INNOVATION INCUBATOR: An exhibition on indigenous innovation achievements was kicked off in Tsinghua Science Park in Beijing's Haidian District on September 12, 2006. The park is backed by a talent pool of students and researchers from universities and institutes  (JHSB)

Beijing Review: What is the main goal of China's indigenous innovation strategy?

Gao Xudong (JIANG XIAOYING)

Gao Xudong: Ultimately, China wants to help domestic enterprises engaged in fierce competition with foreign counterparts succeed in the global marketplace. By improving its innovation capability, the country is set to develop cutting-edge technologies and advanced products with its own intellectual property rights (IPRs). The vigorous efforts that indigenous innovation requires in terms of R&D will help China acquire the new knowledge and technologies to move ahead with the strategy.

What was annoying the country when it decided to launch the strategy?

For several decades, China introduced a number of foreign technologies to propel domestic economic development. Many domestic appliance-makers, for example, have enjoyed global recognition as they gain a competitive edge by taking advantage of foreign technologies.

But the dynamics have changed since China entered the WTO in 2001. Many multinationals now see Chinese enterprises as growing competitors, and have tried to make it more difficult for Chinese rivals to acquire technologies from overseas.

Most Chinese companies are also latecomers to the international market, and find it excruciatingly difficult to compete with the older, more experienced foreign giants. Some Chinese companies even face the risk of being marginalized due to a lack of core technologies. This risk was barely felt in the past, but now casts an ominous shadow over prospects for Chinese businesses.

That's why it is urgent now for domestic companies to form their own team of researchers and grab core technologies to sharpen their competitive edge. It's also the only viable solution for Chinese enterprises competing internationally.

How is the innovation strategy progressing? What are the Central Government's support policies?

Strategies to make China into an innovative nation were outlined at the National Science and Technology Conference in early 2006. The Central Government later announced the National Medium- and Long-term Science and Technology Development Plan (2006-20), with the intention to create a business environment conducive for enterprises to take the initiative in technological innovation. The government has since handed out an array of policy incentives in 10 areas, including R&D funding, tax breaks, financial support, government purchases, foreign technology acquisition and assimilation, talent pool management, IPR protection and policy coordination.

There are opinions that the market, instead of the government, should play a larger role in promoting indigenous innovation in a market economy, and that too much government intervention will violate WTO rules. But I think these opinions are totally unfounded. The government should play an active role in promoting innovation with unwavering support. In this way, enterprises will realize the importance of developing their own core technologies; and it will help boost their confidence, mobilize more investment and encourage them to innovate effectively.

The Chinese Government can take numerous steps to foster a better environment for indigenous innovation.

First, policies should be adjusted to encourage acquisition of only truly advanced technologies, while discouraging imports of technologies China is capable of developing.

Second, the government should support research institutes, universities and a few leading enterprises to make breakthroughs in R&D of key technologies.

Third, efforts must be made to cultivate the market for homegrown technologies and products. While opening the market to foreign investors and products, we have to make sure such moves will not mar the competitiveness of domestic enterprises. While fulfilling China's WTO commitments, we should cancel preferential policies for foreign companies, especially those directly competing with Chinese enterprises in the Chinese market.

What substantial measures must China take to beef up indigenous innovation?

Many Chinese enterprises have been successful in developing their own technologies. The success was attained largely because of their down-to-earth attitude and ceaseless experiments. During the process, they built confidence and came up with new research methods.