R&D and Innovation in China

C B Special Feature : Innovation and Technology FinancingSpecial Feature : Innovation and Technology Financing

R&D and innovation in China

An overview of financing programmes

Ministry of Science and Technology

In recent years, China has embarked on a series of programmes and activities de- signed to promote R&D and innovation in R&D organizations and industries. Key technology sectors have been identified for financing innovative projects that would eventually promote entrepreneurship and enterprise development in the country. To enhance the country’s innovative capacity China will infuse vital funds into R&D projects in high-tech and emerging areas as well as into technology parks. This article gives an overview of current programmes to promote R&D and innovation.

National High-tech R&D year Plan, the 863 Programme contin- Programme ues to play its important role. n 1986, to meet the global challenges of technology revolution and com- Orientation and objectives Ipetition, four Chinese scientists, The objectives of this programme during Wang Daheng, Wang Ganchang, Yang the 10th Five-year Plan period are to Jiachi, and Chen Fangyun, jointly pro- boost innovation capacity in high-tech posed that China’s high-tech develop- sectors, particularly in strategic high-tech ment should be accelerated. The late fields, in order to gain a foothold in the Chinese leader, Mr. Deng Xiaoping, per- world arena; to strive to achieve break- sonally approved the National High-tech throughs in key technical fields that con- R&D Programme, which was named the cern the national economic lifeline and 863 Programme. Implemented during national security; and to leap-frog into key three successive Five-year Plans, the high-tech fields in which China either programme has boosted China’s overall enjoys relative advantages or should high-tech development, R&D capacity, take strategic positions to fulfill strategic socio-economic development and na- objectives in the implementation of the tional security. In April 2001, the Chinese third step of its modernization process. Ministry of Science and Technology State Council approved continued imple- During the 10th Five-year Plan pe- People’s Republic of China mentation of the programme in the 10th riod, the 863 Programme will continue to 15B, Fuxing Road, Beijing, 100862 Five-year Plan. As part of the national aim at the forefront of world technology P. R. China S&T programme trilogy of the 10th Five- development, intensify innovation efforts

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and realize strategic transitions from pac- and other new materials, along with major industries, facilitating industrial ing front-runners to focusing on leap-frog related technologies for the develop- upgrading, developing China’s own development. Efforts made during the 5 ment of aviation, the maglev train, and features of high technologies, and years will greatly enhance China’s high- information storage and access, in or- leap-frogging progress in the high-tech tech innovation capacity in selected fields der to meet major demands of national field. and improve the international competi- security and economic development, tiveness of major industries. The 863 Pro- by utilizing China’s characteristic re- Organization and management gramme will help China master a num- sources, environment, and technical ber of technologies with industrial poten- strength. By selecting advanced man- Expert responsibility system tial and proprietary IPR. It will nurture a ufacturing technologies that cater to During the 10th Five-year Plan period, number of high-tech industrial growth globalized agile manufacturing in the the programme continues practising sources, which will optimize and upgrade 21st century, the Programme will de- an “expert responsibility system”. Ex- China’s industrial structure, as a way of velop advanced integrated manufac- perts are engaged in technical deci- fostering both the individual and the over- turing systems and common key tech- sion-making and judging the trend of all strength of high-tech industries. It will nologies leading to the development high-tech development, while further also develop innovative and enterpris- and upgrading of China’s manufactur- developing the decision-making role ing talents for high-tech R&D and indus- ing industry. of the government. The system is tiered trialization. with expert committees (priorities) and To achieve breakthroughs in key tech- expert panels (subjects). The former Major tasks nologies for environmental protec- supervise, assess, and give advice on In line with national objectives and tion, resources and energy develop- project implementation in relevant pri- market demands, the programme ad- ment to serve sustainable develop- ority fields. The latter are responsible dresses a number of cutting-edge ment in Chinese society for technical decision-making on rele- high-tech issues of strategic impor- vant subjects and their project process tance and foresight during the 10th Development priorities management. Five-year Plan period. They are: In accordance with major tasks, development priorities are categorized into Project management To develop key technologies for the Priority projects and Key projects. During the 10th Five-year Plan period, construction of China’s information Priority projects are guided by the Programme is adopting a project infrastructure encouraging innovation, obtaining IPR management system, which includes The 863 Programme focuses on de- proprietorship and addressing key calculation of the full budget, total cost veloping a number of key technolo- technological issues. Priority projects accounting, and a project leader re- gies in the next five to 10 years and conduct R&D in 19 subjects that are sponsibility system. To pool resources establish systems of significant val- likely to have the most significant im- and focus on key issues, key projects ue for application. It aimed to acceler- pact on enhancing China’s overall na- are managed by the general expert ate national socio-economic develop- tional strengths. These subjects range panel. As for R&D budget management, drive industrialization through in- over six high-tech priority fields in the ment, priority projects will be mostly fi- formatics, and enable China to ap- civil sector - IT, bio-technology and nanced by the government and will proach or catch up with international advanced agricultural technology, ad- adopt a project budget system. Mean- pioneers in selected fields by the year vanced materials technology, ad- while, local governments, industries, 2005. vanced manufacturing and automation enterprises and the whole of society technology, energy technology, and will be encouraged to increase input To develop key biological, agricultural resource and environment technology. into high-tech R&D. and pharmaceutical technologies to Key projects are centred on major improve the welfare of the Chinese systems and projects and guided by Relevant measures people pooling resources to address signifi- A series of measures has been adopt- The 863 Programme concentrates on cant high-tech issues in line with de- ed for the smooth implementation of developing key technologies in agri- mands of major national strategies, the programme in the 10th Five-year culture, pharmaceuticals, and other markets and applications. These issues Plan period. related areas. It will enhance the over- hold strategic significance for China’s z Encourage innovation. In awarding all bio-technological R&D level and high-tech development and participa- and evaluating projects, proprietary capacity by a significant margin. tion in international competition. They intellectual property right (IPR) ac- will facilitate the formation of new eco- quisition is treated as an indicator To master key new materials and ad- nomic growth sources and industrial to encourage innovation. vanced manufacturing technologies clusters with international competitive- z Enhance the innovation capacity of to boost industrial competitiveness ness, and serve as demonstrations. enterprises and push them to be- The 863 Programme attaches impor- They will also be crucial elements in come technical innovation entities. tance to developing nano-materials enhancing the competitive edge of For application-oriented research,

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measures have been adopted in nical support to industrial restructuring, technologies in traditional industries project application, assessment the sustainable development of soci- is expected to be sped up. and evaluation. ety, and the enhancement of living stan- Other priorities are to strengthen en- z Strengthen IPR management and dards by achieving breakthroughs in gineering research in application protection. The study and analysis key technologies, introducing techni- technologies, to develop technolo- of IPR before and during project cal innovation, and applying high and gies and equipment for clean ener- implementation have been strength- new technologies. gy, intelligent traffic system, and tex- ened, with clear definition of the tile post-treatment, to enhance add- ed value of products, and to boost rights and interests of the State, General objective the technical level and domestic con- project stakeholders, and con- The major goal of the Programme is to cerned parties in the application, tent of complete sets of equipment. address pressing major S&T issues in z With the informatization process in development, and utilization of IPR. national economic and social develop- the financial sector as a priority, the z Strengthen the integration of the ment. The programme concentrates on intention is to accelerate the devel- programme with local high-tech de- the R&D of key and common technolo- opment of IT and other high technol- velopment. Projects have been ini- gies that drive technical upgrading and ogies, along with related industrial tiated to guide local high-tech de- restructuring of industries that promote development, to render technical velopment and associated indus- sustainable social development. support to the informatization of the tries to nurture economic growth The programme provides ad- national economy. sources. vanced and applicable new technolo- z With environmental protection and z Encourage international coopera- gies, materials, techniques, and equip- rational utilization of resources as tion. Special funds are earmarked ment to industrial and agricultural pro- priorities, the attempts are to devel- to facilitate the integration of the duction, while facilitating the applica- op key technologies in urban envi- 863 Programme with the ‘Pro- tion and industrialization of high-tech ronmental pollution control, to push gramme on Major International Co- achievements to enhance the interna- forward the rational utilization of wa- operation Projects’; and implemen- tional competitiveness of key industries ter resources, to develop and dem- tation of international cooperative and human welfare. It also aims to cul- onstrate technologies for the improvement of regional ecology and projects are being supported and tivate an elite group involved in key environment, to intensify technical encouraged within the framework technology R&D and to establish a research in exploration and the de- of the 863 Programme. number of internationally recognized velopment of oil and gas fields and technical innovation bases. strategic solid mineral resources, to Key technologies establish technical supporting sys- The Key Technologies R&D Programme Major tasks tems for disaster prevention and mit- is the first national S&T programme in By organizing and supporting a num- igation, and to promote sustainable China. It aims at addressing major S&T ber of major projects, priority projects social development. issues in national economic construc- and guidance projects, while imple- z With the modernization of traditional tion and social development. Initiated menting relevant measures, the Pro- Chinese medicine (TCM) as a gate- in 1982 and implemented through four gramme is expected to accomplish the way to innovation, the intention is five-year plans, the programme has following six major tasks during the to develop key technologies in the made remarkable contributions to the 10th Five-year Plan period: TCM industry to secure its world- technical renovation and upgradation z An initial effort is to promote in- leading position. of traditional industries and the forma- depth agro-product processing by z With the social cause as a goal, it is tion of new industries. It has also boost- developing a number of key tech- hoped to intensify research on ma- ed the sustainable development of our nologies and products for sustain- jor public welfare technologies and society and enhanced national S&T able agricultural development. develop advanced and applicable strength and innovation capacity. This is expected to upgrade tech- technologies and products to further nical levels in agricultural pre-pro- enhance the living standards of the Orientation duction, production, and post-pro- Chinese people. Research on technical standards and measurements As one of the national S&T programme duction, optimize the agricultural will be intensified to facilitate the trilogy in the 10th Five-year Plan, the structure, improve the quality and establishment of a technical stan- programme maintains its goal of serv- efficiency of agricultural develop- dardization system for China. ing national economic construction. It ment, and enhance the competi- is geared to meeting major demands tiveness of agricultural products. of economic construction and sustain- z With the manufacturing industry as Organization and management able social development. It focuses on a gateway to new innovations, ef- In line with the management principle promoting technical upgrading and forts will be redoubled to develop of ‘standardization, rolling manage- restructuring of industries, and tackling common key technologies for ba- ment, simplification and transparency’, major technical issues concerning sic and pillar industries. Also, the the operating mechanism of the pro- public welfare. It works to provide tech- application of IT and other high gramme is based on a mutual inde-

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pendence of decision-making, imple- as patents, while project implementa- ing of the 2008 Olympic Games, name- mentation and supervision. tion emphasizes proprietary IPR acqui- ly technical issues and technical dem- sition, in particular invention patents. onstrations, concerning the environ- Strengthening management The attempt is to encourage and sup- ment, traffic, digital Olympics, scientific Projects are approved on a rolling ba- port findings derived from the pro- research on sports, and S&T popular- sis with their terms generally less than gramme to apply for patents both at ization. It will provide substantial S&T three years. The programme has intro- home and abroad, and to incorporate support to the creation of a clean, beau- duced intermediary agencies as part of IPR management into the programme tiful, safe, and convenient environment its management mechanism. Dynamic management process. for the successful holding of Olympics supervision throughout project imple- with high quality. mentation has been strengthened and Dedicated projects During the 10th Five-year Plan necessary adjustments have been To facilitate China’s Western Develop- period, the project will work on major made on contents, objectives, and bud- ment Strategy and its hosting of the Olym- Olympics-related issues, such as sand- geting in line with the State demands, pic Games in 2008, the programme has storm prevention and control, weather market changes and project progress. launched two dedicated projects. monitoring, sewage treatment, intelligent traffic control, digital news and information systems, an intelligent games Classified management Western development project management system, scientific training, z Major projects: The project man- A number of priority projects have been sports facilities, and analeptic testing. agement panel is responsible for arranged and coordinated for the pro- the overall design and implemen- tection and improvement of regional tation of sub-projects. ecology and environment, the exploi- 973 Programme z Priority projects: In accordance with tation of resources with comparative Basic research is a driving force for the the characteristics and needs of advantages and development of indus- progress of human civilization, a source the projects, the Ministry of Science tries with local features, and the pro- and backbone of S&T and economic and Technology authorizes rel- motion of regional informatization. The development, a precursor of inventions evant governmental agencies in and new technology, and a cradle of industrial sectors, local govern- project is expected to enhance S&T S&T talents. Continuously fast socio- ments or project initiators to take innovation capacity in the western re- economic growth imposes increasing- charge of management. gion, accelerate industrial restructur- ly higher demands on basic research, z Guidance projects: Local S&T au- ing and upgrading, facilitate the fast while many scientific issues press for thorities will manage and supervise development of industries with local projects. features and high-tech industries, and solutions derived from in-depth basic Each project is managed through two- achieve coordinated development be- research. Significant breakthroughs levels: project level and task level. tween regional ecology, environment from basic research often trigger re- and economic construction. markable changes in economic and Priority tasks for the project in- social sectors. On 4 June 1997, the Industry-university-research cludes: optimizing, restructuring, and State Science and Education Steering institute partnership establishing S&T innovation bases, Group decided to formulate ‘The Na- Priority is given to supporting joint ef- tional Plan on Key Basic Research and forts made by universities, research in- including R&D centres, project dem- Development’ and organize the imple- stitutes and enterprises to undertake onstration, and incubators; developing, mentation of the ‘National Programme projects. A major pre-condition for integrating and demonstrating key on Key Basic Research Project’, also project approval is that enterprises take technologies that serve ecological and called the ‘973 Program’. The purpose part in technical development and in- environment construction, and con- of these two initiatives was to strength- dustrialization. Enterprises serve as the verting and adding value to local fea- en basic research in line with national principal entity in the implementation tured resources; creating new patterns of projects that are highly industrialized for high-tech industrial development in strategic targets. or involve intensive engineering. selected areas of the western region; conducting S&T training at different lev- Orientation els and involving extensive domains Encourage bidding Based on the existing basic research Projects are open for public bidding in order to build up a high calibre S&T programmes conducted by the Nation- and contractors are selected on the contingent; establishing a sound mech- al Natural Science Foundation and basis of openness, justice and equali- anism for east-west cooperation based early-stage basic research key projects, ty. The goal is to optimize R&D resourc- on the supplementing and joint devel- the 973 Programme organizes and im- es distribution and promote efficient opment of mutual strengths. plements key projects to meet national utilization of the R&D budget. strategic needs. The strategic objective Olympic games project of the programme is to mobilize Chi- na’s scientific talents in conducting in- Strengthen IPR management This project addresses a number of hot novative research on major scientific Project approval requires necessary issues and bottleneck problems need- issues in agriculture, energy, informa- analysis and assessment of IPRs such ing to be solved for the successful hold-

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tion, resources and environment, popu- lished scientists with organizational jor component of the national S&T lation and health, materials, and relat- skills and international influence will planning system. The endeavour aims ed areas. This is in accordance with the be encouraged and supported to play to adjust, enrich, and strengthen the objectives and tasks of China’s econom- a role in the global arena, thereby rais- S&T capacity of national S&T research ic, social, and S&T development goals ing China’s international S&T status. bases of different kinds. It will also ra- leading up to 2010 and the mid-21st tionalize the distribution of, and efforts century. The programme will build up a Improve programme management to build up, S&T capacity. It will con- solid S&T foundation for the sustainable It is necessary to establish and improve duct S&T activities involving basic data socio-economic development of the a scientific assessment and manage- and national standards, resource spec- nation. Also a contingent of scientific tal- ment system to serve innovation, avoid- imens, etc. The programme will pro- ents will be trained and a number of high- ing the folly of pursuing short-term and vide shared resources and conditions level national research bases will be quick results. Scientists will be encour- for scientific research and technical established to upgrade the primary in- aged to explore new research fields development, and give powerful sup- novative capacity of the nation. courageously, and guided in conduct- port to national S&T development. ing innovative researches in line with The Programme contents include: Major tasks national demands and scientific fron- State Key Laboratories Development During the 10th Five-year Plan period, tiers. Programme, National Key Science Projects Programme, National Engi- the 973 Programme adopts a people- neering Technology Research Centres oriented approach to perform the basic Organization and management Development Programme, R&D Infra- task of enhancing innovation capacity. structure and Facility Development Project management Programme, S&T Basic Work Pro- Research on major scientific issues Projects under the programme adopt gramme, Programme on Research for for development a system in which the chief scientist Public Good, and Programme on Key In line with national strategic demands, and the team leader take responsibili- International S&T Cooperative the programme continues to strength- ties. Budget management consists of Projects. en major basic researches in agricul- total amount sub-contracts budgeting, The major tasks for this programme ture, energy, information, resources and process control and total cost account- in the 10th Five-year Plan period are to environment, population and health, ing. This management of budgeting will strengthen activities involving basic S&T materials, and other areas. It promotes help create a sound and innovation- and public interests and to promote in- research and innovation in order to seek friendly environment. ternational S&T cooperation along with breakthroughs in major frontier fields of constructing national S&T bases. far-reaching and strategic importance, Government decisions with expert such as life science, nano-technology, consultation Environment building for information technology, earth sciences, It is intended to set up a high-level ad- etc. It also reinforces comprehensive visory group of senior experts in charge S&T industries cross-disciplinary research and innova- of consultancy, assessment, and super- Environment building for S&T indus- tive integration to develop new ideas, vision of the programme to ensure its tries is a major component of the na- concepts, inventions and theories so as scientific, democratic, and fair imple- tional S&T plan in the 10th Five-year to lay a solid base to leap-frog social mentation. Plan period. It aims to strengthen the productivity. policy for environment construction, to promote regional economic develop- Strengthen process management ment, to enhance technical services Cultivate personnel with innovative The ‘2+3’ management pattern will be and exchanges, to stimulate develop- capabilities introduced. That is, after two years of opment of small and medium-sized S&T The programme is vigorously people- eration, a project will receive a mid-term enterprises (S&T SMEs), to vigorously oriented to develop talent. The idea is evaluation to determine its development develop S&T intermediaries, and to to stabilize key personnel while nur- plan for the following three years. Advi- create a sound environment for the turing reserve forces by providing more sory groups of specific fields will be put commercialization of S&T findings and support to research communities led in place to follow and manage the project their industrialization. by young and middle-aged scientists. while providing advice and suggestion A number of S&T programmes, Effective measures will be adopted to to the Ministry of Science and Technolo- such as the Spark Programme, the create a people-oriented environment gy. This will facilitate the smooth realiza- that will cultivate generations of talents Torch Programme, and the National tion of prescribed goals. by using the project as the cord, the Science and Technology Achieve- base as the backbone and human re- ments Outreach Programme have sources as the core. High calibre per- R&D and facilities shifted their orientation from project sonnel will be introduced from over- In the 10th Five-year Plan period, the implementation to environment con- seas, international exchanges and co- ‘R&D Infrastructure and Facility Devel- struction and development of S&T operation will be promoted, estab- opment Programme’ constitutes a ma- SMEs. Meanwhile, efforts are being

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made to stimulate the development of frog progress through project imple- sues with strategic impacts on na- national key new products, promote mentation while emphasizing on tional construction and develop- trade through S&T, provide innovation innovative breakthroughs and the ment. funding for small technology-based principle of ‘leaving something un- z The project will provide technical firms, and funding for application of done to focus on others’. support to address major issues that agricultural S&T, productivity promotion z Mechanism: to introduce and explore urge early solutions in national eco- centres, university S&T parks and ag- new mechanisms; to vigorously pro- nomic and social development. ricultural S&T parks. mote the implementation of three z The project will promote construc- During the 10th Five-year Plan major strategies, namely Human tion of an S&T innovation-based period, the major tasks of environment Resource strategy, Patent strategy platform and help build up national building for S&T industries are: to and Standards strategy, which form competitiveness. strengthen demonstration of S&T indus- new breakthrough points for mecha- z The project will strive for technical trialization, to establish S&T interme- nism and system innovations; and to breakthroughs and to leapfrog de- diary agencies and to construct an en- gather talented people and research velopment while promoting the for- vironment for industrialization. teams through project implementa- mation of new industries. tion. Implementation of the 12 mega-projects Mega-projects for science z Organization: To pool strengths will serve as a banner to demonstrate research from different sectors and vigor- that S&T will drive national socio-eco- ously promote collaboration among To meet new challenges and demands nomic development and leapfrog de- after China’s WTO accession, and to central government agencies and velopment. It will constitute another re- between central and local authori- cater to domestic strategic economic markable approach of S&T undertak- ties in order to mobilize all con- restructuring, the Ministry of Science ings in the new era. It is an important cerned parties and establish a joint and Technology, with the approval of step towards addressing issues raised promotion mechanism. the 10th session of the State Science from China’s accession to WTO and z Implementation: To integrate gov- and Education Steering Group, has the three major strategies on human ernment guidance with market decided to organize and implement 12 resources, patents, and technical stan- forces; to promote innovation and mega-projects of science research dards. It will also represent significant input patterns with industries as the based on the 863 Programme and the principal entities; and to realize the reform and innovation in S&T planning National Key Technologies R&D Pro- integration of industry-university- and management. By adopting the gramme. Through the implementation research institute. mode of major dedicated S&T projects, of dedicated projects, the Ministry z Management: To practise classified it will prove to be an effective way to hopes to take favourable positions in management, establish a project address major issues in socio-eco- the science frontier in the 21st century responsibility system and strive to nomic development by pooling re- and to achieve significant technical realize reform targets. sources, redoubling efforts and gath- breakthroughs, leading to industrializa- During the 10th Five-year Plan period, ering strength from various stakehold- tion in major fields related to national the 12 mega-projects will be granted a ers. This will introduce more break- socio-economic development, all with- total investment of approximately RMB throughs in a shorter period of time. It in three to five years. 20 billion (US$ 2.4 billion). Basic prin- is a feasible approach to embody ma- ciples for the approval of major projects jor national strategic objectives, fully Implementation guidelines are as follows: mobilize different sectors, and serve z Goal: to develop new products and z The state will provide priority sup- both S&T innovation and industrializa- nurture new industries, and leap- port to projects related to S&T is- tion.

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