(An excerpt from my book)
The US is the oft-cited innovator. But upon closer inspection, it seems it is only the technology sector, and more specifically Silicon Valley, where the US is the undisputed innovator. So could China create the equivalent of Silicon Valley? To answer this, we need to understand the roots of Silicon Valley.
Some may say the education set-up or the venture capital industry is the source of strength for Silicon Valley, but I would argue they are the symptoms of its success, not its cause. Instead, I would argue that an unlikely post-war interaction between the US military and the hippie movement in Northern California were the trigger for success.
In essence, you had hard-nosed military types with technology mixing with people who were into spirituality and saw technology as a path to some kind of transcendental utopia. The mix of these opposites brought about some of the most interesting innovations in the post-war period. Steve Jobs has to be the epitome of this. He spent time in India visiting Ashrams, practiced Zen Buddhism and experimented in psychedelics, like LSD  . But he was very much into technology. The rest is history.
Could this emerge in China? To outsiders, China is not viewed as particularly creative. But I have to differ. Take the Chinese author Mo Yan (translated as “don’t speak”), who won the Noble prize for literature in 2012. We see someone who can write magic realism like Gabriel Garcia Marquez, be as subversive as Kafka and describe history as well as Tolstoy.
In his novel, “Life and Death Are Wearing Me Out” (shengsi pilao), Mo Yan writes about China’s development since the second world war through the eyes of a landowner who dies and is reincarnated as various animals in rural China. The story is thus narrated through the eyes of a donkey, an ox, a pig, a dog and a monkey. Mo Yan himself features as a character. I cannot think of many authors who are as inventive and creative as Mo Yan. So the ingredients are there for China to become leader in innovation. There is a twist though; it has to happen without a cook!
 See “What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry”, John Markoff, 2005