Weird examples. The US has demonstrated an ability to develop nuclear weapons (deep technical advancement) as well and it has developed datasets on millions of people (see the Snowden revelations).
How and why are you dismissing the ethical costs in this case?
The cost of innovation in crude governments of faith (Dictatorships, Tyrranies, etc) is measured in starvation, famine and deaths in the population. The cost of innovation in modern governments built on systems (socialist or capitalist democracies) is a lot of squaking about the innovation and its uses.
The cost of the NORK's replicating nukes and China's profiling their citizens contrasts with the US in that those costs are much lower in the US. The US isn't carting off undesirables to re-education camps (there's a prison system with a lot of people in jail but every single one of them was put there by a jury) or starving its citizenry to make innovations (although there is a point to be made there). This, in turn, tends to increase the rate of innovation (people don't come to associate the change with bad things and because they are discussing them more people are exploring them).
China or Europe can be #1 in scientific paper publishing but until I see robots that can do what General Dynamics is doing or even what Honda was doing 5 years ago, it's all just copying the leader and the development cycle for those countries to product decent copies is quite long and tends to be inconsistent due to people developing bad cases of I-don't-give-a-shit-itus. E.G. China has problems innovating for the same reason they have problems making an aircraft carrier and maintaining a navy; their steel mills churn out inconsistent crap.
The BBC article is trying to deliver a message using Schmidt's name, and isn't coming to any conclusions or providing any data. It's pure propaganda and a total waste of time to read or comment on really.
Yeah the problem with Chinese innovation is the government still has a brain drain for fundamental science and Advanced manufacturing which still needs years of development. So thanks a lot Trump to help creating a Chinese hostile atmosphere to turn it to a brain gain (you can argue about it but many talented people are going back whatsoever)
However the people there are ironically submissive, dictatorial, flexible and long term thinking. Every now and then magically CCP would adopt some bottom up Suggestion and turn it to top down strategy that does the right thing
