The claim that China can't innovate is repeated so often that it has already become a stereotype.

Singapore Business Times Senior Correspondent Lee Han Shih argues that distrust and the behaviour of the state are among the causes in China's innovation challenge.

Excerpt: For the last 3,500 years, China has never placed innovation in high regard. To become an innovator, the first thing that needs to change is the Chinese mentality.

It may be hard to believe, but China led the world in new inventions for more than a millennium until 1450 AD. The list includes the compass, the water clock, gunpowder, ocean-going ships, paper, printing, the wheelbarrow, the rigid horse collar, and porcelain. China invented all these - and wasted every opportunity to exploit them to their fullest potential.

The implication is fairly clear. China's march towards becoming one of the top 2 or 3 economies in the next few decades may be thwarted unless key reforms are made to government and business culture.

At present the new China is all about incorporating the advantages of the free market while protecting the sovereignty of the state - the holy grail of the Communist system. It took a while for China to embrace free trade - it may take longer to change and environment that favours competition and innovation within.