Evolution and Features of China’s Central Government Funding System for Basic Research

Basic research is believed to be a crucial factor for building national innovation capacity and therefore was perceived as a key battleground for national technological and economic competition. Since the economic reform and opening up in the late 1970s, China has made great achievements in building up its national research system. However, the lacking capabilities to conduct ground-breaking scientific work remain one of the daunting challenges for the country. How to restructure its funding system for basic research so to reinvigorate its indigenous innovation capacity has been one of the main concerns for the Chinese government in recent years. To address this, the paper proposes a conceptual framework to analyze how China’s central government funding system for basic research has evolved since 1985. The paper concludes with a discussion of the identified problems and challenges that China is facing in its current funding system for basic research.

Has China Caught up in the Global Innovation Race?

This chapter shows how much China caught up in the global innovation race, using international indices of innovation performance, and data on R&D expenditures, higher education, scientific outputs, and patents. Frameworks such as ‘windows of opportunity’ are used to explore how China catches up in innovation and is changing policies from importing innovation to developing ‘indigenous innovation’. The bottlenecks confronting China’s catch-up and leadership are examined using the case of semiconductors, Huawei, and 5G, and the chapter poses the question whether the country can overcome such bottlenecks in core technologies. To do so, it is argued that greater investment is needed in basic research, especially by enterprises.

China’s Industrial Development Strategies and Policies

China has adopted a transition strategy and industrial policies pragmatically according to its economic reality since the reform and opening up started in 1979. The organic combination of an effective market with a facilitating state was the main reason for the success of China’s economy in the past four decades. In the process of China’s economic development, industrial policies have played a crucial role in both industrial upgrading and technological progress. Relying on the comparative advantage—following strategy, China has fully utilized its latecomer advantage. Chinese enterprises learn advanced technologies from developed countries when the opportunities exist and do indigenous innovation when needed. Pragmatism and learning capacity has been the most important endowments and comparative advantages of the Chinese government and enterprises. With learning capacity, the government and enterprises can pragmatically explore the comparative advantage of the existing factor endowments and convert latent comparative advantages into competitive advantages to promote continuous transformation, upgrading, and sustainable development.

Manufacturing Power Strategy

To avoid becoming stuck on the middle rungs of the development ladder, China has embarked on a new and more balanced strategy that assigns a greater role to domestic demand and to improvements in technology innovation capacity, especially in its industrial sectors. The government is pursuing a new strategy through a focus on strategic industries with a high content of innovative technology. The Manufacturing Power Strategy and a range of key policy initiatives incorporated within it are the strategic components of China’s new innovation-focused industrial policy. The Manufacturing Power Strategy is the key element of China’s longer-term strategy aimed at closing the technology gap with advanced economies and deriving more of its growth impetus from higher indigenous-innovation-based productivity. It is still not easy, however, to comprehensively assess whether the industrial policy is accelerating or slowing down the transformation and upgrading of China’s manufacturing industry.

Innovation Strategies of Multinational Corporations in China and Their Contribution to the National Ecosystem

For many years, and with great emphasis since 1995, China has followed a technology-and education-led development strategy. Foreign multinational corporations (MNCs) have played an important role in China’s growth, in developing innovations and contributing to the creation of intellectual capital in China. This chapter reviews the role of MNCs in the creation of foreign intellectual capital in China and its transfer to Chinese firms, including incentives and policy implications for indigenous innovation. It also discusses the evolution of MNCs’ research and development (R&D) strategies in China, China’s policies toward attracting foreign intellectual capital, and the changing policy environment.

The Development of Innovation Studies in China

Innovation studies (IS) has been an interdisciplinary research field over decades of development, based on economics, business and management, sociology, policy, organization studies, and other related subjects. This chapter examines the origin and evolution of the field of IS and systematically reviews the key academic achievements and contributors in the IS community. This chapter also proposes a comprehensive and integrated research review for IS in China. In fact, despite its irreplaceable and essential role in economy, innovation also enjoys an important position in theoretical research in China. Based on unique innovation management practices in Chinese enterprises, Chinese scholars have proposed several unique innovation theories, such as “3I pattern” (imitation, improvement, and innovation), indigenous innovation, total innovation management, etc. Now, during its transition from a major innovative nation to a super innovative nation, China is facing the challenge of how to stimulate more major innovation patterns that would “change the world” in the era of the knowledge economy; thus, based on a holistic review of Chinese innovation journey, we propose a Chinese innovation paradigm and discuss future directions for Chinese IS.

Foreign Technology Transfers in China

Innovation can be achieved via various channels, and the effectiveness of each channel depends on the stage of development as well as the local social-economic settings. Based on the concept that innovation is not only limited to invention but also characterized as a learning and adopting process, this chapter discusses the important role of foreign technology sources in China’s innovation path. Different types of foreign knowledge sources are reviewed, including trade, technology licensing, inward and outward foreign direct investment (FDI), internationalization of research and development (R&D), global value chain, and returnees. The discussion highlights the complementary effect between foreign knowledge sources and indigenous innovation efforts in fostering technological upgrading in China. To maximize the benefits from innovation and accelerate catching up, the explicit and well-focused encouragement of indigenous innovation and acquisitions of foreign knowledge must work in parallel.

Planning for science: China’s “grand experiment” and global implications

China’s rising capability in science, technology and innovation to a certain extent has to do with “a grand experiment” that started 15 years ago when the Chinese government released the National Medium and Long-Term Plan for the Development of Science and Technology (2006–2020) (MLP). MLP launched the indigenous innovation strategy and set goals to turn China into an innovation-oriented country. The junction when the old MLP phased out and a new MLP (2021–2035) will soon be introduced holds greater historical and practical significance for the Chinese and international scientific communities to make sense of planning for science. This paper reviews the progress achieved in implementing the MLP, analyzes the daunting challenges facing China to become an innovation-oriented nation, discusses the implications of planning science for the Chinese and international scientific communities, and speculates on what might be included in the new MLP.

From Glass to Glaze in al-Andalus: Local Invention and Technological Transfer

It has long been assumed that lead glazing technology preceded glassmaking in the Western world and that the technological transfer was from glazes to glass. Here, we present new evidence for the reverse, the indigenous innovation of glassmaking and its transfer to glazes in early Islamic al-Andalus (Spain). Compositional analyses show that Islamic lead glazes from Córdoba are intimately related to a distinct type of high-lead glass, suggesting a connection between the two technologies. The archaeological remains from a pottery workshop indicate that the glazing process initially involved the production of a lead glass and is not linked to earlier Roman or other contemporary glazing technologies. The data also demonstrate that the potters not only used the same materials and techniques but borrowed stylistic and decorative models from glassmaking.