Page 1

INNOVATION IN CHINA

Systems, contributors, development zones and regional distribution of innovation

Fact Sheet

Trevor Stam 2012/2013

Research


Cover images : Wan Hoo and his Space Vehicle (left image), credits: NASA Rocket launch in China (right image), credits: CMSE

All rights  reserved.  The  authors  retain  all  copyrights  in  any  text,  graphic  images  and  photos  in  this  book.  No  part  of  this  publication  may  be  reproduced  or  transmitted  in  any  form  or  by  any  means,  electronic or mechanical, including photocopying, recording, or any information storage and retrieval  system, without permission in writing from the authors. 


The Chinese Innovation System: Some Quick Facts INTRODUCTION Alternative Fuel Cars

The Chinese government has unfolded the 12th Five Year Plan for the period 2011-2015 to strengthen and diversify the domestic economy. China is quickly shifting its economic activities from low-cost manufacturing to value-added activities. In the 12th Five Year Plan the Chinese government has targeted seven industries as the new growth drivers.

New Energy

Biotechnology China’s Strategic Emerging Industries

Advanced Materials

New-Generation IT

Clean Technology

High-End Equipment Manufacturing

R&D Expenditure to GDP ratio 2006-2010 1,7 % 1,42 %

1,44 %

2006

2007

1,76 %

1,54 %

2008

2009

Innovation is a key element in attaining these goals. Chinese government expenditure on R&D and S&T activities has risen continuously. Between 2006 and 2010 overall expenditure on R&D has nearly tripled. Although the R&D expenditure to GDP ratio is considerably lower than in neighbouring Korea and Japan, China is quickly catching up.

2010

Source: NBS, 2012

CHINA’S NATIONAL INNOVATION PROGRAM

In 2006 China initiated the Medium- to Long-Term Plan for the Development of Science and Technology (MLP). The MLP, a 15 year plan, calls for China to become an innovation-oriented society by 2020 and a world leader in science and technology by 2050. The plan states that China will increase its gross-expenditure on R&D to 2.5% or above of national GDP. The Chinese government will stimulate ‘indigenous’ innovation. By 2020 Chinese S&T activities are expected to contribute 60% to the national economy. China strives to reduce its dependency on foreign technology to 30% or less. These strategic goals will not only be attained through heightened R&D spending, but also by overcoming the weaknesses of the Chinese innovation system and the economy. Priority areas Major areas of research in basic science 16 S&T megaprojects are • Agriculture • Developmental and reproductive biology launched according to 5 princi• Energy • Nanotechnology • Environment • Protein Science ples • IT and services • Quantum research 1) projects should correspond to • Manufacturing socio-economic needs in order • National Defense Mega S&T projects • Population Health • Numerically-controlled machine tools and to cultivate strategic industries • Public Security basic manufacturing technology 2) Focus on key technologies • Transportation • Control and treatment of major diseases that will boost industrial com• Urban Development • Core electronic components • Water and Mineral Resources • Large-scale integrated circuit manufacturing petitiveness • Drug innovation and development 3) projects need to be capable of Frontier Technology • Genetically modified organisms • Advanced energy absorbing bottle-necks of socio• High-definition earth observation systems • Advanced manufacturing • Advanced nuclear reactors economic development • Aerospace and aeronautics • Large aircraft 4) projects must enhance na• Biotechnology • Large-scale oil and gas exploration • IT tional security • Manned space and lunar exploration • Lasers • Next generation broadband telecom 5)projects need to be affordable • New materials •

Ocean technologies

Water pollution control and treatment

3 unannounced projects


CHINA’S INNOVATION SYSTEM Within China the driving forces behind innovation are powerful. Apart from the innovation policy plans, developments in Chinese society such as the rise of the Chinese consumer, increased urbanization, infrastructure development, natural resource and environmental challenges and upcoming entrepreneurship fuel (the need for) innovation. ENTERPRISES

CHINESE GOVERNMENT

HIGHER EDUCATION

CHINESE ACADEMY OF SCIENCES

GOVERNMENT RESEARCH INSTITUTES

The role of the government is central in Chinese science and technology development. National funding programs support R&D activities. The Chinese Academy of Sciences, research institutes and universities are all state-run. These state institutions design, fund and implement research and innovation programs in China.

Chinese enterprises did not prioritize R&D activities in the past and relied on the research efforts of government research institutes (GRI’s) instead. As China’s economy allowed more market influences, GRI research efforts could not always serve the innovation needs of enterprises. As a response to increased market competition and as a result of government stimulus, enterprises (both state- and private enterprises) are actively boosting their innovative profile. Currently over 70% of R&D is performed by enterprises. Many GRI’s have become research units within state enterprises.

CHINESE INDUSTRY

R&D personnel by sector

In 2010 Chinese industry engaged in over 145.000 R&D projects. Close to 30% of industrial enterprises had R&D facilities. Chinese R&D has seen a rapid increase in expenditure, number of facilities and staff. R&D activity is mainly concentrated in consumer electronics, automotive, machinery, chemicals and medicine. Industrial R&D expenditure is heavily concentrated in experimental development activities.

Other

390.875

Consumer Electronics

278.583

Machinery

184.827

Transport Equipment

176.921

Electrical Machinery

137.965

Chemicals Metals Medicine

R&D projects by sector

77.221 68.282 55.234

Source: NBS, 2012

R&D expenditure by sector (USD bln.) 1,9

Medicines

Machinery 17%

3,9

Chemicals

Other 33%

6,4

Metals

6,7

Electrical Machinery Consumer Electronics 16%

7,5

Machinery

9,2

Automotive Vehicles

10,8

Consumer Electronics Electrical Machinery & Equipment 11%

0,0

Transport Equipment 12%

Source: NBS, 2012 Source: NBS, 2012

2,0

4,0

6,0

8,0

10,0

12,0


HIGHER EDUCATION AND INNOVATION A vital actor in knowledge creation and dissemination is higher education. Higher education institutes are important partners for research collaboration and the development of new technologies. In China universities are expanding their research staff. The number of university-linked R&D institutes has nearly doubled between 2006 and 2010. Expenditure by universities on basic and applied research has skyrocketed. Experimental development has received considerably less funding and investment. University expenditure on research by type 2010 Experimental Development 14% Basic Research 30%

9.000

7.833

8.000 7.000 6.000 5.000 4.000

4.154

4.502

5.159

5.784

3.000 2.000 1.000 0 2006

2007

2008

2009

2010 Source: NBS, 2012

Since government and corporate funding for research has become more readily available, the growth of S&T output of Chinese universities has been staggering. Between 2006 and 2010 the number of R&D projects has increased by 50%. Scientific publications in foreign journals have doubled and the number of granted patents have tripled. S&T output of universities in 2006 and 2010

Applied Research 56% Source: NBS, 2012

GOVERNMENT RESEARCH INSTITUTES (GRI’s)

Number of university-linked R&D institutes

2006

2010

% change

R&D Projects

365.294

547.717

+49.9

Publications in foreign periodicals

90.722

182.247

+100

Patents (granted)

12.043

37.490

+211

Number of GRI’s projects and publications 2006-2010 80.000 70.000 60.000

R&D projects Publications in Foreign Periodicals

50.000 GRI’s have played an impor40.000 tant role in applied research 30.000 and experimental develop20.000 ment. Funded by the govern- 10.000 ment, GRI’s serve to meet the GRI’s Research expenditure by 0 2006 2007 2008 2009 2010 innovation needs of the ministype 2010 Source: NBS, 2012 tries to which they belong. With a large-scale governmen- Number of GRI granted patents Basic Research tal re-organization, whereby 2006-2010 11% several ministries were elimi- 10.000 8.698 9.000 nated, 242 GRI’s became part 8.000 6.391 7.000 of state enterprise R&D units. 6.000 5.048 4.036 Currently there are 3.696 (year 5.000 Applied 3.499 4.000 Experimental Research 3.000 2010) GRI’s in China, employ- 2.000 Development 33% 56% ing 293.000 people. GRI’s have 1.000 0 showcased significant growth 2006 2007 2008 2009 2010 Source: NBS, 2012 in research output (measured by projects, publications and Source: NBS, 2012 granted patents)


CHINESE ACADEMY OF SCIENCES (CAS) CAS is considered the backbone of Chinese research and scientific advancement. CAS still plays a crucial role in China’s strategic weapons program and high-tech development, especially ICT, nano-tech, biotech and energy research. It operates 117 institutions around the country of which 97 research facilities. CAS employs 58.000 people of which 78.7% conduct research. CAS expenditure on research by type 2010

CAS patents (granted) 2005 - 2010

Experimental Development 7%

4.000 3.500

3.133

3.000 2.500 Basic Research 36%

2.000

3.406

2.637 1.948

2.098

2.179

2006

2007

1.500 1.000 500

Applied Research 57%

0 2005

2008

Source: CAS, 2011

%, 1997= 100

2009

2010

Source: CAS, 2011

% Growth of CAS R&D expenditure 1997-2010 (1997=100)

900 808,7

800

444,3

376,9

335,0

216,7

162,9

0

126,3

100

110,5

200

100,0

300

315,7

400

430,9

500

507,2

600

620,8

700

904,2

1.000

Source: CAS, 2011

R&D FUND APPROPRIATION IN CHINA

R&D Funding Sources (total 371 bln. RMB)

Recipients 59.3 bln. RMB 12.9 bln RMB

Government 91.35 bln. RMB 25%

17.8 bln. RMB

1.4 bln. RMB

Government Research Institutes 68.8 bln RMB 19%

2.6 bln. RMB

Enterprise Funds 261.1 bln RMB 70%

246.6 bln. RMB 11 bln. RMB 900 mln. RMB

Enterprises 268.2 bln. RMB 73%

340 mln. RMB

Foreign Organizations 5 bln. RMB 1% Other 13.58 bln. RMB 4%

4.2 bln. RMB

480 mln. RMB

30 mln. RMB

6.5 bln. RMB 4.6 bln. RMB 2.2 bln. RMB 240 mln. RMB

Higher Education 31.5 bln. RMB 9%

Other 2.57 bln RMB 1%

Source: USCC, 2011 Note: NBS 2007 data


REGIONAL DISTRIBUTION OF INNOVATION INDICATORS IN CHINA Regional disparities: Much has been published about the Chinese economic miracle and the drive to-

wards a knowledge-based economy. People tend to forget that China is a diverse country with sizable disparaties of social and economic development between regions. The heavily populated coastal plains in the east are the heartland of China ’s export-oriented manufacturing sector and the main force behind the country ‘s high economic growth. Since the (gradual) opening up of the Chinese economy in 1978, the coastal regions have received large amounts of FDI that have given Chinese industry an enormous boost. Huge domestic investments in assets such as infrastructure have strengthened the position of the coastal, urbanized macro-region in international production networks. GDP per capita, average annual wages and overall consumption have risen quickly in the east and are significantly higher than in inland regions. In the 12th Five year Plan the Chinese government plans to make an economic transition from export-led growth to a domestic consumption-based growth model. Concurrently regional disparities will be addressed by industrializing inland locations. This process has been accelerated by quickly rising labour costs in the coastal regions. Low-end manufacturers in the coastal plains are facing stiff competition from Southeast Asia and need to look for alternative production locations to remain cost competitive in the global economy. Number of R&D facilities by province

> 6000 3000 < 6000 1000 < 3000 500 < 1000 < 500

Source: NBS, 2012

The overwhelming majority of R&D employment is located in the provinces Guangdong, Jiangsu, Zhejiang, Shandong and the municipal regions of Beijing and Shanghai. Especially in Beijing and to a lesser extent Shanghai, R&D staff have advanced degrees. In the six aforementioned regions the supply of skilled labour is abundant. However all over China there are many universities that produce nearly 400.000 graduates with advanced degrees a year. Nearly half graduate in engineering, medicine or sciencerelated fields.

S&T DISPARITY Regional disparities in China are especially visible when we analyze innovation indicators. R&D facilities are mainly concentrated in the coastal regions. Zhejiang and Jiangsu house over 6000 R&D labs each. Guangdong, Shandong and the municipalities of Beijing, Shanghai and Tianjin are other important hubs for R&D activity. These regions also have the highest R&D expenditure and initiate the most R&D projects. Along the Yangtze river in the provinces Anhui, Hunan, Hubei, Sichuan and Chongqing the corridor of R&D activity extends inland.

R&D personnel in China R&D personnel in China Total: 1.4 million people of which nearly 330.000 have an advanced degree

23 %

Top 6 regions by R&D personnel in China representing 57.5% of total R&D staff and 60% of staff with advanced degrees

= R&D personnel with advanced degree

Total R&D Staff 200.000

23.4 % 150.000

16.6 % 48.6 %

100.000

50.000

Guangdong

Source: NBS, 2012

11.5 %

15.8 % 31.2 %

Jiangsu

Beijing

Zhejiang

Shandong

Shanghai


Number of granted patents by type and region Type of Patent

Number of Patents (granted) 150.000 100.000 50.000

30.000

UTILITY MODEL

INVENTION

DESIGN

Xinjiang

Heilongjiang

Inner Mongolia

Jilin

Hebei Beijing

Shanxi Ningxia Qinghai

Shaanxi

Shandong

Gansu

Sichuan

Liaoning

Tianjin

Jiangsu

Henan

Shanghai

Chongqing

Tibet

Hubei

Anhui

Jiangxi

Guizhou

Zhejiang

Hunan Fujian

Yunnan

Guangxi Hong Kong

Source: SIPO, 2012

Guangdong

Hainan

PATENTS: According to SIPO (China’s patent organization) the number of patents filed in China has grown quickly over the last years. Until 2010 there have been over a million patent applications and over 740.000 have been granted by SIPO. Here again we see a concentration in coastal Jiangsu, Zhejiang, Guangdong, Shanghai, Shandong and Beijing. The majority of granted patents are either utility models or design patents. New inventions seem scarcer. Only in Beijing do inventions make up a sizable proportion of granted patents. Of all patents 86.8% are granted to Chinese parties. However, these are mainly design and utility patents. The majority of invention patents are granted to foreign applicants. Foreign parties seldomly file design or utility model patents in China.

DEVELOPMENT ZONES: When the Chinese economy opened up in 1978, the government created special economic zones (SEZ) to attract direct investment of foreign firms. Within these zones firms could flourish due to preferential economic regulations, tax incentives and trade benefits. The SEZ’s have proven successful and have been instrumental in the transition towards a hybrid (centrally planned and market) export-oriented economy. The number of development zones has grown quickly all over China. Development zones have been established on national, provincial, municipal and even district level. Many zones have specialized in specific industries or economic activities. Development zones in China: ETDZ’s (L) and HIDZ’s (R)

ETDZ’s

HIDZ’s

= Development Zone (ETDZ or HITDZ)

Source: CADZ, 2012

There are 6 types of development zones, 2 of which we will describe shortly: ETDZ (Economic and Technological Development Zone: These zones are a continuation of the SEZ policy but are smaller in size and industrial focus. They enjoy similar policies and incentives as SEZ’s in order to boost inward FDI, foreign-domestic joint ventures, technology transfer and export-oriented manufacturing. ETDZ’s are managed by the Ministry of Commerce. ETDZ’s are mainly concentrated around the Yangtze estuary around Shanghai and in other large coastal cities. HIDZ (High-Tech Industrial Development Zone): Specific areas aimed at commercializing R&D and encouraging specific industries such as IT, electronics, pharmaceuticals, new materials etc. HIDZ are often located near universities or research institutes. They are similar to ETDZ’s but in addition have incentives for innovation. HIDZ are managed by the Ministry of Science and Technology. Also HIDZ are concentrated in the Yangtze estuary, in Guangdong province and in Beijing.


HI - TECH INDUSTRIAL DEVELOPMENT ZONES: INDUSTRIAL SPECIALIZATION BY REGION EAST CHINA (Anhui, Beijing, Hebei, Henan, Hubei, Jiangsu, Shaanxi, Shanghai, Shandong, Shanxi, Tianjin, Zhejiang) BEIJING ZHONGGUANCUN

SHIJIAZHUANG

M M

ICT

M

QINGDAO

TIANJIN

M

M

ICT

ICT

YANTAI

TANGSHAN

ZHENGZHOU

ICT

M

ANYANG

ICT

M

ICT

ICT

M

ICT

WEIFANG ICT

M ICT

BAODING

TAIYUAN

LUOYANG

ZIBO

JINAN

M

M

M

NANJING

WEIHAI

M

M ICT

NANYANG

ICT

JIANGYIN

XI’AN

M

TAIZHOU

ICT

ICT

CHANGZHOU

YANGLING

M

WUXI

BAOJI

M

M

ICT

ICT

SUZHOU

YANJIAO

M

WEINAN

ICT

ICT

M

XIANGFAN

ICT

XIANGYANG

M

WUHAN

SHANGHAI ZHANGJIANG

BENGBU

M

M

M

M

ICT ICT

ICT

WUHU

HEFEI

M ICT

SHANGHAI ZIZHU

M ICT

M KUNSHAN

ICT

HANGZHOU

M

ICT

JINING

NINGBO

M ICT

East China is the area with the highest density of HIDZ in the nation. The Eastern Chinese HIDZ contain a wide variety of companies representing diverse industrial segments. Within the confines of the HIDZ companies are clustered according to economic activity or industry. East China is a hotbed for electronics, ICT, materials, chemicals, automotive, manufacturing equipment and precision instruments. Many HIDZ are also designated to develop new energy and cleantech, especially in Beijing, Jiangsu, Hubei, Shanghai and Tianjin. Software and services are concentrated in and around Shanghai, Hangzhou (Zhejiang) and Beijing. The focus of HIDZ in East China is not on heavy industry. Therefore it is not widely present in HIDZ. However heavy industries are often located in other types of economic zones. The location of aerospace and aviation industry is often linked to the presence of universities with aerospace specialization, GRI’s, launching sites and control rooms of the national space agency. Currently there are five HIDZ designated for aerospace and aviation in Beijing, Shanghai, Xi’an, Yantai (Shandong) and Xiangyang (Hubei).

Food

New Energy/ Greentech

Precision Instruments

Agriculture

Chemicals

Life Sciences/ Biotech

M

Materials

Automotive

Aviation/ Aerospace

Software

Creative/ Services

Heavy Industry

Manufacturing Equipment

Electrical Appliances & Components

ICT ICT

Food and agricultural industry is primarily located in Shaanxi and central Shandong. The Yangling HIDZ, west of Xi’an is a specialized zone for agricultural and food processing industries Nearly every HIDZ has a cluster of life sciences and biotech activity. Taizhou HIDZ, nortwest of Shanghai is a specialized zone for life sciences

Figure compiled by author Data sources: CADZ, 2012; Rightsite, 2012; HKTDC, 2011


SOUTH CHINA (Fujian, Guangdong, Guangxi, Guizhou, Hainan, Hunan, Jiangxi) ZHUZHOU

XIANGTAN

NANCHANG

CHANGSHA

JINGDEZHEN

M

M

M ICT

M

ICT

ICT

FUZHOU ICT

YIYANG

M QUANZHOU

M

ICT

GUIYANG

M

ICT

ICT

GUILIN

XIAMEN

M

M

ICT

ICT

HUIZHOU

M

LIUZHOU

M ICT

NANNING

SONGSHANHU

M ICT

ICT

HAIKOU

GUANGZHOU ICT

SHENZHEN

M

M ICT

FOSHAN

ZHAOQING

ICT

ZHUHAI

ZHONGSHAN

JIANGMEN

M

M ICT

ICT

ICT

The southern region of China has stood at the forefront of the country’s economic transformation when the first special economic zone in Shenzhen opened up in the early 80’s. Since then South China has evolved into a dynamic, entrepreneurial and above all a leading region for innovation. The HIDZ are heavily concentrated in the larger Guangzhou metropolitan area. The region as a whole is an important center for the electronics industry, ICT, life sciences, manufacturing equipment, precision instruments, chemicals and materials. Heavy industries also have a large presence in South China, mainly in the provinces of Guangxi, Jiangxi, Hunan and on the various HIDZ sites around Guangzhou (Guangdong). The automotive industry is concentrated in Guangdong and Hunan provinces. Although not the largest industry by size, new energy and cleantech companies are present in the HIDZ throughout all Southern Chinese provinces. Software is overwhelmingly developed in Shenzhen and other Guangdong HIDZ such as Jiangmen, Zhuhai and Foshan. In addition there are softwareparks in Xiamen (Fujian), Changsha (Hunan) and Nanchang (Jiangxi).

ICT

ICT

Food

New Energy/ Greentech

Precision Instruments

Agriculture

Chemicals

Life Sciences/ Biotech

M

Materials

Automotive

Aviation/ Aerospace

Software

Creative/ Services

Heavy Industry

Manufacturing Equipment

Electrical Appliances & Components

ICT ICT

Even though large areas of South China are fertile and suitable for agriculture and food production, these industries have a limited representation in South Chinese HIDZ and receive little government stimulus for innovation. For the aerospace and aviation industry there are special sub-parks within the HIDZ of Zhuzhou (Hunan) and Huizhou (Guangdong).

Figure compiled by author Data sources: CADZ, 2012; Rightsite, 2012; HKTDC, 2011


WEST CHINA (Chongqing, Gansu, Sichuan, Qinghai, Tibet, Xinjiang, Yunnan) Apart from Sichuan and Chongqing municipality Western CHANGJI China is an isolated, economically lagging region. However BAIYIN M the Chinese government has established several HIDZ in the URUMQI west to encourage innovation. M LANZHOU Investment in R&D in sectors M M such as life sciences, manufacMIANYANG turing equipment, materials M and electronics is encouraged. CHONGQING ICT ICT is concentrated in HIDZ in Sichuan, Chongqing and in CHENGDU ICT Kunming (Yunnan). Sichuan M and Yunnan are largely agriculZIGONG ICT tural. In Kunming (Yunnan) and KUNMING Zigong (Sichuan) HIDZ there are sub-parks for agriculture technology. ICT M Food

New Energy/ Greentech

Precision Instruments

Agriculture

Chemicals

Life Sciences/ Biotech

M

Materials

Automotive

Aviation/ Aerospace

Software

Creative/ Services

Heavy Industry

Manufacturing Equipment

Electrical Appliances & Components

ICT ICT

Although West China is endowed with numerous natural resources, ranging from water, oil, gas and metals, R&D in cleantech and heavy processing industries has not taken off yet. The automotive, aerospace and aviation and software industries are not prominent in Western Chinese HIDZ.

HIDZ in Northern China have specialized in life sciences, materials, manufacturing equipment, electronics and chemicals. North China is also renown for its heavy industry, Jilin and Liaoning being the main provinces for iron, steel and raw materials processing. Baotou HIDZ in Inner Mongolia is a zone specialized in economic activities surrounding rare earths and metals. Food and agricultural industries are clustered in HIDZ in Heilongjiang. The main hub for ICT, software and services in North China is the softwarepark in Dalian. HIDZ in Daqing, Harbin (Heilongjiang), Jilin and Shenyang have a special ICT and software zone as well.

NORTH CHINA (Heilongjiang, Inner Mongolia, Jilin, Liaoning) DAQING

M

HARBIN

ICT

M ICT

CHANGCHUN

JILIN

M

M BAOTOU

M

ICT

SHENYANG

ANSHAN

M

LIAOYANG

M

YINGKOU

M ICT

DALIAN

M

M ICT

The HIDZ in Daqing, Harbin, Changchun and Yingkou have designated areas for new energy and cleantech development. R&D activity in the automotive sector is stimulated in the provinces of Liaoning, Jilin and Heilongjiang. Figures compiled by author Data sources: CADZ, 2012; Rightsite, 2012; HKTDC, 2011

China innovation factsheet  

China innovation factsheet

Advertisement