Commentary: China has significantly improved in the field of innovation, and the country’s digital economy is developing very rapidly
In recent years, scientific and technological innovation in the People’s Republic of China has made great progress and the country’s strength has continued to increase. It is worth noting, however, that the internal and external environment of China’s scientific and technological innovation development has also undergone profound changes and timely adjustments need to be made in terms of objectivity, strategies and task structure. These include strengthening basic research, which is an extremely important aspect as a support for high-level technological self-sufficiency.
As an indicator for assessing the innovation ability of various economies and for making various States’ governments take economic decisions, the Global Innovation Index (GII) published on September 20 is used as a point of reference: an annual ranking of countries based on their abilities and success in innovation. The index is published by Cornell University (Ithaca, New York State), the Institut européen d’administration des affaires (Fontainebleau, Singapore, Abu Dhabi, San Francisco) and the World Intellectual Property Organization (UN specialized agency), in collaboration with other organizations and institutions, China has continued the progress made last year, rising from the 14th place in 2020 to the 12th in the world, and remains the only middle-income economy in the top 30. Since 2013, China’s GII ranking has risen steadily for nine consecutive years.
Furthermore, in the global “best technologies” ranking, China has 19 leading technology groups worldwide, including Shenzhen-Hong Kong-Guangzhou and Beijing, ranking second and third respectively. The rankings of Beijing (No. 3), Shanghai (No. 8), Nanjing (No. 18), Hangzhou (No. 21) and Wuhan (No. 25) have all risen compared to the global technology city group.
The GII is based on a collection of 81 international public and private sector indicators. The GII 2021 is calculated based on the average of the two sub-indices of innovation input and output, including institutions, human capital and research, infrastructure, and market maturity.
There are different aspects of business maturity, knowledge and technological and creative output.
The report shows that with Covid-19 causing numerous casualties and economic losses, governments and companies in many parts of the world have increased their investment in innovation, thus demonstrating that people are increasingly aware that new ideas are essential to overcome the epidemic and ensure a subsequent era of economic growth.
In 2020, scientific output, R&D expenditure, intellectual property applications and venture capital transactions continued to grow based on the strong previous performance. It is worth noting that, compared to previous recessions, R&D expenditure showed greater resilience during the epidemic-related economic downturn.
From the GII data regarding China, for the three-year period 2019-2021, it can be seen that this year China’s innovation output is better than its input. This year China’s innovation investment is ranked 25th, higher than in 2020 and 2019, and it ranks 7th in terms of innovation output.
In terms of sub-indexes, from the perspective of innovation input, China’s trade, competition, market size and researchers as a whole are among the main categories of indicators in the position of world leader among mathematical sciences; promotion of training companies; diversification of national industry; average spending of research and development companies; average score of the top three universities; development of industry groups; total capital formation as a percentage of GDP; corporate financing, etc.
From the perspective of innovation output, China’s advantages are concentrated in intangible resources, as well as knowledge creation and influence. They include applications for national patents and trademarks and the export share of products in total trade and other sub-indices, which have achieved global leadership.
In 2021, the broad index of knowledge dissemination has made significant progress. The segmented index of the share of IP income in total trade, in particular, shows that China is gradually turning from a major external IP introduction country to a major internal IP creation country.
During the yearly Boao Forum for Asia Annual Conference 2021, Liu Hua, Director of the WIPO’s China Office, said in an exclusive interview with China Business News that, already according to the GII 2020, a number of Asian economies – particularly China, India, the Philippines and Vietnam – have made significant progress in innovation rankings year after year, and the main areas of innovation have gradually shifted to the East, which shows the vitality of the Asian innovation ecosystem.
According to Liu Hua, China has grown quickly in intellectual property protection and is paying ever more attention to it. He said that the 14th Five-Year Plan 2021-2015 mentioned the implementation of the country’s strategy of strengthening intellectual property rights.
For example, among the twenty main indicators of economic and social development, three are related to innovation and creation and intellectual property rights. WIPO appreciates China’s achievements in protecting intellectual property rights and is very optimistic about China’s prospects for implementing the strategy of strengthening the country with intellectual property rights.
Zhang Mizhi of the Shanghai Institute of Science said that China took the lead in achieving technological innovation and economic recovery during the Covid-19 period and has seized the opportunity for innovation and development in the post-epidemic era.
From the perspective of specific indicators, the overall increase in the first-level indicator of knowledge and technology production has increased from 55.1 in 2020 to 58.5 in 2021. Among them, the export share of high-tech products has jumped directly to the first place in the world.
Moreover, in terms of market, maturity and fast development of infrastructure construction, China is gaining an advantage in construction and economic development compared to Europe and the United States, which are still affected by the epidemic.
Behind the increase in the innovation index there is the building of scientific and technological policies and innovation systems.
In the period of the 14th Five-Year Plan 2021-2025, scientific and technological innovation has been placed in an extremely important position. According to the Plan, China will formulate and implement a ten-year action project for basic research, focusing on the deployment of a number of research centers. The proportion of basic research funding to R&D funding has been increased to over 8%.
Recently, the 30th Session of the Standing Committee of the 13th National People’s Congress has reviewed the Law on the Advancement of Science and Technology.
The revision of the Law on the Advancement of Science and Technology emphasizes the strengthening of national strategic scientific and technological forces and promotes basic technological research. The project clarifies the establishment and strengthening of a strategic science and technology force with national laboratories, science and technology R&D institutes, high-level research universities and major enterprises as key components.
By perfecting key basic technologies under the conditions of a socialist market economy and a new type of national system, it is possible to organize and implement relevant scientific and technological tasks that reflect the Chinese strategic needs.
Chen Qiang, a Professor at the School of Economics and Management at Shanghai Tongji University and Executive Director of the Shanghai Industrial Innovation Ecosystem Research Center, said to China Business News that China’s technological and scientific innovation has continued to increase in recent years. However, it is worth noting that the internal and external environment for the development of scientific and technological innovation has also undergone profound changes, and that timely adjustments will be made in terms of goals, strategy, structure and task allocation. Among these, the strengthening of basic research is an extremely important aspect for high-level technological self-sufficiency, so as not to depend on the other countries.
Speaking about this year’s GII, WIPO’s Director-General, Singaporean Daren Tang, said: “This year’s GII showed us that despite the huge impact of Covid-19 on lives and livelihood, many sectors have shown extraordinary resilience, especially those focusing on the digital sector, as well as on technology and innovation.”
During the heavy and oppressive epidemic phase, China’s digital economy developed rapidly and many new formats and models emerged.
The Beijing Bureau of Statistics outlines that output and investment in China’s high-tech industry have grown rapidly. From January to August 2021, the added value of high-tech production increased by a 13.1% average over two years and related investment increased by a 17% average over two years, both maintaining steady growth. Furthermore, the development of modern service industries, such as information, is relatively good.
At a press conference held by the State Council Information Office a few days ago, Xiao Yaqing, Minister of Industry and Information Technology, answered questions about the digital economy and said that it is developing very rapidly. It is doing so in terms of building new infrastructure, such as the world’s largest 4G fiber-optic network. At the end of August, there were almost 420 million 5G terminal connections.
In terms of development of the electronic information and communications industry, as of last year, the operating profit of the electronic information production industry went above forecasts, reaching 12.1 trillion yuan. It is also worth mentioning that the software corporate income reached 8.2 trillion yuan, and the income of telecommunication companies rose to 1.4 trillion yuan, with a year-on-year ratio of 1.72, 3.27 and 1.26 times that of 2012.
Xiao Yaqing said that in terms of digital, networked and smart industry, at the end of June the rate of numerical control of key processes in manufacturing industry and the penetration rate of digital R&D design tools reached 53.7% and 73.7%, respectively, up by 29.1 and 24.9 times compared to 2012.
The percentage points and the domestic market satisfaction rate of smart production equipment exceed 50%. At present, the development momentum of the digital economy is still very strong, and new business forms and models are constantly emerging, which will surely provide strong support for the development of the manufacturing industry.
The latest report by the China Academy of Information and Communications Technology also shows that the global digital economy will reach 32.6 trillion US dollars in 2020.
The US digital economy continues to rank first in the world, with a scale of 13.6 trillion US dollars, but China ranks second with 5.4 trillion US dollars.
Giancarlo Elia Valori