Fostering global prosperity: China and US innovation policy

By Jon Taylor
0 Comment(s)Print E-mail, April 16, 2017
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"The direction of China's science and technology development is innovation, innovation, and innovation." – President Xi Jinping, 2014

"The White House Office of American Innovation will focus on implementing policies and scaling proven private-sector models to spur job creation and innovation." – President Donald Trump, 2017

In 2016, China joined the ranks of the world's top 25 most innovative economies for the first time. Its performance in the Global Innovation Index was also the first time that a middle-income country has joined an area traditionally been dominated by the highly-developed economies.

China's progression from emerging economy to innovative nation reflects the country's substantial commitment to scientific and technological advancement. China has pledged to be a fully innovative country by 2020 and a global innovation leader by 2050, transforming the country from a factory-driven economy to an innovation-driven one. That commitment has been most visible in research and development expenditures that are edging closer to developed countries such as the U.S. A 2014 U.S. National Science Board report noted a clear and unmistakable trend: The center of high-tech gravity is shifting to Asia, and to China in particular.

This is not to say that U.S. innovative power has diminished, because it hasn't. Rather, China has risen to the competitive challenge through a combination of innovation policies and state-guided entrepreneurship. Since the reform and opening-up began, China has experienced rapid economic growth and advancement from low-end manufacturing and cheap products to high-tech creation.

This will have global game-changing consequences as China can rightly claim that its strategy of compressed development is a viable alternative model for emerging nations seeking to pursue scientific and technological innovation.

Both China and the U.S. believe that innovation is essential to continued economic development and prosperity. With this in mind, they pursue policies aimed at making innovation a key component in fostering policy solutions to a variety of economic and social challenges.

Chinese and U.S. innovation policies arose in different ways. Those in the U.S. grew out of World War II and the Cold War. Practical applications of research were married to academic interests and direct government funding in order to produce nuclear weapons, technologies for manned space flight, and Information and Communications Technology (ICT).

During the past 30 years, U.S. innovation policy has been focused primarily on maintaining the country's lead in basic research in science and technology while also promoting sustainable economic growth.

Chinese science and technology policy reflects the history of New China. In the early years, innovation policy largely emulated the Soviet model. In 1956, the central government implemented the country's first 12-year science and technology development plan. Since then, it has exponentially increased investment in basic research to place the country at the forefront of global innovation.

In 2016, President Xi Jinping noted that science and technology was to be a bedrock upon which "the country relies for its power, enterprises rely for success, and people rely for a better life."

However, "the situation of our nation being under others' control in core technologies of key fields has not changed fundamentally, and the country's science and technology foundation remains weak."

Strengthening this foundation requires a long-term strategy for promoting economic growth by advancing mass entrepreneurship and mass innovation. That strategy is prominent within the 13th Five-Year Plan.

Moving China towards indigenous innovation has been a long-standing plan, embodied in large part by successive policies such as the Medium and Long-term Plan for Science and Technology (MLP), the Five-Year Plan for Science and Technology (FYP), and the National Science and Technology Programs that have promoted technology transfers, increased research output, and boosted patent applications.

Echoing President Xi's concerns, Premier Li Keqiang's Government Work Report to the National People's Congress in the past two years stressed innovation. Specifically, Premier Li emphasized the need to implement policies that can promote technology innovation and the transformation of traditional industries, as well as strengthening China's capability to make technological innovations.

Part of this is the "Made in China 2025" strategy, moving the economy beyond the stage of creating value for labor-intensive industries into a deeper industrial manufacturing phase, which will include high-end technology. The policies include the creation of national innovation demonstration zones, financial support, facility construction and administrative assistance for start-ups, new financial service models, the simplification of foreign investment rules, and the reduction of regulations to create an amicable environment for business start-ups and innovation.

China is no longer the haven for cheap, low quality products that unfortunately remains fixed as a stereotype in the imagination of some Americans. China is home to four of the world's ten largest internet and technology companies – Alibaba, Baidu, Tencent, and Xiaomi.

China's transition from being an imitative latecomer to an innovation-driven leader should not be viewed by Americans as a threat. Rather, it should be seen as a welcome sign of growing global prosperity.

Dr. Jon R. Taylor is a Professor of Political Science and Chair of the Department of Political Science at the University of St. Thomas in Houston.


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