China's system and vision of innovation: analysis of the national medium- and long-term science and technology development plan (2006-2020)

Abstract

China has been characterised by extremely high rates of economic growth for the last several decades. This growth originates from a transformation of the institutional set up giving more room for regional initiative, private ownership and use of market mechanisms. Regional political resources have been aligned to globally oriented market resources and this alignment has established a very specific and unique mechanism of capital accumulation resulting in extremely high savings and investment rates. The downside of this growth model is its intensive exploitation of human and natural resources. While the rate of capital accumulation is extremely high (40-50% of GNP takes the form of gross savings and investment) non reproducible natural and social capital are suffering in the process of growth. Social and regional inequality has reached critical levels and so have ecological imbalances. The central leadership of China are aware of these problems and recent policy documents put strong emphasis on ‘harmonious development’ and ‘independent innovation’ (Gu and Lundvall 2006). In China the transformation of the national innovation system is now regarded as a major step toward a necessary renewal of the growth model. This paper presents a general framework for the analysis of national innovation system, a historical overview over the development of China’s production and innovation system and ends up with a discussion of the National Medium- and Long-term Science and Technology Development Plan (2006-2020). We conclude that the plan represents steps forward in important respects. This is true for the emphasis on need driven innovation policy with focus on energy and environment, the stronger role for enterprises as hosts of R&D-efforts and innovation, a more active role for public procurement and a more realistic understanding of the limits of science as source of innovation. But the plan has some weaknesses and needs to be complemented with other initiatives. There is exaggerated technology optimism and the need for institutional and organisational change at the level of the enterprise is underestimated. In some cases the policy instruments and tools seem to be inadequate when related to the very ambitious targets set by the plan. Especially problematic is the absence of an explicit analysis of the regional dimension and the need to upgrade working life in terms of skills and organisation. The fact that a knowledge based strategy, if left to itself, leads to further social and regional polarisation is not taken into account. Finally how the idea of ‘indigenous innovation’ will be implemented is crucial both for the success of the plan and for China’s relationships with the rest of the world.