Report: China pours funds to forge innovation powerhouse

by Nicolas Mokhoff , TechOnline India - November 10, 2011

China is going all out to transform itself from a manufacturing powerhouse to an innovation engine in the next five years

China is going all out to transform itself from a manufacturing powerhouse to an innovation engine in the next five years, according to the latest Lux Research report.

The government’s twelfth five-year calls for accelerating the state-controlled economy’s transition from manufacturing to innovation its 30-year history of funding R&D shows no signs of slowing.

China’s public investments in scientific and high-tech research, implemented through national programs, are embedded in a complex, geographically diverse and evolving institutional landscape, constituting nearly 70 percent of all R&D funding, which reached $91 billion in 2009.

“China’s R&D funding ecosystem reveals connections between vast public research investment, corporate buy-in, and likely sources of Chinese innovation pivotal in driving the country’s future economic growth,” said Zhun Ma, Lux Research analyst and lead author of the report.

The country’s sweeping innovation agenda are driven by its current manufacturing base, a growing domestic market and an appreciation of the country’s future societal needs. 

Specifically, the report cites the government's broad and substantial support for biotech and healthcare, its refined focus on renewable energy and a buttressing of its IP rights regime to reach global standards.

Fundamental R&D spending in the life sciences under 973 programs dwarfs any other area, while a National Science and Technology program will pump over CNY 27 billion ($4.26 billion) into pharmaceutical industry development including active pharmaceutical ingredients (APIs), drugs, and traditional Chinese medicine.

In renewable energy is pumping  CNY 4.9 billion ($771 million) for EV-related application R&D, through funding for numerous pilot lines for next generation phtovoltaics, to CNY 1.05 billion ($165.16 million) for connecting renewable energy and electric vehicles to large-scale grids, pivotal local technology opportunities are strongly supported.

And in Intellectual property China is spreading its IP base from a few heavyweights to small and medium enterprises, and start-ups. Ma said that as Chinese IP assets gain critical mass in foreign countries, its leaders will be forced to provide greater protection to foreign IP in China in order to ensure Chinese rights are protected overseas. Changes will not be sudden but the timeline towards IP protection equality is measured in years, not decades.

Lux Research’s analysis will be discussed in an upcoming "China's Innovation Ecosystem: Navigating from Hype and Fear to Business Strategy” webinar.

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