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China to become innovation driver

China’s 12th Five-Year Plan shows the country is determined to accelerate the state-controlled economy’s transition from manufacturing powerhouse to innovation engine.

By Kari Williamson

China’s public investments in scientific and high-tech research, implemented through national programmes, are embedded in a complex, geographically diverse and evolving institutional landscape, constituting nearly 70% of all R&D funding, which reached US$91 billion in 2009, according to Lux Research.

“China’s R&D funding ecosystem reveals connections between vast public research investment, corporate buy-in, and likely sources of Chinese innovation pivotal in driving the country’s future economic growth,” says Zhun Ma, Lux Research Analyst and Lead Author of the report titled, Invigorating Innovation and Adoption: Dissecting the Government Funding behind China’s R&D Ecosystem.

“Such an environment represents both technology scouting opportunity and competitive threat, the seeds of which are already sown,” Zhun adds.

Lux Research has drawn the following conclusions:

  • Sweeping innovation agenda. China’s innovation programmes are driven by its current manufacturing base, a growing domestic market and an appreciation of the country’s future societal needs. Funding has been significant and focused, and will only grow over the next five years;
  • Refined focus on renewable energy. The world’s most populous country is investing heavily and holistically into current and emerging renewable energy technologies. From CNY4.9bn (US$771 million) for EV-related application R&D, through funding for numerous pilot lines for next generation PV, to CNY1.05bn (US$165.16m) for connecting renewable energy and electric vehicles to large-scale grids, pivotal local technology opportunities are strongly supported;
  • Broad and substantial support for biotech and healthcare. Fundamental R&D spending in the life sciences under 973 programmes dwarfs any other area, while a National Science and Technology Major Programme will pump over CNY27bn (US$4.26bn) into pharmaceutical industry development including active pharmaceutical ingredients (APIs), drugs, and Traditional Chinese Medicine; and
  • Intellectual property (IP) rights regime will reach global standards. China’s focus on innovation means its IP base will spread from a few heavyweights to small and medium enterprises, and start-ups. As Chinese IP assets gain critical mass in foreign countries, its leaders will be forced to provide greater protection to foreign IP in China in order to ensure Chinese rights are protected overseas. Changes will not be sudden but the timeline towards IP protection equality is measured in years, not decades.

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