Transcript A preliminary evaluation of indigenous innovation of China

A Preliminary Evaluation of
Indigenous Innovation Policy of China
Xielin LIU, PHD
Professor in Graduate University of
Chinese Academy of Sciences
[email protected]
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Outline
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Achievement of innovation and challenge
New strategy for 2020: indigenous innovation
Evaluation of indigenous innovation policy
Implication of standard setting
Conclusion
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Share of High-tech exporting of the world
25.00
20.00
China
15.00
USA
10.00
Japan
Germany
Korea
UK
5.00
0.00
India
Source: NSF: Science and Engineering indicator, 2006.
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Accelerated catch-up in R&D intensity
GERD as a percentage of GDP,1990-2006,%
Source: ECD MSTI database 2006/2.
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R&D Intensity in 2004 and Annual Average
Growth Rate of R&D Intensity*,1999-2004
Source: Euro stat, “R&D expenditure in Europe”, Statistics in Focus, European Communities,June,2006.
* R&D intensity is R&D expenditure as a percentage of GDP
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Surge in applications for Chinese patents
1995-2006
Source: Chinese S&T Yellow Book 2004, and MOST website most.org.cn
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The number of invention patents granted to
Chinese actors has risen rapidly
Source: Chinese S&T Yellow Book 2004, and MOST website most.org.cn
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Summing up: a simplistic input-output
account,1995-2004/05
Source: China S&T Statistical Yearbook 2005, China Yellow Book on S&T 2004, China Foreign Investment
Report 2005, and MOST website most.org.cn
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Challenge
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Cost driven strategy, limit profit margin, trapped by
IPR, standards and high royalty for licensing
technology.
Poor innovation capability in industrial level. No
internationally competitive company.
High reliance of foreign technology supply in key
industry, such as chips, software, machine tool,
engine etc.
Technological dominance of multinationals in
domestic industry
No leading edge scientists and research in China
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Strategic goal of indigenous innovation policy
for 2020
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Solid improvement of capability of S&T to promote
economic and social development.
To master the leading edge industrial technology
and decrease the reliance to foreign technology
To promote the enterprise from cost-driven to
innovation driven.
Achievement of S&T results with global impact.
Make China of innovative countries in the world
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1999—2004 R&D/GDP
Year
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2020
R&D/GDP（%） 0.76
0.90
0.95
1.07
1.13
1.23
1.34
1.42
1.49
1.52
2.5
Source: China S&T Database of MOST sts.org.cn
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16 Target technologies for 2020
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General CPU
New broad wireless mobile telecommunication
High end digital machine tools
Nuclear station
New drugs
Large Airplane
Moon flight
Trans-genetics products
Anti-HIV and other dieses
…
Those project intend to start in a time before 2020 one
by one. But financial crises kicked off those mega
projects earlier.
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Procurement to promote indigenous
innovation
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Priority for indigenous innovative products in public
procurement
More than 30% of technology and equipments buying
should go to domestic equipment if using public
money
Giving indigenous products some price advantage in
procurement
Identification needed before implementation of the
policy.
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Improvement of Special tax policy
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150% underwriting for R&D expenditure before tax
but with conditions 10% of R&D increase, a
company in profit, cannot use the tax benefit to
other year.
Now all the conditions are cancelled.
No profit required
No 10% increase is necessary
Can write off the benefits in next three years.
One income tax policy for domestic and foreign
companies in China
High-tech company can enjoy free income tax for
the first two years and half for next three years after
its profit year.
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Tax for high tech industry
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Free income, operating, real estate and land tax in a
given period for incubators and university science
parks to encourage start-up firms.
For VC company, there will be tax reducing for
investment revenue and income, but not specific this
time, intending to promote VC in China.
Policy bank can invest in high-tech companies by
using equity share.
Second board for SME, started from 2009.
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More support to IPR and standard setting
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Strongly Support TD-SCDMA: push China
Mobile to launch out TD-SCDMA. The effect
is not yet sure.
Take standard and IPR as important indicator
of achievement of government R&D project.
Direct support to enterprises for next
generation technology and standards.
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Evaluation of indigenous policy
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Accelerating of R&D investments: yes
National R&D expenditure
One billion of US dollar
2001
National R&D
expenditure
12.6
2002
15.56
2003
18.6
2004
2005
23.74
30.36
2006
38.5
2007
50.82
2008
66.23
Source: Data Bank of MOST. most.gov.cn, NBS, MOST and MOB (2009). Bulletin of national S&T expenditure
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More money for applied research and product
development
National S&T programs
One million of US dollar
2001
973 Basic Research
2002
2003
2004
2005
2006
2007
2008
71.2
82.8
96.6
108.3
121.8
173.6
225.5
275.4
Key Technologies R&D
program
127.2
161.6
162.5
195.0
201.3
384.6
745.4
734.8
High-tech program (863)
301.9
305.9
1147.8
National Key Experimental
Lab Program
15.7
15.7
15.7
15.7
16.6
27.7
21.9
23.3
Innovation fund for SME
94.6
65.2
80.2
99.9
122.5
108.1
172.1
211.6
1122.3 1409.6
Source: MOST, China Science and Technology Development Report, 2006.China S&T Literature Press.
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More money for experimental development,
Less money for basic research
Basic
Research(%)
Applied
Research(%)
Experimental
Development(%)
1995
5.18
26.39
68.43
0.57
2000
5.22
16.96
77.82
0.90
2005
5.36
17.70
76.95
1.34
2006
5.19
16.28
78.53
1.42
2007
4.70
13.29
82.01
1.49
2008
4.40*
of GDP
Source: 2008 Statistical Yearbook of China's science and technology. *NBS, MOST and MOB (2009)
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Industry has taken a role in innovation system
as counterparts in developed country
Some countries’ R&D expenditure structure in 2006
Item
China USA Japan Turkey Austria Czech Korea
Russian
Financed by
Industry(%)
69. 1 64. 9
77. 1
46. 1
46. 7
56. 9
75. 5
28. 8
Financed by
Government(%)
24. 7 29. 3
16. 2
48. 6
37. 4
39. 0
23. 1
61. 1
6. 8
5. 3
15. 9
4. 2
1. 5
10. 1
Financed by
Other
Sources(%)
6. 2
5. 8
Source:2008 Statistical Yearbook of China's science and technology.
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All enterprises began to speed up their R&D
investment, but the R&D investment gap between
SOE and non-state enterprises is widening fast, why?
4500
4000
State-owned Enterprises
3500
3000
Non State-owned
Enterprises
2500
2000
Enterprises with Funds
from Hongkong Macau
and Taiwan
Foreign Funded
Enterprises
1500
1000
500
0
2002
2003
2004
2005
Source: China S&T Statistical Yearbook 2003-2008.
2006
2007
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Business R&D in China 1995-2005
Source: China S&T Statistical Yearbook 2003-2008.
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Chinese scientific publications are growing
exponentially.
Chinese-authored publications included in Science
Citation Index and Engineering Index, 1997-2005
Source: MOST online database, and China S&T Statistical Yearbook 2005.
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China’s emerging presence in nanoscience:
papers.
Source: A comparative bibliometric study of several nanoscience ‘giants’ [J]. Research Policy,2007
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Patents granted in USA of China, Japan Korea
and Taiwan
Year
China
Japan
Korea
Taiwan
1996
78
24355
1603
2477
1997
103
24498
2027
2678
1998
133
32543
3427
3911
1999
172
32928
3741
4664
2000
274
33387
3560
5976
2001
472
35417
3849
6685
2002
626
36860
4100
6883
2003
724
37744
4246
6846
2004
951
37568
4769
7435
2005
963
32243
4696
6172
2006
1621
39954
6634
8241
2007
1827
36452
7465
7759
2008
2653
37250
8924
8126
Source: Online database of United States patent and trademark office.www.patft.uspto.gov
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USPTO Patenting by year for Various
Nations,1963-2004
USPTO Patenting by Year for Various Nations, 1963-2004
100000
Korea
Taiwan
Japan
USA
China
India
Mexico
10000
1000
100
10
19
63
19
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
20
02
1
China
India
Source: Online database of United States patent and trademark office.www.patft.uspto.gov
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Conclusion and discussion:
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The government spends more on applied science,
experimental development and mega projects as ways
of promoting innovation, in the same time, the share of
expenditure for basic science has been decreased.
But this will not lead more radical innovation and
standard setting in long run.
Foreign related enterprises remain in key innovation
performance indicators, even much faster to spend R&D
in China from 2003 on. It means that after indigenous
innovation policy, foreign company are not intended to
leave, vice versa, they are determined to be more
localized.
So, we can forecast that in near future, foreign company
will continuously be the main actor in industrial standard
setting.
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Conclusion and discussion 2
The gap of needs and the power in standard setting
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SOEs have been accumulating their innovation capability,
but lots of indicator show that State-owned enterprises
have lost their dominant position of innovation. Though
the current innovation policy favors SOEs, but the
regulation of SOEs and their monopoly position
restrained them to be innovation driven. They have the
power to implement standards, but do not have the
incentive to get it.
Private enterprises are the fast runner to build innovation
capability, though they enjoy less direct support from
government. They need standards to win out in the
market competition, but they are relatively weak to do so.
So, Chinese companies are the weak stakeholders
in standard setting.
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Conclusion and discussion 3:market size
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Market size is the key for standard setting?
Lots of scholars argue that the size of
Chinese market can nurture lots of standards
if China is willing to in software,
telecommunication, etc.
But the touch situation of TD-SCDMA shows
that just market size is not enough to lead to
standard setting and control.
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