Hepeng Jia/Beijing, China

Despite China's impressive investment in research and development (R&D), the country lags behind others when it comes to innovation, according to a report by the OECD (Organisation for Economic Cooperation and Development).

China's R&D intensity - the ratio of gross R&D expenditure to gross domestic product (GDP) - has 'increased spectacularly' in recent years, according to the OECD Reviews of Innovation Policy: China, published in September. In 2007, China spent 1.49 per cent of GDP on R&D (366.4 billion yuan or US$53.9 billion), compared with a research intensity of 0.6 per cent in 1995, according to the National Bureau of Statistics. 

China has a strong publication record but lags behind countries such as Germany in its ability to introduce innovative new products and processes to the market, co-author Gang Zhang of the OECD Directorate for Science, Technology and Industry told Chemistry World. The focus is on development rather than basic research, which only attracted about 5 per cent of R&D funding in 2006, compared with 10-20 per cent in OECD countries, the report notes. 

The report's authors found that China's 'national innovation system' is not fully integrated so that it has a large number of 'innovative islands,' such as science parks, that don't link together. They suggest that China should 'improve synergies between hotspots of innovation activities' and promote more market-based innovative clusters and networks. In addition, although foreign investments increasingly contribute to innovation in China, its domestic businesses have been slower to make productive use of R&D investment.

China urgently needs to upgrade its exports from low-cost manufacturing to high technology and high value-added products and services, the report says. Chinese firms need to play a major role in these high-technology exports, 90 per cent of which currently come from foreign-owned companies, it adds. 

The report's authors are confident that, with reforms, China has the potential to become a major innovation player in the near future. They suggest that the country needs to improve the framework conditions for innovation, including corporate governance, R&D financing, technology-based entrepreneurship, and enforcement of intellectual property rights.

Li Xiujin, professor of chemistry at Beijing University of Chemical Sciences, says that China's chemistry sector is not currently encouraged to be innovative. 'Like other academic areas, researchers are encouraged to produce large numbers of papers rather than work on innovative science. Inventions can also easily be stolen when researchers try to commercialise them,' Li told Chemistry World.