Innovation works very differently in China, where the culture promotes collectivism. It's far more encouraged to copy and build upon the work of others, so I think it'll be good for progress.
besides the technology to censor people at a grand scale, what piece of technology was invented in China that hasn't been ripped off from another company in another country?
I've been to China many times over the years for business and I haven't seen anything revolutionary.
China's lax IP laws will only get them so far. If they want to actually become a real tech. center, they need to have protections in place for inventors/companies (and actually enforce them).
The other problem is government corruption, but this is for another discussion entirely.
Two detailed articles explaining this:
http://www.bunniestudios.com/blog/?p=284
http://www.bunniestudios.com/blog/?p=4297