Discussions on Innovation Opportunities in China

1. Discussions on Innovation Opportunities in China Quan Bo First Secretary, Science and Technology Office Chinese Embassy in the Netherlands quanb@most.cn 30 May 2012

2. 1. Why Is China Thirsty for Innovation? - Most of conventional and less sophisticated technologies have been imported and used. - “World Workshop” equipped with above can no longer sustained the China’s economy. - Higher labor cost, stricter regulation, etc. in China facilitate transfer of traditional manufacturing industry to other developing countries. - Demographic momentum is lost. The focus is life quality.

3. 2. Goal, Targets and Plan • 2.1 Goal • A national innovation system will be in its initial form clear in functions, rational in structure, good in interaction, and efficient in performance, to turn the nation into an innovation-driven one. • 2.2 Some targets for S & T development by 2015 • R & D % in GDP: from current 1.75 to 2.2 ($111.2 billion for 2010) • R & D human input per 1,000 employed persons: from 3.3 to 4.3; • World ranking of citation of international science paper: from No. 8 to No. 5; • No. of invention patents per 1,000 persons: from 0.17 to 0.33; • % of added value from high-tech industry in the added value of manufacturing industry: from 13 to 17; and • % of citizens of essential science qualifications: from 3.27 to 5.

4. 2.3 Plan for development of new industries • Energy-saving and environment protection; • New generation of information technology; • Bio-industry; • Manufacturing of high end equipment; • New energy; • New material; and • New energy powered automobile. • China seems interested in everything.

5. 3. Collaborative Innovation or Indigenous Innovation? • 3.1 Collaborative innovation is the main stream • For the past 170 years, China has been a student to learn Western or modern science and technology; • the country is beginning to build an innovation-driven society, and will not materialize it without cooperation with other countries; and • no country is able to conduct a door-closing innovation strategy now. • 3.2 Indigenous innovation is an important ingredient of China’s national innovation strategy • Current high reliance on technology input from developed countries; • No country can be advanced without indigenous innovation, especially for China;

6. Core technology or core competitiveness can not be sold, and China has not yet been permitted to buy so-called sensitive technologies from Western countries; and • China is contributing more and more knowledge and know-how to the world through conducting indigenous innovation. • 3.3 Recent example: R & D areas for concentrated efforts in the 11th 5-year Plan period: • Core electronic devices and high end general chips and basic software products; • Manufacturing equipment and complete sets of process for super scale integrated circuit; • New generation of wireless broadband movable communication network; • Advanced digital controlled machine tool and basic manufacturing equipment;

7. Development of large scale oil/gas field and coal bed gas; • Nuclear power station with advanced large water pressure reactor and high temperature and gas cooling reactor; • Control and treatment of pollution in water bodies; • Culture of new GM biologic varieties; • Invention of major new medicine; • Prevention of AIDS, virus hepatitis and other infectious diseases; and • Large airplane manufacturing. • 3.4 Examples of breakthroughs: manned spacecraft, super computer, high-speed train, stem cell, etc.

8. 4. Is China Available for Building an Innovation-driven Society? • 4.1 Positive aspects • - Basic resources available: $74.8 trillion for 2011; R & D annually increased at 20% in recent years; a huge pool of human resources, etc. • Social consensus: China must invent and be innovative. • Huge capital stock: investment, not exports, leads China’s economy. It invested 48% of its GDP in plant, buildings, machinery and infrastructure in 2011. • China’s economy is being merged itself into the world innovation network, i.g. multinationals have opened 3,500 research institutions mainly in Shanghai and Beijing. Philips research center in Shanghai has 2,000 researchers. • More open for open and collaborative innovation.

9. 4.2 Negative aspects • Short of institutions to train, keep and attract talents, to innovate and respect innovations, to use its innovation resources efficiently, etc. • Arguable: culturally, Chinese people are lack of systematic thinking? Few in China could tell how to innovate in an industry or value chain manner.

10. 5. Opportunities? • 5.1 Europe’s strategic thinking: urgency to cooperate with China in innovation • “Europe must act urgently now to ‘lock in’ much greater science and technology-led business collaboration with China” (Dirk Jan van den Berg, Oct 2010) • 5.2 Needs from China’s macro economy: the country has to produce much more for its own people. • Growth area? Urbanization. Investment per square meter in a China town is much lower than a Dutch one. • 5.3 Work with any of the players: Chinese and foreign research institutions, foreign companies in China, and Chinese companies in Europe. • 5.4 Join in bilateral and Chinese domestic innovation programs.

11. Reference information can be provided upon inquiry • Such as: • China’s science and technology system. • China’s policy on talents. • Major R & D funding sources.