More and more policy foreign policy pundits are attempting to answer the pressing China question. What is the New China and is the Chinese economic miracle, especially the rush of Chinese entrepreneurs to market bringing about a global techno-nationalism? Adam Segal, the Maurice R. Greenberg Senior Fellow in China Studies at the Council on Foreign Relations and author of Digital Dragon: High Technology Enterprises in China recently addressed this issue at a forum held a few weeks ago in Washington, D.C.

In response to that important forum on China innovation, Segal generously responded via e-mail to a few salient questions of mine.

CVN: Do you have confidence that China will or has already developed
a venture capital enterprise to fund technology start-ups?

AS: I would say that my confidence is pretty high, but that it will take a while to get there. The natural tendency in China is try and do this through policy directives and to try and limit foreign participation. Both of these will get in the way of efforts to build a truly effective system.

CVN: With the "wave of Silicon Valley VCs" investing in Chinese tech companies is there any danger to displacing America's vaulted position as the cradle of tech entrepreneurship?

AS: Clearly something is happening-maybe a shift in gravity. But I do not expect the US to displaced in quite a while. Money is only one part of entrepreneurship, and the US still has a great lead in transparency, the rule of law, tolerance for risk, labor market flexibility, and IPR protection.

CVN: Do you agree with the US-China Economic Security Review Commission
that we (US) needs to monitor or create some safeguards on the US funding
of Chinese tech start-ups? Some have even suggested raising the
bar so that Chinese tech companies will not be allowed to use Nasdaq
as an exit strategy for investors?

AS: I have no problem with monitoring. A lot of things are happening, there is not a lot of data, and the data we do have is often contradictory. So any effort
to gather and standardize data I think is useful. Suggestions on safeguarding or prevention generally make bad economic and technology policy. I would suspect that there are with offshore listing all types of work arounds. Besides
in the future, innovations will occur everywhere, and the way to ensure national security is to make sure that American firms are on site when those innovations occur--either in Silicon Valley, or Shanghai.

CVN: Finally at the recent forum in Washington, you stated that "openness is clearly China's greatest asset." Will you please clarify that remark?

AS: This was badly stated- I meant openness to FDI and foreign companies,and had the comparison to Japan in the 1980s in the back of my mind. I think the most likely market space of a Chinese innovation is where there are local companies competing and cooperating with foreign ones. The growing transnational networks-of VC in Silicon Valley and Shanghai and of returnees who are founding their own start-ups-is one of the great strengths of China. The restrictions on blogs and google, of course, push in the other direction and I think are basically incompatible with China's ultimate objective of independent innovation.