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Mestrando: Leandro Roberto Baran

China's innovation policies: Evolution, institutional structure, and trajectory

Feng-chao Liua, Denis Fred Simonb, Yu-tao Suna, Cong Caoc,


China has transformed itself from a planning to a market-oriented economy over the past three
decades and has sustained a fairly long period of rapid economic growth, to which the
contributions from innovation in science and technology (S&T) have become increasingly
important. Then, how have China's innovation policies evolved to reflect the changing and
supposedly better understanding of innovation by China's policy makers? The paper tries to
answer this question through a quantitative analysis of 287 policies issued by China's central
government agencies between 1980 and 2005 and of 79 policies introduced between 2006 and
2008 to implement the Medium- and Long-Term Plan for the Development of Science and
Technology (2006–2020). China has shifted its S&T and industrial policy-centered innovation
strategy and has pursued a series of better coordinated, innovation-oriented economic and
technology initiatives that give greater attention to a portfolio of policies that include critical
financial, tax, and fiscal measures. There has been a gradual departure from the pattern in
which innovation policies are formulated by one single government agency, therefore steering
China to a different and probably more promising innovation trajectory.

Politica x Inovação

Of the constituting ministries of the State Council, China's cabinet, the Ministry of Science and
Technology, which succeeded the State Science and Technology Commission (SSTC) in 1998,
is a principal participant in China's S&T enterprise. MOST administers China's national S&T
programs, ranging from basic and applied research and development to down-stream
commercialization of S&T achievements, supports innovation within enterprises (along with the
National Development and Reform Commission, NDRC), and manages and promotes science
parks and incubators. It also exercises an important role with regard to the design and
implementation of S&T and innovation policies in conjunction with the Ministries of Education
(MOE), Agriculture (MOA), Health (MOH), and Industry and Information Technology (MOIIT), the
former Commission of Science, Technology, and Industry for National Defense (COSTIND),
which was merged into the MOIIT in 2008. Indeed, MOST assists these entities formulate and
execute policies related to their respective missions in science and technology and allocates
resources to various programs involving personnel in these entities. The Ministry of Finance
(MOF) has become increasingly important in the formulation of innovation policies, especially in
scrutinizing ministerial budgets, allocating monies for particular projects and initiatives, and
monitoring the appropriate usage of the funds.

One of NDRC's responsibilities is to formulate policies related to enterprise innovation and high
technology in Chinese economic and social development. NDRC also manages and implements
major S&T programs such as the State Major S&T Achievement Industrialization Program, the
State Key Industrial Testing Program, and the National Engineering Research Center Program,
which date back to the former SPC and SDPC.

The Chinese Academy of Sciences (CAS), an entity with multiple functions in research, high-
tech development, technology transfer, and training, also plays a significant advisory role in S&T
policy-making through its academicians (yuanshi), who, along with academicians of the Chinese
Academy of Engineering (CAE), an advisory institution, provide services to support decision-
making tied to the nation's engineering and technological advance. The National Natural

remarked that S&T is the primary productive force and intellectuals are part of the working class. loans. the State Council formally approved setting up the Beijing Experimental Zone for New Technology and Industrial Development. the State Council also . and personnel mobility and recruitment to support its development. high-tech start-ups that were spun off from various research institutes and universities emerged in Zhongguancun and other high-tech concentration areas. and specific sector guidelines for information technology and biotechnology respectively in 1988. all of which emerged from the Cultural Revolution severely damaged. also known as the 863 Program. and S&T-related policy matters. Thus. the main focus still was on S&T and industrial policies (34 and 25 respectively). but also stipulated various forms of preferential treatment for supporting their overall development. Nevertheless. it is the CCP that has final say in innovation policy-making. Both financial and tax policies increased only to eight and the first fiscal policy was issued.8 This document not only defined the qualifications for certifying high. granting 18 preferential policies on taxes. to monitor high-tech trends in the world and make efforts to develop China's own high-tech industries. economic. now known as the Zhongguancun Science Park.Science Foundation of China (NSFC) mainly supports basic research and mission-oriented research projects through competitive and peer review processes. the State Council issued the “Announcement on the Approval of National High. financial (4). The leadership felt compelled to restore the nation's key S&T organizations and industrial technological capabilities. including research institutions. China has a total of 53 such parks at the national level). who later would become China's paramount leader. as it does virtually in all matters in China. Thanks to the 1985 decision on S&T system reform. technology equipment and facilities. The period started with the general revitalization of China's S&T system.and new-tech enterprises operating within a high-tech park. and tax policies (3). there was no formal fiscal policy of any significance. It is during this period that SSTC started to take on a more pronounced role in launching and administering national S&T programs. In addition to formulating broad S&T guidelines in 1989 and 1994. Three years later. during which Deng Xiaoping.and New-Technology and Industrial Development Zones and Related Policies and Regulations. The 1978 National Science Conference was held against such a backdrop. Second Period (1985-1984) While the total number of innovation policies during this period reached 76. experiment bases. While it is true that the party's direct involvement in scientific and technical matters has diminished since the heyday of the Cultural Revolution and especially since the reforms of the mid-1980s.” approving another 26 national high- tech parks (as of now. it can be said that China truly rekindled its commitment to S&T development and innovation activities. Políticas Inovação The first period (1980-1984) The total number of innovation policies issued during this period was fairly small – only 17 – with the majority being in the category of S&T policy (6) plus a few industrial (4). In 1988. therefore laying the ideological foundation for designing China's new S&T development strategies in years to come. From then on. launched in March 1986. The most noticeable example is the State High-Tech R&D Program. the reality is that the CCP remains the overall authority in all major political. the establishment of high-tech parks became a prominent aspect of the new S&T push.

and tax policies played a more prominent role in the latter period. support for private S&T enterprises became one of the key foci of Chinese innovation policies. 8 to 28. Second. more consideration was given to the alignment and coordination between and across policies of the same and different derivation. and fiscal policies (from 8 to 35.focused on one special issue – accelerating technological progress by importing technology and facilitating its assimilation. Third Period This period is marked by the introduction of the concept of “innovation” into China's discourse. whose highly vertically oriented bureaucratic structure often precluded close communication. and fiscal policies had become as strategically important as traditional S&T and industrial policies in the innovation promotion framework. over the years. . such progress on the S&T front represented a major breakthrough. tax. policies specifically focused on the conversion of S&T achievements started to appear. and cooperation across ministries and other government organizations. In terms of content. At the same time of having a big jump in the number of S&T policies (from 34 in the second period to 84) and a modest increase in the number of industrial policies (from 25 to 35). That is. and reach. innovation policies during the first two periods focused on the initiation of new S&T programs. 242 institutes affiliated with the former SETC were among the first to be transformed – they were either merged into existing enterprises to become their internal R&D units or converted into technology-oriented enterprises themselves. From the perspective of policy domains. went on to be restructured as well and CAS started a Knowledge Innovation Program to revitalize itself. but shifted in emphasis to innovation capacity building and further to the creation of an innovation-friendly environment during the third period through the enhanced management of S&T programs. In 1999. The reliance on a single policy framework to support the implementation of specific S&T programs gave way to the formation of a rich portfolio of diverse policies in which financial. this period witnessed the rapid introduction of financial. Other types of R&D institutes. S&T policy was geared toward stimulating broad institutional reforms at government- affiliated R&D institutions. and 1 to 12 respectively). including those in the areas of public goods. more recognizable S&T and industrial policies dominated the first two periods. Third. innovation policies have increased in number. Conclusão In a word. and thereby the expansion of China's innovation policies beyond S&T and industrial policies. fiscal. Fourth. variety. tax. while financial. coordination. For China.