Table Of Content’
China s Path to Innovation
Overthepastthreedecades,Chinahasexperiencedrapideconomicgrowth
and a fascinating transformation of its industry. However, much of this
success is the result of industrial imitationand China’s continuing success
now relies heavily on its ability to strengthen its indigenous innovation
capability.Inthisbook,XiaolanFuinvestigateshowChinacandevelopa
strategy of compressed development to emerge as a leading innovative
nation. The book draws on quantitative and qualitative research that
includes cross-country, cross-province and cross-firm analysis. Large
multi-level panel datasets, unique survey databases, and in-depth industry
casestudiesareexplored.Differenttheoreticalapproachesarealsousedto
examinethemotivations,obstaclesandconsequencesofChina’sinnovation
withawiderdiscussionaroundwhatothercountriescanlearnfromChina’s
experience.Thisbookwillappealtoscholarsandpolicy-makersworkingin
fieldssuchasinnovationpolicy,technologymanagement,developmentand
internationaleconomicsandChinastudies.
xiaolan fu isProfessorofTechnologyandInternationalDevelopment
and Founding Director of the Technology and Management Centre for
DevelopmentattheUniversityofOxford.Herresearchinterestsinclude
innovation,technologyandindustrialisation;trade,foreigndirectinvest-
ment and economic development; emerging Asian economies; and inno-
vation and productivity in the UK and US. She also has first-hand
experienceworkinginthebusinessandacademicsectorsinChinabefore
comingtotheUK.
‘ProfessorFuhasintegratedavarietyofscholarlyarticlesfromthefirmlevelto
theindustryleveltothenationalpolicylevel,toproducethefirstcomprehensive
treatmentofChineseinnovationactivitiesfromanopeninnovationperspective.
Her masterful book points the way towards ‘open innovation with Chinese
characteristics’.’
Henry Chesbrough, Professor at UC Berkeley’s Haas School of Business and
authorofOpenInnovation
‘ThatChinaistheworkshopoftheworldisnowa‘given’.ProfessorFuhasinvested
yearsinthesearchforcluestohowthegoodsintheChinaworkshophavemoved
from being ‘assembled in China’ through ‘invented in China’ to ‘invented and
commercialisedinacomplexopenengagementwiththeworld’scapitalandskilled
labour’.Thisbookistheauthoritativeresultandisessentialreading.’
Barbara Harriss-White, Emeritus Professor of Development Studies, Oxford
University and co-editor of China-India: Pathways of Economic and Social
Development
‘ThisfascinatingbookbyaleadingChinesescholarishugelyinformativeofthe
challengesChinafacesinitsquesttobecomeamajorglobalinnovativeeconomy.It
populates a knowledge gap, challenges our conventional wisdom and provides
importantinsightsforcorporateandgovernmentpolicymakersalike.’
RaphaelKaplinsky,ProfessorofInternationalDevelopment,TheOpenUniversity
‘China achieved an average annual growth rate of 9.8% for 35 years, made
possibleonlybycontinuoustechnologicalinnovations,afterthetransitionfroma
planning economy to a market economy in 1979. Such a long period of extra-
ordinarygrowthwasunprecedentedinhumanhistory.Thisbookcarefullystudies
China’sopennationalinnovationsystematnational,regionalandfirmlevels.It
deciphershowChinawasabletoachievesucharemarkablesuccessinthepast,
examineshowChinamaysustaindynamicgrowthinthefutureandsuggestswhat
othercountriescanlearnfromChina’ssuccess.Thebookisamust-readforanyone
whowantstounderstandChineseeconomicdevelopment.’
JustinYifuLin,Professor,PekingUniversityandFormerChiefEconomist,The
WorldBank
‘Finally,wehaveananalyticalvolumethatcombineseconomictheory,interna-
tional experience, and China’s socio-economic conditions to formulate a most
crediblestrategytogreatlystrengthenChina’scapacitytoinnovate.XiaolanFu’s
‘Open National Innovation System’ approach deserves careful study by other
developingcountriesbecauseitisalsoapplicabletothem.’
WingWoo,Professor,UniversityofCaliforniaatDavisandPresident,Jeffrey
CheahInstituteonSoutheastAsia,Malaysia
’
China s Path
to Innovation
xiaolan fu
UniversityofOxford
UniversityPrintingHouse,CambridgeCB28BS,UnitedKingdom
CambridgeUniversityPressispartoftheUniversityofCambridge.
ItfurtherstheUniversity’smissionbydisseminatingknowledgeinthepursuitof
education,learningandresearchatthehighestinternationallevelsofexcellence.
www.cambridge.org
Informationonthistitle:www.cambridge.org/9781107046993
©XiaolanFu2015
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andtotheprovisionsofrelevantcollectivelicensingagreements,
noreproductionofanypartmaytakeplacewithoutthewritten
permissionofCambridgeUniversityPress.
Firstpublished2015
PrintedintheUnitedKingdombyClays,StIvesplc
AcataloguerecordforthispublicationisavailablefromtheBritishLibrary.
LibraryofCongressCataloguinginPublicationdata
Fu,Xiaolan,1967–
China’spathtoinnovation/XiaolanFu.
pages cm
ISBN978-1-107-04699-3(hardback)
1. Economicdevelopment–China. 2. Industrialpolicy–China.
3. Informationtechnology–Management–China. I. Title.
HC427.95.F798 2015
3380.0640951–dc23
2014048687
ISBN978-1-107-04699-3Hardback
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Contents
Listoffigures pagevii
Listoftables x
Preface xiii
Listofabbrevations xvii
Introduction 1
1 Introduction 3
2 InnovationinChinasincethereforms:Anoverview 15
PartI Internationalknowledgetransferandtechnological
takeoff 45
3 Foreigndirectinvestment,absorptivecapacityandregional
innovativecapabilities:EvidencefromChina 47
4 Processingtrade,FDIandinternationalcompetitivenessof
theChinesehigh-technologyindustries 74
5 Indigenousandforeigninnovationeffortsand
technologicalupgradinginChina 108
PartII Developmentofindigenousinnovationcapacity
andcatch-up 139
6 Theroleofstatepolicyinshapinginnovationpractices:The
caseofopeninnovationinChina 141
7 Openinnovationasaresponsetoconstraintsandrisks 170
8 Thedualroleofuniversitiesinindustrialinnovation:
comparingChinaandtheUK 201
v
vi Contents
9 Technologicallearning,tacitknowledgeacquisitionand
industrialupgrading:TheChineseopticalfibreandcable
industry 236
10 Leapfroggingingreentechnology:Thesolar-PVindustry
inChinaandIndia 256
PartIII Towardsaglobalinnovationleader 277
11 Internationalisation,reverselearningandcapabilities
upgrading:ThecaseofHuaweiandZTE 279
12 Internationalcollaborationandradicalinnovation 314
13 Innovationefficiencyandthecross-countrygapin
innovation 325
14 Capabilities,incentives,institutionsandnational
innovationperformance 358
Conclusions 379
15 Conclusions:OpennationalinnovationsystemandChina’s
pathtoinnovation 381
References 396
Index 430
Figures
2.1 China’sR&Dexpenditure,1995–2012 page17
2.2 R&DexpenditureinChinaandothereconomies,
1995–2012 18
2.3 CompositionofR&Dbytypesofactivities:basic
research,appliedresearchandexperimental
development 19
2.4 R&Dcompositionbyfundingsources,2003–2011 20
2.5a TotalnumberofR&Dpersonnel 21
2.5b R&Dpersonnelbyexecutiveentity,2009 21
2.6 ComparisonofR&Dpersonnelperthousandemployees
inChinaandOECDeconomies,2000–2011 22
2.7a Expenditureforacquisitionofforeigntechnologyin
China,2000–2012 23
2.7b ForeigntechnologyimportsinChina,percentages,2012 24
2.8 Numberofpatentapplicationsvsnumberofgranted
patents,1995–2012 25
2.9 TriadicpatentfamiliesacrossBRICS,1999–2011 26
2.10 NumberoftriadicpatentfamiliesinChinaandother
OECDeconomies,1999–2011 27
2.11 OutputofR&D:indexarticlespublishedininternational
journals 28
2.12 Citationsofscientificpaperspublished,2000–2010 28
2.13 Innovationperformance:internationalcomparison,
2012 29
2.14 R&Dexpendituresandintensityofenterprisesinthe
above-scalemanufacturingindustries,2012 30
2.15 NumberofR&Dpersonnelacrosssectors,2009 31
2.16 Innovationoutputacrossindustries:numberofpatent
applications,2010 32
2.17 Innovationoutputsacrossindustries:newproductsales
andnewproductexportvalues,2012 33
vii
viii Listoffigures
2.18 Exportandimportvolumeofhigh-techproducts,
1995–2012 34
2.19 Innovationoutputsbyownershipoffirms:newproduct
salesandnewproductexportvalues,2012 35
2.20 R&Dexpendituresacrossdifferentownershipstructures
inindustrialenterprisesabovedesignatedsize,
2006–2012 36
2.21 R&Dexpendituresacrossdifferentownershipstructures
inindustrialenterprisesabovedesignatedsize,2006and
2012 36
2.22 R&Dpersonnelacrossdifferentownershipstructuresin
industrialenterprisesabovedesignatedsize,2006–2012 37
2.23 Patentapplicationsacrossdifferentownershipstructures
inindustrialenterprisesabovedesignatedsize,
2009–2012 38
2.24 Newproductsalesandnewproductexportsacross
differentownershipstructuresinindustrialenterprises
abovedesignatedsize,2009–2012 39
2.25 R&DexpendituresandR&D/GDPratiosacrossChina,
2012 40
2.26 R&DexpendituresacrossChina,2000and2012 40
2.27 RatioofR&DexpendituresinGDPacrossChina,2000
and2012 41
2.28 MeanpatentapplicationnumbersacrossChina,2000
and2012 42
2.29 R&DfundingsourcesacrossChina,2009 42
3.1 TradeandFDIinChina,1985–2004 53
3.2 RegionaldistributionofFDIstockinChina,2005 53
3.3 Regionaldistributionofnumberofinvention
applications,2004 56
3.4 Regionaldistributionofsalesofnewproducts,2004 56
3.5 RegionaldistributionofindustrialR&D,2004 58
3.6 Innovationactivities:foreignandindigenousenterprises
inChina,2004 60
3.7 Regionalinnovationefficiency,China 67
4.1 ShareofprocessingexportsinChina’stotal
high-technologyexports 81
4.2 Percentageofprocessingexportsintotalexports,
electronicindustryofChina,2006 92
