OECD Report Evaluates China's Path to Research, Development and Innovation. (August 30, 2007)

    China needs a better return on its fast-rising investments in research and development (R&D) and higher education if it is to meet its goal of becoming an “innovation-oriented” economy by 2020, according to the sixty-eight page report OECD Reviews of Innovation Policy: CHINA - Synthesis Report released this past Monday.

According to the OECD media release:

China still has a long way to go to build a modern, high-performance national innovation system. R&D spending has increased at an annual rate of 19% since 1995 to reached US$30 billion (at current exchange rates) in 2005, the sixth worldwide. China has made very impressive investments in R&D, human resources and R&D infrastructure to date, at the same time, China has still a long way to go to build a full-fledged and mature national innovation system. But much of this focused on the high-technology sector, updating equipment and facilities, and experimental research for new products rather than on basic research, the foundation of long-term innovation. More investment is needed in sectors such as services, energy, environmental technology and basic research.

 

Looking ahead, China could also face a shortage of skilled workers in science and technology, despite currently having more researchers than any other country except the United States. In recent years, undergraduate degrees in science have even fallen in absolute terms. China should improve the quality of science education to attract more students, with more emphasis on managerial expertise and entrepreneurship.

The OECD report goes on to say: "the innovative capabilities of the Chinese business sector remain weak. Further reform of China’s financial system which is still dominated by state-owned banks would help business innovation."

And it emphasises that "Universities play a key role in China’s innovation system. They run more than one in ten Chinese science and technology (S&T) firms... Further reform of these public research organisations would help increase the quality and efficiency of researchers: this is important because current demand for talented managers or highly qualified researchers exceeds supply."

The report also admonishes the Chinese government: "[T]he design, management and evaluation of [its R&D] programmes could be improved and made more market-oriented.

Among the evaluations by the OECD in this report are the relative investments in R&D of foreign and domestic owned firms based on percent of value added as of 2004 or latest data available.

They have also done a graphic evaluation of the governance problems China must overcome to move significantly ahead:

And the report summarises its views in part: