From Shanghai, the second stop on my GEW 2016 road trip, I report that entrepreneurship is on the rise in China. However, many commentators outside and even inside the country have been slow to equate China’s economic growth with entrepreneurial activity. Instead, analysts have focused on government initiatives, such as infrastructure construction, or foreign direct investment as the key drivers of China’s 20-year surge.

Yet, private sector development is something that has gone hand-in-hand with its growth. Between 2000 and 2013, the total revenues earned by private enterprises rose nearly 18 times, whereas those of state-owned enterprises rose six times. Profits increased at an even faster rate – by 23 times for private firms against seven times for public enterprises.

Leading the rapid acceleration of entrepreneurial activity are people born in the 1980s and 1990s.  They are more tolerant of the risk of failure and starting to see “trial and error” as simply part of the process. Because the experience of founding a business or working for a startup, even if not successful, has been shown to open new opportunities in the future, they are more likely than their predecessors to develop and apply new technology.

Many come from large cities such as Shanghai, Beijing, and Shenzhen, but other cities are developing urban ecosystems as well and this year our partners led celebration entrepreneurship weeks in many cities including: the Hong Kong Cyberport Management Company Limited leading in of course Hong Kong; Shaanxi Science and Technology Resource Center in Xi’an; Dongke Chuangxing in Wuhan; Anhui Wanchuang Investment Holdings Limited in Hefei; U Creative Space in Chongqing; Qianhai Dream spaceX in Shenzhen; Hainan Association for Advancement of Youth entrepreneurship & innovation in Haikou; and Phoenix tea in Jinan.

Despite coming from diverse backgrounds, China’s entrepreneurs share many characteristics: they are ambitious, future-oriented, creative and focused on incorporating internet technology into their businesses.  As a result, entrepreneurship in China has grown at an exponential rate during the past decade.

Our new Global Entrepreneurship Index released the day I was in Shanghai to open GEW China, ranks China 48th in the world, up 12 places from last year. It has world class strengths in measures of availability of risk capital and product innovation, but lags most noticeably measures of opportunity perception and startup skills. The trend lines are up, and as more people start and scale new ventures, China’s ecosystem profile will even out further.

In 2009, more than half (54 percent) of respondents to an Intel-Newsweek innovation survey in China predicted that their country will pioneer the next generation of breakthrough technologies and overtake the United States as the global innovation leader in coming decades.  This has been borne out by China’s trajectory. According to the World Economic Forum, “over the next decade, China could become not only the place where global companies conduct research and launch new products, but also the source of a low-cost and nimble approach to innovation that affects competition everywhere.

In the mid to late 1990s, tech entrepreneurs laid the foundation for contemporary giants Alibaba, Tencent and Baidu. As the number of entrepreneurs grew throughout the 2000s, new founders began innovating and disrupting other industries: energy, financial services, healthcare, and retail.  China now produces more “unicorns” (non-listed companies valued at over U.S. $1 Billion) than any country save the United States. This bodes well for a global economy, now driven by new opportunities in the disruption of highly regulated industries.

China’s entrepreneurial aspirations are shared by its government, which for the past eight years has been very supportive of GEW. Recognizing that an essential ingredient for economic growth is talented and creative people with entrepreneurial vision, last March, Premier Li Keqiang called for “mass entrepreneurship and innovation” as central to China’s overall development.  China’s Ministry of Science and Technology lists 115 university science parks and over 1,600 technology business incubators in the country, which provide office space, mentorship, and other services to entrepreneurs. During my visit it was clear entrepreneurship is being adopted on a massive scale. For example, during my lunch with Weimin Yang who runs the Pudong Incubator Alliance, I had the sense that there was that number in Shanghai alone. Further, as you can see in Zhongguancun Innoway’s case study of Z-Park, China’s first innovation and science park is hardly small.  In fact when I was first briefed about it at the GEC+ in Daegu, Korea last August, the presenter was able to note that the park was bigger in size than Daegu itself – Korea’s second largest city.

While in Shanghai I visited the GEW offices at the “Shanghai Public Practicing Base for Entrepreneurs” which while having a mouthful of a name was very impressive. Multiple buildings make up a significant startup park in the city. The atmosphere was alive and vibrant and approach very sophisticated. In an earlier visit to that area I had noticed the buildings were closed off to the public by a fence on the street. Now I see they have removed the fence, made a promenade and opened the entrances to the technology park to coffee shops which can be shared by those using the startup hubs or others from the street.

GEW China, managed by Entrepreneurship Foundation for Graduates, which is housed in the Shanghai Public Practicing Base for Entrepreneurs, has grown substantially since the early days of our collaboration.  EFG hosted the Global Entrepreneurship Congress in 2011 and continues to work with China’s major universities in doing bootcamps and other entrepreneurship education programs. At the EFG dinner Monday night, I met some of our longtime GEW partners who we plan to engage in the future in a wider agenda of programs and activities around GEN China. This includes an excellent angel investor program which has funded more than 1,200 entrepreneurs. I was impressed at the credentials of some of the investors that night including the likes of Allen Zhu from GSR Ventures who is among other things famous for his leadership with Didi – China’s Uber which also acquired Uber China.

There are many elements of course that make China an attractive environment for entrepreneurs. As reported by the World Bank Doing Business Report, these include: the vast size of its market, a sophisticated infrastructure, comparatively low operating costs, and an increasing standard of living.  But at the center of China’s continued entrepreneurial vitality are a new generation of founders who are pursuing new economic opportunities with boundless creativity and a determined drive to realize their vision of the future. This generation of Chinese entrepreneurs hold the promise for propelling China through its next stage of development.  Over 1,000 of them showed up for the Opening Ceremony of GEW which was an extraordinary spectacle unto itself.

The scale and scope of GEW in Shanghai – as on display at huge GEW opening day events – left me impressed at the level of interest and commitment from China is developing its entrepreneurial ecosystem by leveraging thousands upon thousands of universities, incubators, investor groups and other institutions. We are bullish on GEN China as a major future world actor in the global collection of GEN leaders helping each other develop an environment and support structure that can channel the enthusiasm of young people especially in China into scalable ventures.

Now the overnight hop to …..Riyadh, Saudi Arabia.  Stay tuned.