China's R & D Policies and Technology-intensive Industries

This article reveals the role of research and development (R&D) policies in the development of the technology-intensive industries of China. Since economic reform began in 1978, the Chinese government has transformed the R&D system from one that was wholly centrally planned into a more market-orientated system, making it more efficient and productive. At the same time, the state, its incentives and its investment remain significant. The government has increased the R&D expenditure rapidly, while trying to develop indigenous technologies. It has actively utilised foreign direct investment inflows as the means to introduce advanced technology from developed countries. It has also provided systematic guidelines and established the economic technology development zones and high technology industrial development zones, in order to channel foreign investment inflows into technology-intensive industries. China has placed emphasis on the development of human resources in science and technology as well. Finally, the implications of the role of government in developing technology-intensive industries are considered. Key Words: ChinagovernmentR&Dtechnology-intensive industries Notes 1 Part of Deng Xiaoping's "Four Modernisations" was modernisation of the military sector. Therefore, some of China's R&D expenditure involved military mobilisation. The authors are grateful to an anonymous referee for this point. 2 According to the Ministry of Science and Technology's "China Science and Technology Statistics Data Book," high-tech products include computers and telecommunications, life science technologies, electronics, computer-integrated manufacture, aerospace, opto-electronics, biotechnology, materials, and other technologies. 3 In general, the 24% preferential tax rate has been applied to foreign-invested enterprises. The 15% rate has been applied to the high-tech enterprises in HTDZs and profits arising from exports by foreign investors investing in the SEZs (Han, Citation2004: 56-76; Lu, Citation2002: 21). 4 The sectors included export-related industries, especially, relating to machinery, electrics, light industrial products, textiles and high-tech products (see Lu, Citation2002: 16; Zhang and Felmingham, Citation2001: 83). 5 Generally, the establishment of ETDZs was inspired by the success of the five SEZs, such as Shenzhen and Zhuhai, which were the first areas opened to foreign investors. State-level ETDZs constitute part of China's open-door policies under the supervision of the Ministry of Commerce. HIDZs are the realisation of the so-called Torch Programme, which was initiated by the Ministry of Science and Technology in an attempt to accelerate technology diffusion in China (Ministry of Land and Resources, 2008). 6 According to OECD (Citation2007c: 6), scientists and engineers (S&E) "are those who own senior or medium professional title, or who don't possess such title but hold university degree or diploma. The proportion of S&E to R&D personnel is to some extent the indicator to measure the quality of R&D personnel."