It's a lot more than just free-spirited innovation
While innovation and a willingness to accept failure are important in Silicon Valley, just as important are the financial institutions and mentoring available to start-ups. The culture of venture capitalists and more recently angel investors provides the seed corn to make start-ups possible. The best VCs also provide valuable mentoring and connections to talent and resources to their investments. Communist China in contrast has a hard time providing start-up funding.