Development of Innovation

System In China
[ ]

Annotation
Currently in China there is a process of transition from a resource-type of economic development to
innovation. A new innovative model of economic development, which is a consequence of the transition to the
dominance of the economy such elements as information and communication technology, internal and external
transfer of innovation, market development, innovation and intellectual property. Thus, the state innovation
policy is one of the most important components of the comprehensiveness of the state policy in China, and one
of the most important goals for the near future is the goal of creating a state of innovative type.
The aim of this work is to study the process of formation of the innovation system in China. As the tasks are
the following questions:
A certain period of implementation of the state innovation policy in China
Research programs, research and development of high technologies
Studies the current state of China's innovation system.
Materials and Methods:
In order to write this work variety of sources and literature were used.
Firstly, the use of scientific articles by authors such as Berger, Leonov, Domnich who spent a lot of time
dealing with the issue of studying the innovation system in China.
Secondly, different monographs have been used. Such as OECD Reviews of Innovation Policy, China,
Synthesis Report of the Ministry of Science and Technology of China and "Economic Strategy of China"
textbook written by Berger.
Third, Internet resources also were used for the study: such as the official website of the Ministry of Science
and Technology of China, China Encyclopedia, the official website of the media "Renmin Ribao" newspaper
CNTV channel.
Of particular importance are the documents: texts of programs of scientific research and development of
high technology, where you can clearly see the Government of China set goals, objectives and methods to
achieve their goals.
This work is divided into three chapters: The first one is about periodization of the state innovation policy,
second describes key programs for research and development of high technologies. Third one is about current
stage of innovation system in China, its advantages and disadvantages.

Key words: China, innovation policy, economy, science and technology

Table of Contents
Annotation...............................................................................................................................................................1
Key words: China, innovation policy, economy, science and technology...............................................................1
1. The periodization of the state innovation policy.................................................................................................3
Pre-reform period (1975-1978)............................................................................................................................3
"Experimental" period (1978-1985).....................................................................................................................3
The period of structural reforms (1985 - 1995)...................................................................................................4
2. Program for research and development of high technologies.............................................................................5
The Assault Plan...............................................................................................................................................5
The "Spark" plan..................................................................................................................................................5
The State Plan......................................................................................................................................................6
Research program of social development............................................................................................................6
The "863".............................................................................................................................................................6
The "Torch"..........................................................................................................................................................7
The program "Key Technologies"........................................................................................................................8
The "973".............................................................................................................................................................8
3. The current state of China's innovation system. Advantages and disadvantages................................................9
Advantages...........................................................................................................................................................9
Disadvantages....................................................................................................................................................12
Conclusion.............................................................................................................................................................12
References:............................................................................................................................................................13

1. The periodization of the state innovation policy

Scientific and technological progress recognized worldwide as the most important factor in economic
development, more and more often associated with the concept of the innovation process.
Thus, innovation policy has become an integral part of the overall policy of any state.
According to Russian authors such as Leonov and Domnich, the history of China can distinguish 5 steps of the
state innovation policy.

Pre-reform period (1975-1978)

As the first period of the innovation policy in China can be identified as pre-reform period (1975-1978).
This period is characterized by ideological barriers to overcome in terms of innovation management. The most
important instrument of innovation policy was direct state orders for scientific research organizations and for
the purchase of foreign technology in the form of complete sets of equipment for industrial companies. The
Higher School sector only performs the functions of professional training.
Therefore, in the 70s 40% of scientific themes developed in China, duplicated research which overseas
already received the results and many scientific research institutions in the final stages of development faced
with competition from imported ready-made counterparts. As a result, there was created the situation "where
enterprises are innovative, science is backward." (Leonov et al, 2010) In addition, the experience of market
reforms in the country was absent.

"Experimental" period (1978-1985)

After 1978 the basic principles of a market-oriented economy began to be used in conducting the state
policy in science and technology. There is the restoration and development of research and development, the
integration of methods and tools for development of R&D 6th National five-year plan (1980 - 1985) (Huang,
2004).
For this period is characterized by trial experiments on the organization of cooperation on the basis of
cost-accounting between state agencies and major institutional sectors within the institutional sectors and
institutional sectors with each other.
The country's leaders announced the formation of a multi-level process of preserving a combination of
traditional and high-tech. There was a certain liberalization of the sources of funding for research and
development, and the partial withdrawal of state control in the system of foreign economic activity resulted in a
number of industrial enterprises to buy on their own the necessary equipment and technology from abroad. They
were opened to foreign capital special economic zones, and then most of the major coastal towns (Leonov et al,
2010).

The period of structural reforms (1985 - 1995)

At that time there was a break-up of a centralized mechanism for the continuous financing of science on
a broad front of research. A grant system was introduced to support science; there was an association of research
organizations. There is the establishment of regular horizontal ties of scientific and technical sectors and
businesses replaced the old system of financing science and technological development, previously based on the
government's plans, the system of state programs state reduces the size of grants to force research and
development institutions to cooperate with enterprises. Private high technology companies are beginning to be
established on the basis of scientific research institutes and universities. The country begins to develop the
market of intellectual property.
In the period under review in China begins the accumulation of experience of large-scale downstream
market reforms "top down", developed and implemented international standards of statistical observation of
scientific and technological activities.
In the period of 1995-2005 against the backdrop of rapid economic growth and increasing technological
competition in domestic and international market is deepening the reform of innovation policy in China:
increasing research intensity of GDP due to the active investment of the business sector, in parallel carried out
step by step the privatization of industrial enterprises and scientific organizations, the law greatly expanded
opportunities for the commercialization of the newly created technologies for state universities. In addition, has
been developed a new form of direct public funding of innovation, covering additional areas of the innovation
cycle, introduced specific tax incentives for high-tech industries, much expanded participation of foreign capital
in the technological modernization of the country, including in the interior regions due to withdrawal of a
number of regional and sectoral restrictions. By the end of the 90 R&D institutions finally provided a
comprehensive economic autonomy. R&D institutions start converting into enterprises, non-profit
organizations, intermediary organizations, and there is an association with their universities (Huang, 2004).
Thus, the Chinese government quickly accumulates practical experience in implementing innovation
policies, especially through intensive development of international experience, the expansion of international
contacts through membership in the WTO.
Since 2006, with the adoption of the "Basis of state plan of medium-term long-term development of
science and technology for 2006 - 2020" the innovation policy in China has entered a new period, which
continues nowadays. The purpose of this period is to ensure the sustainability of the current predetermined path
and economical development. The most important qualitative objectives of innovation policy in the period up to
2020 are to strengthen innovation receptivity use of science and technology in socio-economic development and
national security, which will increase the total capacity of the country to carry out basic research and
development at the forefront of science and technology (OECD, 2007).

2. Program for research and development of high technologies

The main course of development of China today is the strict adherence to the concept, which has
developed Deng Xiaoping: "Science and technology is the most important productive force" (Chang, 1996).
Thus, the implementation of the strategy of "lifting the country's reliance on science and education" is the
biggest task of the Chinese government. In accordance with the basic course and the strategic objectives of the
development of science and technology in China, the state has implemented the overall planning work in
science and technology, creating the following three-tier model of development: "Innovative research, high-tech
development and the creation of high and new technologies, as well as strengthening Basic Research". (Chinese
embassy in Russia, 2007) At the same time the 80s, a number of government programs are implemented for the
development of scientific and technical research aimed at improving all aspects of the competitiveness of China
in the strategically important areas of science and technology in the twenty-first century.
At the first level - a program of innovative scientific research focused on economic construction and
social development: Assault plan, program "Spark", the State Plan for the implementation of priority scientific
and technological achievements, scientific and technical program of social development.

The Assault Plan

A plan to address priority scientific and technical issues of national importance, adopted in 1982. The
main objective of the plan is to solve the large and important scientific and technical problems of economic
development through the mastery of storming key technologies and technologies of general application, which
act as the pillars of social and economic development.

The "Spark" plan

A program, the main objective of which is to learn advanced agricultural techniques, the use of this
technique in the villages, helping farmers in agricultural development, promotion of scientific and technological
progress in rural enterprises, improving the training of rural workers, as well as the promotion of a stable, rapid
and healthy development of agriculture and the rural economy. The program was adopted in 1986.
Giving it the name, the scientists hoped that "the spark of new technologies will flare up the progress in
agriculture." (CRJ, 2006) Implementation of the plan "Spark" greatly advanced the development of modern
agriculture, increased farmers' incomes. Today, this program implemented over 140 thousand projects, covering
about 90% of counties and cities in the rural areas of the country (Zhongguo Wang, 2003). Through the
program, more than 850 thousand inhabitants Qianxinan Buyei and Miao Autonomous Prefecture of Guizhou
Province have got rid of poverty (Partners, 2005).

The State Plan

The State Plan prioritized the introduction of scientific and technological achievements - a plan whose
goal is to create a favorable global environment and conditions for the orderly and systematic introduction of
advanced ready-to-use science and technology to promote the close connection of science and technology with
the economy. The plan was adopted in 1990.

Research program of social development

A program designed for the period 1996-2010 year, which aims to improve the quality of life and the
natural qualities of the people, improve the environment of existence and development of man, the regulation of
relations between man and nature, the promotion of scientific and technological progress in the social system
and related industries, the promotion of the progressive development of the strategy, outlined by the Chinese
government. Main covered by the program areas: population, health care and sanitation, natural resource
management and protection, protection and improvement of the ecological environment; preventive measures
against natural disasters; housing and urban and rural construction.
At the second level - the program of development of high technology and education industry and high
technologies: the program "863" and "Torch".

The "863"
A state program for research and development in high technology was adopted in 1986. The main task giving China the role of locomotive in the development of high technology, so that in the period since 2000 to
create conditions for education has certain advantages of the technology industry, as well as prepare the
groundwork for a stable sustainable development of the economy on a higher level. Also, the plan emphasizes
the importance of achieving a breakthrough in the key technical areas (Ministry of Science and Technology of
China, 2002).
The program aims to stimulate the development of advanced technologies in the various fields of
research. The main objective of the 863 is the independence of the state from the import of foreign
technologies.
Based on global trends in the development of high technology, given the volume of consumption and the
potential of China's key points of research and development in the "Plan 863" became the 7 regions and 15
topics such as biological, space, information, laser, automatic, power equipment and machinery new materials .
Through the implementation of the Program "863" in China has gradually formed a strategy for research
and development of high technology that meets the real situation in China, also a number of database
development technology-intensive products has been created, to cultivate a new generation of personnel for
work in the technology-intensive sector, has achieved a number of scientific and technological achievements of

the international level. During the implementation of the "863" level of research and development of high
technologies markedly increased scientific and technological power of China. (CRJ, 2006)

The "Torch"
A program for the development of high and new technologies adopted in1988. The program is aimed at
identifying the benefits of scientific and technological potential of China and promoting the commercialization
of achievements in the field of high and new technologies, the industrialization of the production of goods of
high and new technologies and the internationalization of the industry of these technologies (CRJ, 2006).
China's State plan for the dissemination of the achievements in the field of new technologies, science
and technology "Torch" is a plan for the development of leading technology-intensive industry. The purpose of
the plan - identify the advantages and potential of China's scientific and technological base, create the most
favorable conditions for the development of basic and applied research in the Chinese science and technology,
promotion of technology-intensive achievements in production, removal of the company technology-intensive
industry on the international market (Domnich, 2006).
Key areas include: electronics, computer science, biology, new materials, actin electricity and electrical
actuators, alternative energy, energy saving and environmental protection.
The main objective of the "Torch" is not only the development of national science and technology, and the rapid
introduction of advanced domestic developments. Although formally the joint ventures are considered to be
admitted to participation in this program, this program is actually still closed to foreign participation.
It is the program "Torch that enabled China in record time to raise its own science and technology and
export-oriented high-tech industry. By the mid-90s, many high-tech products and technology-intensive, going
for 100 percent of Chinese parts. In addition, there was an unprecedented increase in the number of joint
ventures, import advanced technology and knowledge-based growth of technically sophisticated products,
especially household purpose. However, in many sectors, particularly in electronics and IT, China still lags far
behind advanced countries.
To date, China has set up in the framework of 54 state enterprises in the development zone of high and
new technologies (Skolkovo, 2011). These zones have become important points of growth in the development
of new technologies in China, there has been created a number of large enterprises. In addition to high-tech
zones have been established science parks, incubators, inside of which are tens of thousands of high-tech
enterprises, which generate millions of jobs (Huang, 2008).
The main results of the "Torch" is the development and implementation of the mechanism of the
economic realization of comparative regional advantages, social support for highly qualified workers in the
structural transformation of scientific-industrial complex, accelerating the diffusion of new, cost-effective
knowledge of the national economy, in part to overcome the technological backwardness of the country
international level (Domnich, 2006).

At the third level - the scientific and technical program to strengthen basic scientific research - the
program "Key Technologies" and the program "973".

The program "Key Technologies"

Is the first national program for the development of science and technology in China, adopted in 1982.
The program is mainly addressed to the problems of science and technology in the framework of national
economic construction and social development. The program "Key Technologies" should contribute to the
technological modernization and restructuring of industry, and also must deal with the main technical problems
of public welfare. It should help to achieve breakthroughs in key technologies, introducing technical innovation,
and applying high and new technology.
The main objectives of the plan are: the development of many key technologies and products for
sustainable agricultural development, environmental protection, rational use of resources, the development of
the manufacturing industry, the modernization of traditional Chinese medicine, improving the living standards
of the Chinese people (Ministry of Science and Technology of China, 2011).
The program "Key Technologies" highlighted in the strategically important area of expertise and
removed the technological gap.. The research program had significant support from the state budget funding for
universities and research institutes, and its performance is evaluated on the scientific knowledge (articles and
patents), obtained as a result of the survey (Leonov, 2010).
The program "Key Technologies" has made a significant contribution to technical renovation and
modernization of traditional industries and the creation of new industries. The program has accelerated
sustainable development of Chinese society, increased national strength and the ability to own innovations.

The "973"
Is a state plan of China of basic scientific and technological research. The plan began to be implemented
in March 1997. The main goal of the program is effort of basic research in line with national strategic
objectives.
The program should mobilize scientific talents in China to carry out innovative research on scientific
problems mainly agriculture, energy, IT, the scope of resources and environment, population and health,
materials, which are closely connected with the national economy, social development and scientific and
technological development of the country. The plan shall be based on an integrated multidisciplinary research,
provide a theoretical foundation and scientific basis for resolving the issues (Huang, 2008).
To date, the Chinese government has invested in the implementation of the Program "973" resources
worth several billion Yuan and commissioned more than 300 objects. A number of sites have already had some
success. Achievements of Chinese scientists in the field of nanotechnology, genetics, the study of the human
brain, paleontology are known throughout the world (CRJ, 2006).

Thus, China has adopted a range of government programs of scientific and technological development
that by the year 2000 visibly increased the contribution rate of science and technology in economic growth.
Economic construction and social development has to rely on scientific and technological progress and
improving the quality of workers.
By 2011, there is a further strengthening and improvement of basically created a new system of science
and technology, the implementation of a close connection of science and technology with the economy, the
completion of the formation of the structure of the integration of science and technology with the economy, the
emergence of China on the scientific and technical level in the category of 10 world scientific-technical powers
(Chinese embassy in Russia, 2012).
For 20 years, the reform of the system of science and technology of China has undergone profound
changes, significantly increased scientific and technological strength and its level. This is largely reflected in the
adoption in 2006 of "the basis of the state plan for medium and long term science and technology development
for 2006 - 2020".

3. The current state of China's innovation system. Advantages and disadvantages

The plan has been implemented in 2006 and already begun to yield results. Over the past 5 years it has
become clear in which areas, China has made significant progress.

Advantages
After the adoption of the Plan 2006-2020 investments significantly increased in R&D and China rose to
5th place in terms of their financing.
China has rapidly created high-tech and parks and incubators. According to the number of incubators,
China is now the 2nd place after the United States (Berger, 2009). At present, China has more than 120
industrial parks at various levels, including 54 zones - a zone of new and high-tech state-level with attractive tax
benefits for investors among which are the three major areas - Zhongguancun in Beijing, Zhangjiang in
Shanghai in the area of Pudong and Shenzhen SEZ, where is concentrated most of the high-tech enterprises,
whose products are competitive on the world market (Sample China, 2014).
For the creation and development of new zones and high technology there should be certain conditions.
One is government support for the project, which includes aspects such as the adoption of new laws for the
development of areas of new and high technologies, favorable financial conditions for the development of the
zone, providing tax incentives and the attraction of venture investments by private investors. As international
experience shows, mainly in the success of the project development areas of new and high technologies is the
concentration of intellectual resources - research institutions, universities, centers of technology development,
design offices, which is crucial for rapid growth. Another just as important condition is the availability of the

necessary innovative mechanism, which would ensure the involvement of leading scientists, designers,
engineers and technicians in the process of practical implementation of advanced science and technology
(Skolkovo, 2011).
In recent years, significant results were obtained, contributing to the development of science and
technology in China through the development of areas of new and high technologies. First of all, in these zones
have been created favorable conditions for the introduction into production of science and technology in the socalled "incubators" for venture capital investments, a mechanism for implementation in production of science
and technology, which provides a mix of new and high technology to the market to work in these areas to attract
professionals who have been trained abroad and entrepreneurs with new thinking. The necessary investments
have been made for the development of enterprises, not only from the government but also individuals who
have invested in the area, not only their knowledge, but also the capital (Skolkovo, 2011).
Foreign scientists were attracted to create Chinese industrial parks abroad. To date, the Ministry of
Science and Technology has established five industrial parks abroad, namely in Singapore, Maryland, USA,
UK, Cambridge and Manchester, as well as in Moscow. According to incomplete statistics, during the 10th
"Five-Year" in China were invited more than 270 thousand foreign experts in the fields of agriculture, industry,
energy, environment, health and trade. China plans to attract 200 foreign researchers and highly advanced
expert biologists (SAI, 2012).
Another means of filling shortage of highly qualified personnel is to attract Chinese aimed to study or
internship abroad in advanced centers of science and education, and remain there to live and work. Another
channel to attract highly qualified staff to the country's immigration policy is a China focused primarily on the
Chinese diaspora. It is in this environment, China is looking for highly qualified personnel to work in China
(Biryukov, 2011).
In addition to attracting staff from abroad, China is preparing more and more of their own experts. Each
year, an increasing number of researchers, graduates, a growing number of scientific publications and patents is
obtained by Chinese researchers. According to the number of researchers, China is second only to the United
States. In addition, a growing number of patents are received by Chinese scientists. By the number of patents
China has the 4th position in the world after the US, Japan and South Korea. In China, there are more patented
inventions in natural products and polymers, followed by patents in the computer field. There are a growing
number of scientific publications and Chinese researchers.
The Academic Ranking of World Universities has increased significantly for the Chinese universities.
Leading universities participate in government programs, if universities are science and technology companies,
parks, incubators. Venture capital firms invest heavily in the leading universities in China (Berger, 2009).
In recent years, began an extensive integration of leading research institutions and universities with large
industrial enterprises. In 2007, four of these were created by industrial and research alliances in metallurgy, coal
mining, chemical industry and agricultural engineering (Berger, 2009).

China has made significant progress in the field of biotechnology, corpuscular physics, energy,
materials, biology, chemistry, and integrated circuits. China has become the fourth after the United States,
Russia and Japan, a state with a new micro jet space rocket engine, and the fifth, after Russia, the US, France
and Japan, a country able to independently design, produce and launch satellites. In addition, Chinese scientists
have received outstanding results in the development of artificial intelligence. Chinese scientists have been
invited to participate in the study of the human genome. Their participation in this major research project rather
stimulated the development of science in China in one of the most important areas. China has outstanding
achievements in the field of biotechnology (Biryukov, 2011).
The country developed a state innovation system in the field of science and technology, which are an
important element of basic research, the creation of the necessary infrastructure for R&D. There have been
major shifts in the areas of science and technology such as independent design and manufacture of integrated
circuit chips, the development of third generation mobile communication, production of high quality synthetic
materials, designing high-end machine tools with numerical control. It is expected that China, based on its
economic potential and rich mineral and biological resources, will be able to make a breakthrough in the
development of knowledge-intensive industries, including IT, biotechnology and nano-technology,
pharmaceuticals, nuclear, "clean" coal and hydrogen power engineering, space research (Dee, 2007).
In 2006, it was announced the beginning of the project EUChinaGrid, which is to unite the network of the EU
and China (Biryukov, 2011).
In February 2011, Chinese Academy of Sciences approved the plan "Innovation 2020", which defines
the vector of development and research for academic institutions in China, and also poses a number of strategic
objectives towards which the country's scientists will seek in the medium term. Approval of the plan of
scientific development "Innovation 2020" has become a part and a reflection of China's ambitions for the
development of high-tech industries. After numerous discussions and negotiations with hundreds of scientists
and experts, Chinese Academy of Sciences has selected eight research projects - they were called the basic and
relevant. Among them - the developments in the field of space exploration, the study of stem cells and
regenerative medicine, as well as the operation of clean energy sources. Now academics discuss which other
projects should be included in the priority list.
Bai Chunli, Executive Vice-Chairman of the Chinese Academy of Sciences: "All of these projects are in
the fundamental and even to some extent futuristic planes. Their implementation within ten years or over a
longer period of time can lead to the emergence of new industrial areas and the revolution in the old . All of
them will help to meet the strategic challenges that our country faces." Chinese Academy of Sciences
established the Center for Interdisciplinary Mathematical and Sciences, whose mission - to find purely
theoretical models and construct practical applications. The laws of mathematics are the new powers introduced
to the basics of the six disciplines, including biomedicine, electric power and environmental protection,
financial engineering (CTK, 2007).

Disadvantages
Despite some achievements, China's ability to self-innovative development is still assessed as
insufficient. Chinese enterprises are experiencing a serious shortage of qualified personnel able to conduct
research and development and to implement the results of research. Affect insufficient investment business in
the training of workers and the fact that state-owned enterprises are much smaller than foreign, ability to attract
capable managers and talented researchers. China is still very dependent on imported technology. It has still not
overcome the technological gap. Developed countries have almost completely control over the production and
R&D in the field of new and high technologies. Today, China is still far from full scale ready to compete in this
area with the West. In addition there are problems in the application of the law of China in the field of
intellectual property (Biryukov, 2011).
SOEs (State Owned Enterprise) have weak incentives to innovate, while the state-owned commercial
banks have no orientation to the credit support to small and medium-sized enterprises, in particular of the more
innovative and venture capital activities.
China has not yet become a country that is developing on the basis of knowledge and national
innovation system. But it is rapidly moving towards this goal. Given all the problems and shortcomings, it
should be noted that China will take a long time to rely primarily on their own innovations. To create a national
innovation system, China will have to go a long and difficult path. It will rebuild the science and technology
policy, to significantly expand and improve training. The effective functioning of the national innovation system
requires a comprehensive state support, including budgetary allocations, tax regulation, government
procurement, etc (Berger, 2009).

Conclusion
To develop an innovative system of China government since the beginning of the second half 70s of the
20th century and for the past 30 years has reached great success.
The main methods of the innovation system are creating their own innovation, the development of
foreign innovations, the development of foreign direct investment, the organization of scientific research,
training of qualified personnel, attracting professionals from other countries to attract foreign investment, as
well as the construction of parks and incubators of high technology both domestically and abroad.
For the organization of the formation of the Government of China's innovation system accepts a variety
of programs for research and development of high technology: The "Torch", "spark", "863", "973" plan 20062020 and others. These programs set specific goals, objectives to build innovation sphere, as well as define
methods for their achievement of these goals.

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