China in Transition

China Becoming a Major Innovation Power:
Research and development capabilities approaching those of developed countries

Chi Hung KWAN
Consulting Fellow, RIETI

Since shifting to policies of reform and opening up at the end of the 1970s, China has accomplished strong economic growth by leveraging its abundant labor force. With labor shortage becoming pronounced, however, the potential growth rate has declined significantly. In response, the government is seeking to transform the country's economic development pattern from one based on expansion labor input to one based on productivity growth by pursuing "the strategy of innovation-driven development."

Innovation in China includes (1) original innovation (basic inventions or the invention of core technology and its application), (2) innovation through technology integration (creating a new product or a new management method by organically combining existing technologies), and (3) introduction, digestion, absorption, and re-innovation (Note 1). While China has been emphasizing innovation centered on those in (2) and (3), capabilities in terms of (1) are also increasing. In addition to technological innovation, innovation in products, services, organizations, business models, and design are also considered to be part of innovation.

In the past, innovation in China was led by the government, with achievements being made in space development, basic research, and large projects. As market-oriented economic reforms make progress, some private companies in the information and telecommunications industry, particularly in the internet industry, have emerged as innovation leaders. Against this backdrop, the international reputation of innovation in China has been increasing rapidly.

The strategy of innovation-driven development promoted by the government

In China, the modernization of science and technology has been positioned since the 1970s as one of "four modernizations," the goals of the policies of reform and opening up, along with those of industry, agriculture, and national defense, and the government has been actively and consistently supporting innovation to achieve it.

In particular, with the aim of realizing an innovation-based country, the State Council announced the "Outline of Medium- and Long-term Plan for National Science and Technology Development (2006-2020)" in February 2006. In the plan, the State Council decided to support eight areas of advanced technologies in a focused manner: (1) biotechnology, (2) information technology, (3) advanced materials technology, (4) advanced manufacturing technology, (5) advanced energy technology, (6) marine technology, (7) laser technology, and (8) aerospace technology. In addition, at the 18th Communist Party Congress in November 2012, innovation in science and technology were positioned as "strategic supports to increase social production capacity and overall national strength." The strategy of innovation-driven has been inherited by the government of Xi Jinping that took office following the 18th Party Congress.

Specifically, the following policies were launched to increase the innovation power of China in the "Made in China 2025" initiative announced in May 2015:
(1)Enhancing research and development (R&D) of core technologies
(2)Improving innovative design capabilities
(3)Promoting the commercial applications of science and technology
(4)Improving the country's manufacturing innovation systems
(5)Developing technical standard systems
(6)Strengthening the use of intellectual property rights

In the "Outline of the 13th Five-Year Plan for the Development on National Economic and Social Development" adopted at the National People's Congress in March 2016, "innovation" is listed first and foremost as one of five key "concepts of development," along with "coordination," "green development," "opening up," and "sharing." Specifically, it states, "We must constantly undertake innovation in all areas, including innovation in theories, innovation in institutions, innovation in science and technology, and innovation in culture, by putting innovation in the core position in all aspects of national development, so that innovation will be consistent with all activities of the Party and the country and will become the general atmosphere for the entire society." As part of this effort, the government plans to implement the following 15 important projects toward 2030 mainly in the area of science and technology (Table 1).

Table 1: Major Projects Presented in the 13th Five-Year Plan
1 Aero-engines and gas turbines
2 Deep sea station
3 Quantum communication and quantum computers
4 Brain sciences and brain-inspired research
5 National cyber security
6 Deep space exploration and probe orbit service maintenance systems
7 Innovative seed industry
8 High-efficiency use of green coal
9 Smart grid
10 Space-terrestrial information network
11 Big data
12 Intelligent manufacturing and robots
13 R&D of focused advanced materials and their applications
14 Comprehensive environmental improvement in Beijing, Tianjin, and Hebei
15 Health security
Source: Compiled by the author based on "The Outline of the 13th Five-year Plan for National Economic and Social Development of the People's Republic of China."

In addition, the "13th Five-year Plan on National Scientific and Technological Innovation" released in July 2016 sets specific goals for 2020, which include (1) making China an innovation-based country that ranks in the world's top 15 in terms of overall national innovation strength, (2) increasing the contribution of the rising total factor productivity to the economic growth rate from 55.3% in 2015 to 60%, (3) raising the ratio of the value added of the knowledge-intensive service industry to gross domestic product (GDP) from 15.6% to 20%, (4) lifting the ratio of R&D expenditures to GDP from 2.1% in 2015 to 2.5%, and (5) doubling the number of international patent applications from its level in 2015 (Table 2).

Table 2: Major Targets in the 13th Five-year Plan on National Scientific and Technological Innovation
Table 2: Major Targets in the 13th Five-year Plan on National Scientific and Technological Innovation
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Source: Compiled by the author based on the "13th Five-year Plan on National Scientific and Technological Innovation" (July 28, 2016) of the State Council.

Advantages of China in terms of innovation

In addition to support from the government, the ability to introduce advanced technologies from overseas as a developing country and to increase innovation capabilities by absorbing and digesting technologies through imitation, as well as the advantages of having a huge domestic market and accumulated human resources through improved education, provide China with advantageous conditions for innovation.

First, China is aggressively promoting the policy of opening the country to foreign businesses and introducing and absorbing foreign technologies mainly through the following routes:
(1) Import of capital goods that embody technology
(2) Reverse engineering (analyzing the structure of a product through mechanical deconstruction; observing the operation of a product and analyzing the operation of the software; investigating manufacturing methods, operating principles, designs, and source codes, etc.)
(3) Direct investment by foreign companies
(4) Licensing (leasing of intellectual property rights including patents)
(5) Original equipment manufacturing (OEM: manufacturing products that will be sold under the brand of the purchasing company)
(6) Movement of personnel between companies
(7) R&D overseas

So far, direct investment by foreign companies has played the key role, but recently, R&D overseas have been also grown in importance. Some Chinese companies that have gained momentum have established research institutes in Silicon Valley and acquired overseas high-tech companies in some prominent cases (Table 3) (Note 2).

Table 3: Major M&As of Overseas Companies by Chinese Companies (January to September 2016)
Table 3: Major M&As of Overseas Companies by Chinese Companies (January to September 2016)
[Click to enlarge]
Source: Compiled by the author based on "PwC: Many large acquisitions by Chinese companies up until the third quarter of 2016: Portfolio investors play an active role," Diyi Caijing, October 20, 2016.

Next, to achieve innovation, it is necessary not to simply introduce technologies from overseas, but to add refinements to them by digesting and absorbing them as well. Imitation plays a major role in this process, and China is a model student in this skill.

Although imitation is generally recognized as standing in the way of innovation, it may also facilitate it. For example, Google Inc. is not actually the inventor of the search engine, and smartphones existed before Apple Inc. launched the iPhone, so innovation is simply the creation of better things based on the fruits of the R&D of predecessors. Reverse engineering, follow-the-leader strategy, and kaizen, which characterizes Japan's approach to innovation, all begin with imitation.

As Shenkar (2010) pointed out, the main reason why many companies have become successful through imitation is that imitators are able to take a free ride on businesses and markets that innovators and pioneers have already developed by making an investment. Imitators can save not only R&D expenses but also marketing expenses because customers already know how to use new products and services. Imitators can also avoid making a major bet and ending in failure. On top of this, it is not innovation itself, but the refinements that follow that significantly improve productivity. Thus, imitators are usually in an advantageous position to provide customers with better products than the original ones at lower prices.

Of the three types of innovation mentioned above, China is better at innovation through technology integration based on imitation and introduction, digestion, absorption, and re-innovation than at original innovation. One example is the fact that China has reached the world's most advanced level in the area of high-speed rail less than 10 years after it introduced the technology from overseas by fully taking advantage of being a latecomer.

The huge domestic market is also one of the advantageous conditions for innovation in China. A virtuous cycle of expanding the market and accelerating innovation has taken root in many areas, and online shopping is a good example. The size of online shopping in China amounted to 3,877.3 billion yuan ($622.5 billion) in 2015, significantly exceeding the $341.7 billion in the United States (Figure 1) (Note 3). To meet customer needs, innovation has emerged in the areas of order management, as well as associated operations such as home delivery and payment. Forbes (online version) lists the following eight industries in which China leads the world, and among them, (1)-(5) are closely related with online shopping (Swanson, 2014).
(1) Micropayments
(2) E-commerce
(3) Delivery services
(4) Online investment products
(5) Cheap smartphones
(6) Hydroelectricity
(7) DNA sequencing
(8) High-speed rail

Figure 1: Online Retail Sales in China
— Comparison with the United States —
Figure 1: Online Retail Sales in China
Source: Compiled by the author based on data from the U.S. Department of Commerce, the National Bureau of Statistics of China, and the China Internet Network Information Center (CNNIC).

Finally, the accumulation of human capital is progressing in China. The massive amount of human resources needed for innovation is being cultivated, thanks in particular to the growth of higher education. From 2000 to 2015, the number of fresh university graduates increased rapidly, from 950,000 people per year to 6.809 million, and the number of those who completed graduate school also rose sharply, from 59,000 people to 552,000 people (Figure 2). The reputation of Chinese universities has also improved, with Peking University (29th) and Tsinghua University (35th) ranked higher than the University of Tokyo (39th) and Kyoto University (91st) in the World University Rankings in 2016-2017 announced by Times Higher Education.

Figure 2: Changes in the Number of University Graduates in China
Figure 2: Changes in the Number of University Graduates in China
Source: Compiled by the author based on data from China Statistical Yearbook 2016

In addition, an increasing number of Chinese students who have studied abroad and acquired advanced skills have returned to China in recent years. The number of Chinese students going abroad to study reached 4,042,100 between 1978 and 2015, and 523,700 in 2015 alone (Ministry of Education, "Status of Chinese Students Going Abroad to Study in 2015" March 16, 2016). For a long time, the majority of Chinese students studying abroad remained overseas after graduation, reflecting a very large gap between domestic and foreign wages. In 2001, the number of Chinese students returning home was only 14.6% of the number of those going abroad to study. However, as the gap between domestic and foreign wages has been rapidly narrowing against the backdrop of high economic growth and the labor shortage in China, the number of Chinese students studying abroad who are returning home is increasing, reaching 409,100 in 2015, equivalent to 78.1% of the number of students going abroad in the same year (Table 4). Returnees include many engineers who have acquired advanced skills through education and practical experience.

Table 4: Changes in the Number of Chinese Students Going Abroad to Study and Returning Home
Year Number of students leaving to study overseas
Number of students returning from overseas study
Share of students returning (%)
2001 83,973 12,243 14.6
2002 125,179 17,945 14.3
2003 117,307 20,152 17.2
2004 114,682 24,726 21.6
2005 118,515 34,987 29.5
2006 134,000 42,000 31.3
2007 144,000 44,000 30.6
2008 179,800 69,300 38.5
2009 229,300 108,300 47.2
2010 284,700 134,800 47.3
2011 339,700 186,200 54.8
2012 399,600 272,900 68.3
2013 413,900 353,500 85.4
2014 459,800 364,800 79.3
2015 523,700 409,100 78.1
Source: Compiled by the author based on data from China Statistical Yearbook 2016

Remarkable development of science and technology in China

China has achieved remarkable development in the area of science and technology in recent years. This is symbolized by the accomplishments described below in the areas of space exploration, computer science, and communications.

First, in the area of space exploration, China succeeded in landing a probe vehicle on the moon in 2013, following human space flight in 2003. At the moment, China is proceeding with the construction of a space station on its own. As part of this endeavor, China succeeded in docking Shenzhou 11, a two-seat spacecraft, with Tiangong 2 space laboratory on autopilot in an orbit 393 kilometers above earth on October 19, 2016. On September 25, 2016, FAST (Five-hundred-meter Aperture Spherical radio Telescope), the world's largest radio telescope for space observation built in Guizhou province, commenced operations. It is expected to be used to search for extraterrestrial intelligence.

Next, in the area of computer science, Sunway TaihuLight, which uses purely China-made chips, held the top position in the TOP500 performance ranking of supercomputers announced at the International Supercomputing Conference held on November 14, 2016 in Salt Lake City, United States, as it did the previous time as well (June 2016). Another Chinese supercomputer also came second, and China, with 171 units out of the top 500 units, was ranked first along with the United States in terms of the number of supercomputers.

In the area of communications, China launched the world's first quantum communications satellite into orbit on August 16, 2016 to conduct quantum communications experiments with the aim of preventing hackers from acquiring confidential information.

The leap forward made by China in the area of science and technology is also represented in widely used indicators such as the number of papers published in major scientific journals and the number of patent applications.

First, in terms of the number of papers published in major scientific journals compiled by Nature (Nature Index), China, with 6,478 research papers, is ranked second after the United States (17,204) in 2015 (Table 5). By institution, of the world's top 50, China makes up the second largest share with seven institutions, following the United States (25 institutions) (Note 4), and the Chinese Academy of Sciences is ranked first, outclassing Harvard University. In addition, of the 100 institutions with the largest increase in the amount of literature from 2012 to 2015 (the so-called "rising stars"), Chinese institutions make up 40, and all of the top nine institutions are Chinese.

Table 5: The Nature Index Ranking in number of publications by Country and Region (2015)
Ranking Country/Region Number of Publications(Note) Ranking Country/Region Number of Publications(Note)
1 United States 17,204 11 Spain 1,056
2 China 6,478 12 Australia 944
3 Germany 4,078 13 India 901
4 United Kingdom 3,366 14 Netherlands 713
5 Japan 3,053 15 Israel 532
6 France 2,128 16 Sweden 527
7 Canada 1,478 17 Singapore 485
8 Switzerland 1,135 18 Taiwan 416
9 Korea 1,112 19 Russia 370
10 Italy 1,061 20 Belgium 334
Note: Number of publications is the weighted fractional count of primary research articles published in top level science journals.
Source: Compiled by the author based on "Nature Index 2016 Tables,"

According to the World Intellectual Property Organization (WIPO), China was the third largest international patent applications (PCT) filer in 2015 with 29,837 applications, following the United States (57,385) and Japan (44,235) (Figure 3). By institution, China's Huawei and ZTE ranked as the top and third PCT filer respectively (Table 6). China's total number of patent applications that includes both domestic and overseas applications has surpassed that of the United States since 2012 to become the largest in the world.

Figure 3: Changes in the Number of PCT Applications Filed by China
— Comparison with the United States and Japan —
Figure 3: Changes in the Number of PCT Applications Filed by China
Source: Compiled by the author based on WIPO, WIPO Statistics Database
Table 6: World Top 10 PCT Applicants (Number of Published Applications, 2015)
Ranking Company Number HQ Location
1 Huawei Technologies 3,898 China (Shenzhen)
2 Qualcomm 2,442 United States
3 ZTE 2,155 China (Shenzhen)
4 Samsung Electronics 1,683 South Korea
5 Mitsubishi Electric 1,593 Japan
6 Ericsson 1,481 Sweden
7 LG Electronics 1,457 South Korea
8 Sony 1,381 Japan
9 Philips Electronics 1,378 Netherland
10 Hewlett-Packard 1,310 United States
Source: Compiled by the author based on WIPO, "Who Filed the Most PCT Patent Applications in 2015?"

World-class innovation companies emerging from China

As the R&D capabilities of the whole country increase, world-class innovation companies are also emerging from China. Five Chinese companies ranked in the "50 Smartest Companies 2016" selected by MIT Technology Review including Baidu (2), Huawei (10), Tencent (20), Didi Chuxing (21), and Alibaba (24) (Table 7) (Note 5). China is behind the United States' 32 companies, but ranked second, surpassing Japan's three companies (Toyota (17), Fanuc (27), and LINE (38)).

Table 7: 50 Smartest Companies selected by MIT Technology Review
Ranking Company Industry Location
1 Amazon Internet and digital media United States
2 Baidu Internet and digital media China
3 Illumina Biotechnology United States
4 Tesla Motors Transportation United States
5 Aquion Energy Energy United States
6 Mobileye Computing and communications Israel
7 23andMe Biotechnology United States
8 Alphabet Internet and digital media United States
9 Spark Therapeutics Biotechnology United States
10 Huawei Computing and communications China
11 First Solar Energy United States
12 Nvidia Computing and communications United States
13 Cellectis Biotechnology United States
14 Enlitic Biotechnology United States
15 Facebook Internet and digital media United States
16 SpaceX Transportation United States
17 Toyota Transportation Japan
18 Airware Computing and communications United States
19 IDE Technologies Energy Israel
20 Tencent Internet and digital media China
21 Didi Chuxing Transportation China
22 Oxford Nanopore Biotechnology United Kingdom
23 24M Energy United States
24 Alibaba Internet and digital media China
25 Bristol-Myers Squibb Biotechnology United States
26 Microsoft Computing and communications United States
27 Fanuc Computing and communications Japan
28 Sonnen Energy Germany
29 Improbable Computing and communications United Kingdom
30 Movidius Computing and communications United States
31 Intrexon Biotechnology United States
32 Carbon Energy United States
33 Bosch Transportation Germany
34 T2 Biosystems Biotechnology United States
35 Editas Medicine Biotechnology United States
36 Nestlé Biotechnology Switzerland
37 RetroSense Therapeutics Biotechnology United States
38 LINE Internet and digital media Japan
39 TransferWise Computing and communications United Kingdom
40 Veritas Genetics Biotechnology United States
41 FireEye Computing and communications United States
42 Seven Bridges Computing and communications United States
43 Slack Computing and communications United States
44 Coupang Internet and digital media Korea
45 IBM Computing and communications United States
46 Snapchat Internet and digital media United States
47 Africa Internet Group Internet and digital media Nigeria
48 LittleBits Computing and communications United States
49 Intel Computing and communications United States
50 Monsanto Biotechnology United States
Source: Compiled by the author based on "50 Smartest Companies 2016," MIT Technology Review, June 21, 2016

The criteria for choosing companies are those that best combine "truly innovative technology and a business model that is both practical and ambitious, and strategic management capability." Specific reasons for the Chinese companies to be selected are as follows.

Baidu (Search engine)
Outside of its core business of Internet search and ad sales, Baidu is doing notable work on speech recognition and conversational interfaces. In 2015, it announced the development of a speech recognition engine using artificial intelligence called Deep Speech 2. Baidu is also aggressively pursuing the autonomous car market and recently established a team in Silicon Valley to lead research and engineering in computer vision, robotics, and sensors, among other areas.

Huawei (Communication devices)
Huawei has been selling cell phones for more than a decade and smartphones since 2009, but it long struggled to break into the premium device and U.S. markets. Its 2015 launch of the Nexus 6P phone, which it co-designed and manufactured for Google, showed it can make high-end, high-quality smartphones. Continued strength in entry level devices, coupled with growing clout in more expensive phones, have helped Huawei become the no. 3 smartphone vendor worldwide.

Tencent (SNS and games)
Tencent is Asia's largest Internet company with a well-used Web portal and a messaging app, WeChat, that is China's largest. The company recently branched into the enterprise market by launching a business-focused version of WeChat that facilitates communication (messages, phone calls, e-mails) between colleagues, as well as employee expense reports and other record keeping. Tencent derives most of its revenue from online and smartphone games, and it has been investing in mobile-games companies.

Didi Chuxing (Ride-hailing app)
Didi Chuxing and Uber are battling for market share. Didi claims its drivers complete 14 million rides, surpassing Uber's one million (Note 6). The company's ambitions do not end at China's borders. It has partnerships in India and South Asia.

Alibaba (E-commerce)
Alibaba, which runs an eBay-like store, a popular virtual mall, and other e-commerce services, is now the world's largest online marketplace as measured by annual gross merchandise volume. The growth of mobile and video ads also favors Alibaba, which already dominates the Chinese mobile-ad market and recently acquired Youku Tudou, China's largest online video service. Beyond China, Alibaba has become a backer of other technology companies.

These Chinese enterprises with recognized innovation capabilities are all-sector companies. As symbolized by this fact, private companies are taking the place of state-owned enterprises in innovation.

The reputation of innovation in China on the rise

The international reputation of innovation in China has been rising not only at the company level but also at the national level. China ranked 25th among 128 economies around the world according to the Global Innovation Index 2016 (Cornell University, et al., 2016) jointly published by Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) (Table 8). All of the countries that are ranked higher than China (e.g., Switzerland (1), Sweden (2), United Kingdom (3), United States (4), Germany (10), Japan (16), and France (18)) have per capita GDP higher than that of China's. Meanwhile, China's rank shows a big lead over other emerging economies (e.g., Russia (43), South Africa (54), and Brazil (69)). Generally, there is a strong tendency that the more advanced the economic development stage presented by per capita GDP is, the higher the comprehensive evaluation of innovation presented in the Global Innovation Index becomes. However, the innovation capabilities of China are exceptionally high compared with other countries at a similar stage of economic development.

Table 8: Global Innovation Index 2016 Rankings
Ranking Country/Region Ranking Country/Region Ranking Country/Region
1 Switzerland 14 Hong Kong 27 Czech Republic
2 Sweden 15 Canada 28 Spain
3 United Kingdom 16 Japan 29 Italy
4 United States 17 New Zealand 30 Portugal
5 Finland 18 France : :
6 Singapore 19 Australia 43 Russia
7 Ireland 20 Austria : :
8 Denmark 21 Israel 54 South Africa
9 Netherlands 22 Norway : :
10 Germany 23 Belgium 66 India
11 Korea 24 Estonia : :
12 Luxembourg 25 China 69 Brazil
13 Iceland 26 Malta
Source: Compiled by the author based on Cornell University, The European Institute for Business Administration (INSEAD), and World Intellectual Property Organization (WIPO), "The Global Innovation Index 2016, released on August 15, 2016.

The Global Innovation Index score is the simple average of the input and output sub-indices (Table 9). China ranked only 29th in the former and 15th in the latter (Note 7). This implies that China is producing significant innovation outputs with relatively smaller innovation inputs. Reflecting this, China ranked seventh in the innovation efficiency ratio, which is the ratio of the output sub-index over the input sub-index (Note 8).

Table 9: Global Innovation Index and its Components (2016)
— Comparison of ranks of China, United States, Japan, and Korea —
China U.S. Japan Korea
Input sub-index 29 3 9 13
Institutions 79 17 15 31
Human capital and research 29 14 13 3
Infrastructure 36 13 7 9
Market sophistication 21 1 8 14
Business sophistication 7 11 10 13
Output sub-index 15 7 24 11
Knowledge and technology outputs 6 4 13 5
Creative outputs 30 13 36 21
Overall 25 4 16 11
Efficiency Ratio 7 25 65 24
Source: Compiled by the author based on Cornell University, The European Institute for Business Administration (INSEAD), and World Intellectual Property Organization (WIPO), "The Global Innovation Index 2016," released on August 15, 2016.

Remaining challenges

Thus, China is showing successful results in innovation by exerting its own superiority. On the other hand, however, many factors that could hinder innovation still remain, reflecting the immature market economy.

First, the protection of intellectual property is still insufficient. An intellectual property system that protects patents and copyrights, etc. promotes innovation because it strikes the right balance between the interests of innovators and the wider public interest. In China, however, the relevant laws are not necessarily fully enforced, as symbolized by the fact that pirate editions and forged products are widespread, although the development of these laws is being undertaken. This becomes a factor that hinders investments of foreign companies in China, and eventually their technology transfer.

Second, state-owned enterprises in China, which are blessed with human resources and financial power, are unable to fully realize these advantages in innovation. They are inefficient in terms of R&D compared with private companies because, with their monopoly power, they are not exposed to competitive pressures.

Third, the venture capital industry, which supports innovation and high-tech companies in China, lacks funds and experience. There is a startup board in the Shenzhen Stock Exchange, but the role it can play as a channel for venture capital to recover its investments is limited because the size is small. As the case of Alibaba clearly shows, many venture companies in China have no other choice but to rely on foreign capital and aim to be listed on a foreign stock exchange.

Finally, as Ronald Coase, the founder of new institutional economics and a professor at the University of Chicago who received the Nobel Prize in Economics in 1991, points out, "[W]hile the Chinese market transformation has spawned a booming market for goods and services and allowed China to become a leading global player in manufacturing, it has not yet created an active market for ideas. Indeed, the whole process of creating, spreading, and consuming ideas, from the education system to the media, has remained under tight ideological control and state surveillance. The state monopoly in China has severely curtailed the production of ideas." (Coase and Wang, 2012)

Eliminating these hindrances will become the key to the further advancement of innovation in China. Fortunately, as the amount of intellectual property such as patents held by Chinese companies increases, requests to strengthen the legal system to protect it are growing, and the government is attempting to respond to them. The leaders of innovation are also being replaced by private companies. Although the main source of venture financing was foreign capital in China for a long time, it has been overtaken by domestic capital in recent years, and the domestic listing of emerging companies is also increasing. However, the creation of an active market for ideas requires the easing of censorship imposed on the media, which appears to be difficult from a political perspective for the meantime.

The original text in Japanese was posted on December 6, 2016.

  1. ^ In the "Outline of Medium- and Long-term Plan for National Science and Technology Development (2006-2020)" announced by the State Council in February 2006, (1) original innovation, (2) innovation through technology integration, and (3) introduction, digestion, absorption, and re-innovation are listed as the three components that comprise indigenous innovation.
  2. ^ Above all, the acquisition of Syngenta AG in Switzerland by China National Chemical Corporation (ChemChina), which was agreed in February 2016, will be the largest-ever acquisition overseas by a Chinese company if it becomes realized, given that the investment amount totals $43 billion. Syngenta is the world leader in agrochemicals and seeds and has the most advanced technologies in the bio area, including genetic modification.
  3. ^ Online shopping in China continues to grow in 2016 and reached 3.93 trillion yuan in the January-October period, up 25.9% year on year. Sales made by the Web giant Alibaba on Singles' Day on November 11, which is designated as a special bargain day for online shopping and marks the peak of annual sales, amounted to 120.7 billion yuan, much higher than the 91.2 billion yuan achieved in the previous year.
  4. ^ Chinese Academy of Sciences (1), Peking University (16), Tsinghua University (29), University of Science and Technology of China (31), Zhejiang University (43), Fudan University (44)
  5. ^ Among them, Tencent, Huawei, and Lenovo also ranked in Boston Consulting Group's list of "Most Innovative Companies 2015" (Boston Consulting Group, 2015).
  6. ^ With $1 billion investment by Apple in May 2016, Didi Chuxing purchased the Chinese operations of rival Uber in August 2016.
  7. ^ Input index comprises five items including institutions, human capital and research, infrastructure, market sophistication, and business sophistication. Output index comprises of knowledge and technology outputs and creative outputs. China is highly ranked in knowledge and technology outputs.
  8. ^In contrast to China, although Japan ranked high in inputs (9th), it ranked lower in outputs (24th) and in innovation efficiency (65th).
  • Boston Consulting Group (2015), "BCG Global Innovation Survey, 2015."
  • Coase, Ronald and Ning Wang (2012) How China Became Capitalist, Palgrave Macmillan.
  • Cornell University, The European Institute for Business Administration, and World Intellectual Property Organization (2016) "The Global Innovation Index 2016," August 15.
  • Swanson, Ana (2014), "Eight Innovative Industries China Does Better than Anywhere Else,", November 30.
  • Shenkar, Oded (2010) Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge, Harvard Business Review Press.
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