It isn't that they aren't "smart" enough -- it's that there is no culture of innovation. The best and brightest are running tech startups -- they work for the military and police apparatus. Come to China, find some "innovations." The last Chinese invention of any significance was gunpowder. Have a look a Baidu, Maxthon and the warehouses full of copycat iPads. Look at their cars, military machinery -- most of their military equipment is Soviet retreads or reverse-engineered US stuff. The Chinese are dangerous because there is no end to their industrial and scientific aggression. When a US company wants to do business in China, they are forced to take Chinese "partners." The US side of the office does the work and the Chinese side simply copies and sends the information onward. There is no such thing as a trade secret for a foreign company in China.

The culture is entrepreneurial, but it isn't one of invention, it's one of doing something someone else has done and doing it cheaper and at a lower quality. Come to China -- you'll see. There are some good things in China, but they are the exception that proves the rule.