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China Center for Economics and Business Innovation and China’S Economic Future

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China Center for Economics and Business Innovation and China’S Economic Future Volume 2, Number 1 February 2007 China Center For Economics and Business Innovation and China’s Economic Future China Center Founding Becoming a Global Leader in Innovation by 2020 Members China has taken its place among the world’s largest economies. But behind the admir- the agilent technologies able economic boom of the past thirty years is the fact that the level of technological foundation contribution to China’s growth lags well behind that of other major economies. In response to that gap, China has launched a national campaign to develop an enhanced capability for bekaert group innovation. One of the key elements of the government’s 11th Five Year Plan is the goal to become a society that successfully supports innovative thinking and a global leader in the campbell soup company innovation by the year 2020. caterpillar inc. The National Bureau of Statistics (NBS) has been charged with a key role in this initiative, china development bank including defining, measuring and analyzing China’s innovative activity in the coming years. As an important part of this effort, NBS joined with The Conference Board on two dbs (development bank of important efforts to help define the key issues faced by China: singapore) • The 2006 Economic Growth Forum: Innovation and China’s Economic Future was held on deloitte & touche October 21-22, 2006 in Suzhou, China. It brought together leaders of the Chinese government, Chinese and foreign business leaders, academics, and industry experts to general electric company share their perspectives on innovation and China’s future. pricewaterhousecoopers, • A Survey of 1,600 Chinese enterprises and 90 large US companies was conducted to llp provide insight into the current state of innovative activity in these companies and some comparative information on organization and investment in research and reuters development. reliance industries, ltd. This report summarizes the discussion, findings and debate of the 2006 Economic Growth Forum. 2 Innovation and China’s Economic Future The Conference Board Speakers Mr. Xie Fuzhan, Commissioner, Mr. Craig Mundie, Dr. Andreas Tschirky, General National Bureau of Statistics Chief Research and Strategy Manager, Roche R&D Center China Officer, Microsoft Ms. Gail Fosler, Executive Vice Dr. Francis Ka Kui Lung, Director, President and Chief Economist, Mr. Zhang Baolin, Vice President, China & International Business, The Conference Board Changan Automobile (Group) Co., MTR Corporation Ltd. Ltd. Mr. Zhang Weiguo, Vice Governor, Mr. Bijan Dorii, Managing Director, Jiangsu Province Ms. Leila Fernandez-Stembridge, GE China Technology Center Officer, Delegation of the Mr. Yan Li, Mayor, Suzhou European Commission in China, Mr. Thomas Parenty, Author, Municipality European Union Digital Defense Ms Zhang Meiying, Vice Dr. Kenneth DeWoskin, Senior Mr. Richard Johnson, Senior Chairwoman, The Chinese People’s Advisor, PricewaterhouseCoopers Partner, Arnold & Porter, LLP Political Consultative Conference Mr. Zhu Congjiu, President, Mr. Xu Xianchun, Deputy Mr. Su Ning, Vice Governor, Shanghai Stock Exchange Commissioner, National Bureau of People’s Bank of China Statistics Mr. Ronald Want, Head of Mr. Liu Shijin, Deputy Director, Investment Banking, Softbank Mr. Yao Jinguuan, Chief Economist, Development Research Center of Investment National Bureau of Statistics the State Council Mr. Erh-Cheng Hwa, Chief Mr. Xu Yifan, Deputy Mr. Adrian Dillon, Chief Financial Economist, China Construction Commissioner, National Bureau of Officer and Executive Vice Bank Statistics President, Finance and Administration, Agilent Mr. Gregory Shea, President and Technologies Managing Director, US IT Office, Beijing Dr. Zhang Weiying, Dean, Guanghua School of Management, Mr. Ching Chuiang, President, Peking University Motorola China Technology Limited, and Director, Motorola Mr. Shang Ming, Director-General, China R&D Institute Department of Regulations and Laws, Ministry of Commerce Ms. Piper Cole, Vice President, Global Public Policy and Government Affairs, Sun Microsystems, Inc. Innovation and China’s Economic Future The Conference Board 3 Forum Overview Third, the role of the socialist market economy in resource The Chinese Economic Growth Forum was held in allocation continues to improve, which enhances the effi- Suzhou, China on October 21-22, 2006. It was co-spon- ciency of economic operations. On the other hand, the abil- sored by The National Bureau of Statistics, The ity to manage and track key economic parameters becomes Conference Board, Jiangsu Province and Suzhou more difficult and blocks the national economy from tak- Municipality. The Forum was attended by more than 200 ing the track of scientific development. participants from government, Chinese and multi-national companies, industry associations and academia. Fourth, China continues to open to the outside world and China’s economy is more linked to the global economy, The purpose of the Forum was to bring together govern- which leads to more dependence on the outside world and ment leaders and policy makers, CEOs of Chinese and increased risk. global companies, academics and technical experts to dis- cuss China’s focus on becoming a global leader in innova- We need to face all these challenges in order to develop tion by the year 2020. ourselves and revitalize China. Otherwise, the conflicts may become acute and economic development delayed. An important way to address such problems is to transform our growth pattern through innovation. Opening Comments Commissioner Xie Fuzhan of NBS opened the confer- In her opening address, The Conference Board’s Executive ence by stressing the crucial role innovation will play in Vice President and Chief Economist Gail Fosler acknowl- the sustained growth of China’s economy in the coming edged the important role that the National Bureau of years. Innovation, particularly technological innovation, is Statistics plays in defining and measuring the progress of vital to global economic growth and provides the opportu- China’s innovation strategy and the effect it will have on nity for developing countries to reduce the gap with the China’s economic growth. The Conference Board and NBS developed world and achieve rapid economic advances. are natural partners in this effort because of their history of cooperative work in developing and refining statistical The Chinese government has made “enhancing the capabil- measurement of China’s economy. The intention of China ity of independent innovation” a core strategy in the to become a truly global player in innovation by the year Eleventh Five-Year Plan. The enhanced creativity of soci- 2020 will require a global perspective and increased trans- ety as a whole and the development of an innovation-based parency that NBS is committed to achieving. nation were also listed as one of the nine major goals for building a harmonious socialist society by the year 2020 by the Central Committee in the recent Sixth Plenary Session, which confirms the importance given to this effort “Forums such as this unite the by the Chinese government. National Bureau of Statistics and There is a sense of urgency involved in the move to The Conference Board in a common enhance innovation. There are long term structural con- flicts in the Chinese economy that will impede continued purpose — to support the continuing economic development if they are not addressed. growth of high quality economic First, while economic growth is fueling industrial expan- data and analysis that allows both sion, there is uneven development between urban and rural areas, unbalanced regional growth, a huge consumption of the Chinese government and private energy and environmental pollution. enterprise in China and around the Second, the marginal labor force in rural districts is mov- world to make informed strategic ing into non-agricultural industries, providing cheap labor for the development of second and third tier industries, but choices.” also exerting a huge pressure on employment, social secu- Gail Fosler, Executive Vice President and rity and unified planning in urban and rural areas. Chief Economist, The Conference Board 4 Innovation and China’s Economic Future The Conference Board Theme Report Keynote Addresses Madame Zhang Meiying, the Vice Chair of the National Three leaders were invited to speak on the topic of China People’s Political Consultative Conference, placed the con- and innovation in the context of globalization. ference theme in the context of the 11th Five-Year Plan, which calls for an innovative society by the year 2020. Mr. Su Ning, Vice Governor of the People’s Bank of China, spoke of the need to increase the level of innovation Technological innovation is driven by the internal demand in China’s financial system so that it is better adapted to of the economy. Capital input can lead to high economic economic development. One important goal is the creation growth, which China has certainly experienced, but heavy of new financial technology tools to better manage finan- capital input will result in surplus and low efficiency. Only cial risks. Another goal is to develop increased innovation technology-based growth is sustainable and reliable. in financial markets, including creating new financial prod- ucts and services. Currently, China still relies heavily on the import of high- tech products. China’s participation is primarily in assem- As China’s financial institutions become more integrated bly, which is low value-added. If core technology is with financial markets
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