerate drugs kills about 700,000 people a year, a figure that could rise to 10m by 2050 – the same number of lives claimed by cancer each year.

While observers and industry members had expressed hope the current pandemic could alert the world to the perils of under-investment in new drug research, progress has been stymied by on crucial problem: AMR drugs should be used as sparingly as possible, offering little commercial incentive for drug-makers to invest in research and development.

The 2020 report finds the antibiotic pipeline is “near static”, with only a few new drugs approved by regulators in recent years. Most of these offer little benefit compared with existing ones, or are variations of antibiotic drugs classes discovered in the 1980s. A number of pharmaceutical companies have given up on antibiotic development altogether because it is unprofitable.

Bacteria that cause pneumonia or sepsis are becoming more and more resistant to existing drugs, a process that has been accelerated by antibiotic misuse in humans and animals, according to Peter Beyer, interim head of the WHO’s global co-ordination department on AMR.

The report also highlights new classes of promising therapies including phages – viruses that eat up bacteria; antibodies; and immune therapies that weaken the effect of bacteria. There are also a number of initiatives aimed at enticing investors and companies to act.

Still, scientists insist that because antibiotics are so prevalent and used to treat a wide array of infections in key healthcare settings, and delay in action could be costly.

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