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By Wang Shanshan (China Daily)
Updated: 2007-08-28 07:30

China still has a long way to go toward its goal of becoming an "innovation-oriented economy" by 2020, and what it wants most is a better return on its fast-growing investments on research and development, the Organization for Economic Cooperation and Development (OECD) said in a report on Monday.

In its first review of China's innovation system, which was prepared in collaboration with the Ministry of Science and Technology, the 30-member group of developed economies said China has enjoyed a spectacular rise in its hi-tech exports in recent years, but these exports mainly originate from foreign-owned enterprises.

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The share of hi-tech in China's total exports increased from 5 percent in the early 1990s to more than 30 percent in 2005, and these exports are heavily concentrated in office machinery, TV, radio and communication equipment. Being relatively weak are exports such as pharmaceuticals.

Products from foreign-owned companies account for 88 percent of the hi-tech exports. China's hi-tech industries, notably manufacturing related to information and communication, are primarily under foreign control, the OECD said.

"To date, China has largely relied on the supply of foreign technology," the report said.

But it also applauded the fact that China is boosting investment in science and technology and has taken steps toward building a high-performing "enterprise-based innovation system".

China has ranked second in the world after the United States and ahead of Japan in number of researchers since 2000, and its R&D spending has increased at an annual rate of almost 19 percent since 1995 and was $30 billion in 2005, the sixth largest worldwide, the OECD said.

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