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|A study by UBS Securities Asia, Tiger Sparks: Is Asia's Innovation Boom Creating a New World Order? observes that China is following in the footsteps of Japan, South Korea and Taiwan, shedding its image of being the metal-basher of the world to becoming an innovation powerhouse.
According to UBS, there has been an explosion in creativity and innovation in China. In areas such as Artificial Intelligence (AI) and financial technology, Chinese companies are increasingly world-class. Improved education (2.8 million science/engineering graduates annually, 5 times the US level), intensified R&D, government policy and availability of capital are fueling this growth.
This follows a well-trodden path elsewhere in north Asia. Japan, Korea, and Taiwan have moved through the middle income trap with the help of innovation. Faced with China's rise, these countries are not standing still. Though China's R&D spend will likely surpass the US as early as 2018, the region as a whole is likely to spend more than the European Union and US combined by 2020.
UBS has built a detailed regional scorecard tracking education, R&D, funding, and patents, The UBS ranking order by country for Asian innovation is:
1. S. Korea
7. New Zealand
8. Hong Kong
The UBS report draws four key conclusions:
1. Chinese innovation is likely to help shift the country away from basic manufacturing to newer areas of growth.
2. S. Korea in particular stands out - R&D has been increasing sharply, now among the highest globally.
3. Much of south Asia risks missing out on an innovation dividend. However, there is some optimism in India.
4. North Asia's pace of innovation is much faster than South Asia.