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By Xiaolan Fu

Over the last 3 a long time, China has skilled swift financial development and a desirable transformation of its undefined. although, a lot of this luck is the results of commercial imitation and China's carrying on with good fortune now is based seriously on its skill to bolster its indigenous innovation power. during this publication, Xiaolan Fu investigates how China can improve a method of compressed improvement to become a number one leading edge kingdom. The ebook attracts on quantitative and qualitative examine that incorporates cross-country, cross-province and cross-firm research. huge multi-level panel datasets, specific survey databases, and in-depth case experiences are explored. assorted theoretical methods also are used to envision the motivations, hindrances and effects of China's innovation with a much broader dialogue round what different nations can research from China's adventure. This ebook will attract students and policy-makers operating in fields akin to innovation coverage, expertise administration, improvement and foreign economics and China reports.

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Among OECD countries, the United States, Japan and Germany are the main performers. 2. Although it has experienced a remarkable increase, the R&D intensity in China is still low in comparison with OECD countries. 39 per cent. 5 per cent or more by 2020. 5 per cent by 2020 is a serious challenge taking into account the fast growth rate of GDP. This indicates that R&D expenditure needs to increase at least 25 per cent annually starting from 2012. 2 R&D expenditure in China and other economies, 1995–2012 Source: China Statistical Yearbook (1996–2013).

1 Introduction The intensive investment and rapid development in science and technology (S&T) in China has attracted growing attention. The unprecedented increase in expenditure on R&D activities and human capital for innovation together with industrial structure upgrading and knowledge-intensive trade are strengthening China’s transformation from a labour-intensive economic growth model into a knowledgebased one. As outlined in China’s 12th Five-Year Plan, innovation is a key element to promote a more balanced pattern of development.

Chapter 14 examines the policy choices for China’s drive to transforming the country into an innovation-driven economy. Innovation capabilities, incentives and institutional frameworks are examined. The chapter argues that China should continue to increase its investment in R&D and in education, and that there should also be an attempt to strengthen the incentive system at the macro, meso and micro levels. This strengthening may include the following reforms: release the power of competition and guide resources towards innovative sectors; adopt appropriate human resource management policies, such as appraisal and remuneration systems; create effective policies for research funding management; and evaluate the efficiency of research to encourage the creativity of researchers, managers and employees.

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