Road to being a global innovation leader

Over the next 15 years, China should strive to close the gap with the current global innovation leaders

According to the communiqué of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China, by 2035 China's economic and technological strength will have increased significantly and it should be a global leader in innovation.

Despite a sustained and substantial rise in total research and development expenditure, China's R&D intensity has much room to be further increased. In 2017, China's R&D spending accounted for 2.13 percent of its GDP, lower than the 2.79 percent of the United States, 3.2 percent of Japan, 3.02 percent of Germany and 4.55 percent of the Republic of Korea. China's R&D personnel intensity also lags far behind the global leaders in innovation, although the total number of R&D personnel ranks top in the world. And despite the quantity, the quality of Chinese patents is far below that of global innovation leaders.

China's science and technology research papers also have the problem of high quantity and low quality. According to the Essential Science Indicators, the total number of Chinese scientific research papers reached 2,407,339 in the first 10 months of 2018, ranking the second-highest in the world. However, the average number of citations per paper was much lower than that for the UK, the US, German, French and Japanese papers.

China has not invested enough in basic research. In 2017, China's spending on basic research only accounted for 0.12 percent of its GDP, lower than the 0.47 percent of the US, 0.42 percent of Japan and 0.66 percent of the ROK. Furthermore, the R&D intensity of higher education institutions is insufficient, and their expenditures on basic research in total R&D spending is relatively low. In 2017, R&D expenditures by Chinese higher education institutions accounted for a meager 0.15 percent of China's GDP, much lower than the 0.38 percent of the US, 0.52 percent of Germany and 0.39 percent of the ROK.

Higher education institutions are the main body for carrying out basic research, but the input of Chinese higher education institutions in basic research is far from enough. The proportion of Chinese companies' expenditures in basic research is too low as well. Collaboration between enterprises, universities and research institutes also needs further promoting. Chinese enterprises' R&D collaboration degree with universities stood at 4.4 points with no major changes over the five years from 2012 to 2017, lower than the global leaders in innovation such as the US (5.7), Germany (5.4) and the UK (5.4).

The ecosystem for innovation also lags behind the global leaders in innovation. China needs to strengthen its protection of intellectual property rights. China has a much lower efficiency in protecting IP rights and settling IP disputes than the global leaders in innovation. According to the Global Competitiveness Report, China scored 4.5 in IP protection while the United States scored 5.8, Japan scored 5.8, Germany scored 5.7 and the United Kingdom scored 6.2.

In light of these three weaknesses, China should transform its technological innovation mechanism from one that values the quantity of innovation toward one that pays more attention to the quality.

The evaluation mechanism should be optimized to improve the quality of Chinese innovation. To promote innovation-driven and high-quality development, China should reform its evaluation system for achievements in scientific research to stimulate the motivation of scientific research personnel. Chinese colleges, universities and research institutes should carry out reform to change the mindset of scientific research personnel from the pursuit of quick success and instant benefits. Meanwhile, colleges, universities and research institutes should reform their research evaluation system by increasing the weight of indexes such as the ratings and citation ratios of papers, instead of paying too much attention to the number of papers published.

Investment in basic research, the source of technological innovation, is investment in a country's future competitiveness. The government should therefore increase the proportion of basic research expenditures in total R&D expenditures, as basic research entails long-term, high-risk investment and has positive externalities. It should significantly increase its support for the basic research endeavors of colleges, universities and research institutes. Greater significance should be attached to long-term investment in the basic research capabilities of universities.

Chinese businesses should also play a bigger role in basic research. The government should guide and encourage banks, venture capital and institutional investors to participate so as to increase the investment of Chinese enterprises in basic research. The tax burden on small-and medium-sized R&D-focused companies should be alleviated to create a better environment for them to grow.

Collaboration between companies, universities and research institutes should be encouraged. The national key labs and national engineering research centers should be utilized to support industry-leading enterprises to carry out basic research and basic technology research and development to establish a long-term incentive mechanism to promote more collaboration between companies and universities. The mechanism for setting up a scientific research project should be improved to increase the involvement of enterprises on shouldering and participating in demand-oriented basic research projects.

Finally, China should strengthen its IP protection.

China should actively promote the alignment of China's IP protection system with the international IP system, raise the patent examination standards, improve the compensation mechanism for damages from IPR infringements and make contributions to the formation of a just global IP protection system. It should realize coordination between the localization and internationalization of IP-related laws to the greatest extent, and actively take part in the formulation of international IP rules and participate in judicial exchanges on IP.

Over the next 15 years, by making the necessary changes, China can build on the foundation created by realizing a moderately prosperous society to become a powerhouse for innovation.

The author is an associate researcher with the National School of Development at Peking University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.