Innovation in China

China is in the midst of transitioning from a manufacturing–based economy to one driven by innovation and knowledge. This up–to–date analysis evaluates China′s state–led approach to science and technology, and its successes and failures.

In recent decades, China has seen huge investments in highΓÇôtech science parks, a surge in homeΓÇôgrown topΓÇôranked global companies, and a significant increase in scientific publications and patents. Helped by a flexible business culture, state policies that favor domestic over foreign enterprises, and a stillΓÇôimmature intellectual property rights system, the country has been able to leapfrog its way to a more globally competitive position in the international division of labor.

However, the authors argue that this approach might not yield the same level of progress going forward if China does not address serious institutional, organizational, and cultural obstacles. Since many of these are ingrained into the fabric of ChinaΓÇÖs prevailing culture from the days of state planning and topΓÇôdown government policy, they will require significant structural change to enable China to truly transform its innovation system. While not impossible, this task may well prove to be more difficult for the Chinese Communist Party than the challenges that China has faced in the past.