The Chinese State and Its Role in Shaping China’s Innovation System

Abstract

The Chinese leadership initiated a comprehensive reform of the management of science and technology (S&T) in the 1980s, with the explicit aim of developing a dynamic innovation system that could help the Chinese economy catch up with advanced industrialized countries. One key element of the reform has been to expand the funding of research and development (R&D) so that investment in R&D as a ratio of GDP tripled from 0.6 percent in 1996 to 1.8 percent in 2010; considering the exponential growth rate of GDP during this period, the resources available for innovation in China are now considerable. Much of the expansion has been driven by public funding, but the proportion of investments by industry has also gone up. Another key element has been the growth of human resources for innovation, which has been developed rapidly through the educational system and the role of Chinese trained abroad. The People’s Republic of China has succeeded in using an approach akin to those of other developmental states to steer the economy toward an innovative economy, even if it is not considered an archetypical example of the developmental state model (Evans 2011). This chapter will first briefly review the legacies that the Chinese leadership faced in the late 1970s, when the reforms of the economy were initiated. Second, the transformation of the Chinese innovation system during three decades will be described, and I will analyze how the key policy initiatives and state—business interaction at various levels of Chinese society have led to the current state of innovation. However, the question remains open as to whether China’s recent experience represents a proper example of the “developmental state” model.