Dameisha Forum/Forum Opinions/Technological Innovation in China as a Condition for Sustainable Growth
Technological Innovation in China as a Condition for Sustainable Growth
Author： Source： Date：2017-09-01
Editor's notes: Mr. Meyer painted the picture of the current situation of technological development in terms of numbers and quality, and interpreted relevant government policies to encourage technological innovations. Though there are some drawbacks in China’s technological scene compared to developed countries, Mr. Meyer remains optimistic in China’s technological future.
Good morning. I'm very honored to speak to you today. I would like to thank the organizers for their kind invitation. I chose to speak about the essential role of innovation for China’s growth. In a way it’s a kind of paradox because many of you may be far more competent than I am in this respect. So my only goal is to bring to you a very frank and personal viewpoint and perception from a French economist, concerning the progress and prospects of innovation in China.
Innovation is the key element for global economy, and for each country and particularly true for China, taking into account the current economic background. The most important element is the decrease of productivity from 5% a year to 3 % since 2008. I will focus on three points. The first one is the present situation. Second one is the most recent governmental policies to foster innovation. And the last one is concerned with the reasons for my optimism regarding China’s technological future.
Current Situation
So first, the present situation. In accordance with the 2006 15-year science and technological plan, we have seen over the past decade quite remarkable progress. For example, the ratio of resources used for research and development has been increased from 1.5% of the GDP in 2005 to 2% in 2015 and should reach 2.5% in 2020. Second, the contribution rate of technology to economic growth has increased from 21% in 2010 to 55% in the past year. Third, China is now the No.1 in the world for patent applications. China has proved to be better in carrying out this very remarkable success. And more qualitatively we have seen a quick catching up in many sectors like aviation, railway, information technology, etc etc. I will speak on the two spectacular examples, which is the successful launching of the Long March 5 rocket yesterday night which opened the way to the man’s space. And second, the most powerful computer fully Chinese which is the so-called Sunway Taihu Light. So that’s for the success and progress.
Still, there’s in my opinion, a long way full of uncertainties to gain technological independence and leadership in innovation because China is still dependent on foreign technology. And the aim is to rise to, say, 70% ratios between domestic and foreign technologies in 2020 against, say, 30% in 2005. Second, if we look at the indicator of patent applications to measure the innovation activity, I mentioned that China is No.1 for the applications but most of them are domestic, which is to say in China. China is still weak for applications on a worldwide basis, in particular, for so-called triadic patents which are applied for simultaneously in Japan, in the US and in the EU. So China makes less than 4% in the triadic patents applications. Third, the financial and human resources are concentrated on applied research at the expense of fundamental research. So that’s the present situation.
Recent policies
Let's see now the most recent government policies. The 13th five-year plan for the period between 2016 and 2020 updated the 2006 plan with an emphasis on original innovation. Technological progress should contribute to 60% of the economic growth by 2020 from the current 55%. China should strengthen research in both basic and cutting-edge technology with a focus on two aspects. First one is core industries for national security: energy, information, space and space technology, marine science, etc. Second is on fields concerning people’s well-being through environment and medical sciences. Third point, enterprises should be the pillar of innovation which means private sector companies as well, of course SOEs, but provided the reforms underway for the latter will be carried on so as to boost innovation capacity. And collaboration between enterprises and institutes should be encouraged. In addition, the government adds two new national level development zones to encourage innovation, Fujian province and Anhui province, in addition to Beijing and Shanghai. This is connected to some extent to the so-called Internet+ strategy. We have seen revolution in retail industry through the Internet. So the aim of Internet+ strategy is to develop the use of Internet in the conventional industries as well. Additionally, as for manufacturing, it is the part of the so-called made-in-China 2025 Plan. That is to say digitalization and modernization of the manufacturing sector, and upgrading the production from consumer goods to equipment manufacturing.
China’s technological future
Third part concerns the reasons for my personal optimism. In addition to a very firm commitment, and a clear strategy, in my view, on the part of the authorities, I see two main reasons for optimism. The first one is the huge human and financial resources which are invested for this purpose. Human resources: the total number of university graduates is getting close to 100 million, while in 1990, it was only 16 million. Among this population, a very encouraging sign is that engineering and natural sciences are the most popular subjects, representing over 40% of enrollment, which, by the way, is not at all the case in my own country. Human resources but also financial resources: as I mentioned, it is 2% of the GDP in 2015 and we are getting to about 300 billion dollars in 2020. In addition to these direct investments and funds, we should also not forget one element, which is the cost of some acquisition of foreign companies, including also the acquisition of foreign technology. Let’s look at an example of the acquisition in 2010 of the Swedish company Volvo by GEELY, a Chinese private company. That involves, also, the acquisition of very important technologies for GEELY. The second reason for my optimism lies in the history, in the lessons of the past. My background before economics is in humanities, so I try to keep some matter of fact. So we should remember that China has been for many centuries and long before Europe the leading technological power in the world. That is the reason why I am fully confident that China will recover the remarkable creativity in which it has shown throughout its history. I would like to take the example of the four great inventions the so-called “四大发明” -- compass, paper making, printing and gunpowder which have been so brightly symbolized during the opening ceremony of 2008 Olympics in the Beijing.
In conclusion, I would like to say that I advise my students and my fellow academics to read economic and scientific history for judging theses questions of innovation in the world and in particular in China. Then, they will be convinced I think, that China will be, say by 2030, a leading technological power and possibly given its historical records, THE technological power. Thank you for your attention.
Claude Meyer is the senior advisor of the Center for Asian Studies of the French Institute of International Affairs,
Speech delivered at the Global Views and China's Economy session during the 3rd Dameisha Forum. Opinions expressed here belong to the author and do not necessarily represent the position of SZIDI.
Good morning. I'm very honored to speak to you today. I would like to thank the organizers for their kind invitation. I chose to speak about the essential role of innovation for China’s growth. In a way it’s a kind of paradox because many of you may be far more competent than I am in this respect. So my only goal is to bring to you a very frank and personal viewpoint and perception from a French economist, concerning the progress and prospects of innovation in China.
Innovation is the key element for global economy, and for each country and particularly true for China, taking into account the current economic background. The most important element is the decrease of productivity from 5% a year to 3 % since 2008. I will focus on three points. The first one is the present situation. Second one is the most recent governmental policies to foster innovation. And the last one is concerned with the reasons for my optimism regarding China’s technological future.
Current Situation
So first, the present situation. In accordance with the 2006 15-year science and technological plan, we have seen over the past decade quite remarkable progress. For example, the ratio of resources used for research and development has been increased from 1.5% of the GDP in 2005 to 2% in 2015 and should reach 2.5% in 2020. Second, the contribution rate of technology to economic growth has increased from 21% in 2010 to 55% in the past year. Third, China is now the No.1 in the world for patent applications. China has proved to be better in carrying out this very remarkable success. And more qualitatively we have seen a quick catching up in many sectors like aviation, railway, information technology, etc etc. I will speak on the two spectacular examples, which is the successful launching of the Long March 5 rocket yesterday night which opened the way to the man’s space. And second, the most powerful computer fully Chinese which is the so-called Sunway Taihu Light. So that’s for the success and progress.
Still, there’s in my opinion, a long way full of uncertainties to gain technological independence and leadership in innovation because China is still dependent on foreign technology. And the aim is to rise to, say, 70% ratios between domestic and foreign technologies in 2020 against, say, 30% in 2005. Second, if we look at the indicator of patent applications to measure the innovation activity, I mentioned that China is No.1 for the applications but most of them are domestic, which is to say in China. China is still weak for applications on a worldwide basis, in particular, for so-called triadic patents which are applied for simultaneously in Japan, in the US and in the EU. So China makes less than 4% in the triadic patents applications. Third, the financial and human resources are concentrated on applied research at the expense of fundamental research. So that’s the present situation.
Recent policies
Let's see now the most recent government policies. The 13th five-year plan for the period between 2016 and 2020 updated the 2006 plan with an emphasis on original innovation. Technological progress should contribute to 60% of the economic growth by 2020 from the current 55%. China should strengthen research in both basic and cutting-edge technology with a focus on two aspects. First one is core industries for national security: energy, information, space and space technology, marine science, etc. Second is on fields concerning people’s well-being through environment and medical sciences. Third point, enterprises should be the pillar of innovation which means private sector companies as well, of course SOEs, but provided the reforms underway for the latter will be carried on so as to boost innovation capacity. And collaboration between enterprises and institutes should be encouraged. In addition, the government adds two new national level development zones to encourage innovation, Fujian province and Anhui province, in addition to Beijing and Shanghai. This is connected to some extent to the so-called Internet+ strategy. We have seen revolution in retail industry through the Internet. So the aim of Internet+ strategy is to develop the use of Internet in the conventional industries as well. Additionally, as for manufacturing, it is the part of the so-called made-in-China 2025 Plan. That is to say digitalization and modernization of the manufacturing sector, and upgrading the production from consumer goods to equipment manufacturing.
China’s technological future
Third part concerns the reasons for my personal optimism. In addition to a very firm commitment, and a clear strategy, in my view, on the part of the authorities, I see two main reasons for optimism. The first one is the huge human and financial resources which are invested for this purpose. Human resources: the total number of university graduates is getting close to 100 million, while in 1990, it was only 16 million. Among this population, a very encouraging sign is that engineering and natural sciences are the most popular subjects, representing over 40% of enrollment, which, by the way, is not at all the case in my own country. Human resources but also financial resources: as I mentioned, it is 2% of the GDP in 2015 and we are getting to about 300 billion dollars in 2020. In addition to these direct investments and funds, we should also not forget one element, which is the cost of some acquisition of foreign companies, including also the acquisition of foreign technology. Let’s look at an example of the acquisition in 2010 of the Swedish company Volvo by GEELY, a Chinese private company. That involves, also, the acquisition of very important technologies for GEELY. The second reason for my optimism lies in the history, in the lessons of the past. My background before economics is in humanities, so I try to keep some matter of fact. So we should remember that China has been for many centuries and long before Europe the leading technological power in the world. That is the reason why I am fully confident that China will recover the remarkable creativity in which it has shown throughout its history. I would like to take the example of the four great inventions the so-called “四大发明” -- compass, paper making, printing and gunpowder which have been so brightly symbolized during the opening ceremony of 2008 Olympics in the Beijing.
In conclusion, I would like to say that I advise my students and my fellow academics to read economic and scientific history for judging theses questions of innovation in the world and in particular in China. Then, they will be convinced I think, that China will be, say by 2030, a leading technological power and possibly given its historical records, THE technological power. Thank you for your attention.
Claude Meyer is the senior advisor of the Center for Asian Studies of the French Institute of International Affairs,
Speech delivered at the Global Views and China's Economy session during the 3rd Dameisha Forum. Opinions expressed here belong to the author and do not necessarily represent the position of SZIDI.
