American policy makers worry about the dramatic increases in the number of academic papers being published and patents being filed by Chinese researchers. They believe that these will give China a formidable competitive advantage when it comes to innovation. After all, China is now only second to the U.S. in academic publications, and by 2015 it will file more patents annually than the U.S. does.

Our policy makers are worried about the wrong things.

The Chinese academic papers are largely irrelevant or are plagiarized. Almost no innovation is coming from government-funded research labs. Meanwhile, Chinese patents aren't an indicator of innovation, but are tollbooths that the country is erecting to tax foreign companies that come to China.

China's real advantage lies in its next generation - the students who graduate from its top colleges and become entrepreneurs. These kids are very similar to their counterparts in the West. They are smart, motivated, and ambitious.

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