National Innovation as a transformative journey: The Chinese Model

Although the Chinese civilization contributed many inventions like paper and compass, its contribution was limited compared to the western technological innovations. The key question is how we can explain the re-emergence of China as a global leader in technological innovations. 

China embarked on economic reform and open door policy to enhance its innovation capability and to harness the value of global innovation networks and global value chains. Moving from catching up technology policy to innovation nation and restoring China’s competitive position were founded on many enablers including sound national policies in industry an technology, institutional settings, and absorptive capacity. 

Specifically, the Cultural Revolution in 1960s contributed to mainstreaming science and technology as the cornerstone of economic development. This was evident in the allocation of $48 billion to R&D which amounted to about 1.49% of GDP in 2007. This puts China as the 4th largest in R&D expenditure after USA, Japan and Germany. Besides, during 1998-2007, R&D expenditure increased about 21%. The transformation to an innovation-based industry was underpinned by investing in higher education and innovation infrastructure which includes: 1500 universities; 600 research universities; 139 national Labs; 49 science parks hosting 4000 technology-based start-ups which employ 70,000.

The shift to market-led polices in the 1980s, supported science parks which host technology firms which resulted in the emergence of technology markets and commercialization of entrepreneurships like Lenovo Group. Moreover, the 1990s, witnessed key structural changes including decentralizing the governance to the local level, allocating funds to SMEs helped to ignite a bottom-up innovation paradigm, and a national strategy of reverse brain drain to empower the nation through talent. The results in the growth of technology-based firms like sina.com, Tencent Group and Alibaba. 

The 21st century witnessed a shift in innovation policy which a focus to build indigenous innovation capability through enhancing access to global innovation networks and interplay between industry and academia. The Foreign Direct Investment (FDI) in manufacturing and venture capital in high tech industries provided new models of learning in corporate structure and management practices. This was enabled by market for technology policy which used technology transfer as a condition for foreign firms to enter markets through joint venture or licensing.  Regional technology clusters at the local level supported technology convergence and cross-industry integration. The innovative foresight is evident in investment in emerging technologies like clean energy, next generation Internet, and new-concept vehicle.

The vision 2020 calls for innovation-oriented society that is underpinned by a sound national innovation system (NIS) that supports sustainable innovation and standard setting for both state-owned enterprises, and private entrepreneurial firms in telecom (like Huawei) which filed 1737 patents in 2008. Solar photovoltaic (PV) is an example of standard setting. In 2010, China accounted for about 50% of the world solar PV cell production. In sum, China journey in innovation is defined by cultural values, new governance, and science and technology policy. These lessons can be of value in the GCC journey of innovation. 

Prof. Odeh Al-Jayyousi, Head of Innovation and Technology  Management, Arabian Gulf University, Bahrain,  E-mail: odehaj@agu.edu