This report is Deliverable 4.3 of DRAGON-STAR: “The Innovation Ecosystem in China”

The report is expected to analyse the innovation measures and system in China and especially the incentives and obstacles towards the exploitation of research results. The report aims to provide a comprehensive analysis of China’s Innovative Ecosystem and specifically, to identify innovation support mechanisms regarding:

1) Public policies on innovation;

2) Capacity Building on innovation;

3) Supporting schemes and initiatives for international Science, Technology and Innovation (STI) collaboration, with a focus on collaboration with the EU;

4) Regulations and financial incentives that support innovation and internationalization;

5) Framework conditions for research and innovation;

6) Opportunities and obstacles for the innovation ecosystem.

A short summary of the contents presented in each section of the document is presented below:

Ÿ  The section entitled China’s National Innovation Ecosystem provides a comprehensive overview of China’s innovation capacity, analyzing topics such as policies, regulations and programmes that enhance and/or restrict innovation in China. With regard to policies that support S&T Innovation. The study focuses on the main policies promoted by the Chinese government in the past years, more specifically by the Minister of Science and Technology (MoST). The Training Programmes section covers the measures implemented in regard to training incentives, both for Chinese and foreign researchers. China has been building a strong economic base for training and also exploiting the bilateral relations with Europe. Regarding the support schemes/programmes for International Collaboration, the study identifies several bilateral programmes already established between China and different European countries, building an important base of success cases regarding this subject. Concerning the regulations and financial incentives, the report focuses on Chinese governmental incentives, as well as venture capital and angel fund investments. These incentives aim to decrease the gap between Europe and China in terms of innovation capacity. In addition, the study analyzes the infrastructure support for S&T innovation following a regional approach to evaluate three types of infrastructure: Special Economic Zones (SEZ), Innovation Clusters and Science Parks and Business Incubators.

Ÿ  The Framework Conditions for Research and Innovation analyzes Intellectual Property Rights (IPR) Protection issues, Standards, Market Regulations, Access to Public Procurement and Entrepreneurial Activities. The recent efforts regarding IPR protection issues – to create an attractive environment for patent and trademark licensing for foreign companies, strengthening of its administrative and judicial protection in IPR, among others – represent positive efforts in aligning the IPR legislation with that of Western economies. However, some of this legislation is still weak and favours Chinese companies over foreign ones, restricting innovation activities between China and other countries. Standards and Market regulations follow the same path, as China struggles to level the policies favouring Chinese companies over foreign ones. Concerning Public Procurement, the developments over the past years have shown that China is now orienting its procurement policy to innovation and technology transfer. In regard to entrepreneurial activities, the Chinese government has been active in promoting such initiatives, reducing corporate tax and Value Added Tax (VAT) for high-technology enterprises, SMEs and Information and Communications Technology (ICT) firms.

Ÿ  The Obstacles towards the Exploitation of Research Results identified include protectionism and the standard of technology innovation. The analysis indicates that Chinese State-Owned Enterprises (SOEs) can inhibit the innovation system and that the eastern region of China is where more investment is made in research and innovation. Additionally, the problems concerning discriminatory standardization policies, inadequate IPR protection, forced technology transfer, unequal financial incentives and strict pricing control block technology innovation, requiring more efforts from the Chinese government in taking the necessary control measures.