NEW YORK - China needs to enhance innovation to sharpen its competitive edge against other countries especially when it is experiencing an economic slowdown, said Alan Greenspan, former US Federal Reserve chairman, in New York Monday.

In the process of moving to a market-based economy, China's productivity growth is obviously rising very quickly, Greenspan told the Economic Club of New York in a speech.

"But a trouble with that is that almost all of it is borrowed technology," he said.

Citing a survey by Thomson Reuters, Greenspan said the United States accounted for the majority of the world' s top hundred innovative companies, while none of them were from China. Thus, the world' s second-largest economy needed to deal with the innovation issue in order to move up.

Admitting the remarkable gains China has made, Greenspan noted: "the question is as they get closer and closer to the United States in the standard of living, without their own innovation, they are restricted to how far they can go, because obviously if your ceiling is your competitor, you cannot go beyond him in innovation."

"As you know (China' s) growth rate is falling dramatically..., they are going to have difficulties, largely because they have been so successful for so long without being significantly innovative themselves," he added.

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