Reforms needed to build a modern innovation system in China, says OECD
China may not pose the immediate threat to Europe's competitiveness in research and development that many Europeans have feared. A new survey from the Organisation for Economic Cooperation and Development (OECD) concludes that China still has a long way to go to build a modern, high-performance national innovation system. Spending on research and development (R&D) has increased by 19% annually since 1995, reaching USD 30 billion (€22 billion) by 2005. This brought the country up to sixth position worldwide in terms of R&D spending. But much of the spending has been channelled into the high-technology sector, used to update equipment and facilities, or for funding experimental research for new products, rather than basic research, which the OECD describes as 'the foundation of long-term innovation'. It is perhaps surprising to hear that China could also face a shortage of skilled science and technology workers in the future. China has more R&D workers than any other country except the US, but the number of young people graduating with science degrees has fallen in real terms in recent years. 'China should improve the quality of science education to attract more students, with more emphasis on managerial expertise and entrepreneurship,' says the OECD. Indeed, current demand for talented managers or highly qualified researchers is already exceeding supply, finds the review. The OECD also reports that the innovative capabilities of the Chinese business sector remain weak, in spite of a series of reforms during the mid 1980s. 'Further reform of China's financial system, which is still dominated by state-owned banks, would help business innovation,' reads an OECD statement. More open and efficient capital markets would also enable entrepreneurs to invest in higher risk areas such as biotechnology, it adds. Governance of science and innovation policy also needs more attention, according to the OECD, which notes that China's 'ability to allocate public resources to support government priorities has played a key role in closing the technological gap between China and the rest of the world. But the design, management and evaluation of programmes could be improved and made more market-oriented'. Science policy could also benefit from a mechanism to coordinate initiatives more effectively across government departments, and guidelines to ensure that duplication in regional and national programmes is avoided. Creating an independent agency to monitor and evaluate the success of various programmes would also be valuable, the review suggests. Finally, better protection of intellectual property rights (IPR) would encourage both domestic companies to innovate, and foreign firms to collaborate with Chinese counterparts. China is not a member of the OECD, but participates as an observer on some OECD committees.
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China