Obscured by panic over a fast-spreading virus and drumbeats of war in the Persian Gulf, a great race is progressing across Asia. China is determined to be a technological superpower. It is prepared to spend billions of dollars to nurture innovation and new technological standards so its companies can compete with the likes of Microsoft, Intel, and Cisco Systems. Korea is spending just as heavily to make high-speed Internet access as ubiquitous as electric power and to erect a whole new industry upon this fiber-optic foundation. Not about to be outdone, Japan is blazing pathways in so-called intelligent networks and nanotechnology. These are risky frontier sciences, where the less developed countries of the region are unlikely to pose a competitive threat anytime soon.

T here is a pattern here. As an impoverished nation after World War II, Japan protected its home market and latched onto electronics and high-tech manufacturing to jump-start industrial growth. South Korea followed in its footsteps. Now, it’s China’s turn. But instead of shutting out foreign players, as both Japan and Korea did, Beijing has aggressively courted multinationals to invest in China— and has even enlisted some to help in crafting China’s homegrown technology standards.

Beijing’s latest thrust is putting pressure on all of its neighbors. "If you are ahead of China, you have to keep on going up," says Bob Yang, executive vice-president of the Industrial Technology Research Institute, Taiwan’s government-supported research-and-development center. "Every country around here needs a strategy to cope with China’s rise."

But it is Japan and South Korea that feel most keenly threatened by China’s maneuvers. Both are placing big bets on communications, and no one in the world of network technology takes their efforts lightly. Last August, Britain dispatched a team to Korea to identify the factors behind its rapid broadband rollout. British Telecom also sent a group of 10 senior execs to see what technology was incubating in Japan’s laboratories. What they found, says Koshiro Kitazato, chairman of BT Japan, "is that everything in Japan, from tech to product development, is geared to fast, ubiquitous networks."

Yet while technological might can translate into economic muscle, it doesn’t automatically turn countries into leaders or promote grass-roots effectiveness. In the battle against severe acute respiratory syndrome, or SARS, the infectious disease experts say China has disappointed the international community. As the disease sickened hundreds and threatened the economies of Hong Kong and Singapore, the Chinese government initially hid the damage within its borders and refused to allow international health authorities to investigate. On the diplomatic front, Japan and Korea struggle with their own shortcomings. For decades, both countries have followed the foreign-policy dictates of Washington in exchange for a place under the US security net. Now, amid an escalating war of words between the Bush Administration and a nuclear-capable North Korea, Japanese and South Koreans are questioning their governments’ subservient relationship to Washington, yet show little ability to affect political policy.

In other words, competition is driving communications technology to new heights, but communicating globally is not Asia’s strongest suit. As the region confronts future crises—military or molecular—Asia will bring its technological skills to bear. Microelectronics will be the guts of future weapons systems. High-speed communications networks and computer skills will help these nations respond more quickly to medical crises. Technology, however, won’t cure Asia’s more subtle ills. Competition among nations will expand Asia’s storehouse of abilities and knowledge. Wisdom, in any region, is more elusive.

BusinessWeek. Copyright 2003 by The McGraw-Hill Companies, Inc