China to help firms play leading role in innovation
By Wu Chong (China Daily)
Updated: 2005-12-24 07:34

China has decided to push domestic enterprises to play a leading role in technological innovation starting next year, with a package of preferential financial and tax policies.

The State Council is studying related proposals about the new policies, said Li Xueyong, vice-minister of science and technology, at the launch of the "Technological Innovation" campaign on Friday. But he declined to reveal details.

Facing a lack of research and development (R&D) funds, the nationwide campaign aims to strengthen domestic companies' self-innovation capability.

"Enterprises will be given more chances in the future to lead the country's key scientific and technological projects," Li said. "They will be encouraged to shoulder more of the State and local major researches."

Colleges and institutes are currently driving China's primary projects in this field.

Li said next year will witness a "sharp increase" in the central and local budgets allocated to enterprises for their research and development. But the specific figure is currently unavailable.

The Shenzhen government in South China's Guangdong Province promised that it will inject no less than 10 billion yuan (US$1.3 billion) in inspiring the self-innovation of local companies in the coming five years.

"The investment from companies will be much more," said Lu Jian, deputy director with the Shenzhen Science, Technology and Information Bureau.

Several hundred companies across the country will be chosen as pilots for the campaign next year, Li said. Later, the programme will be expanded to all high-tech firms, large and medium-sized companies, as well as leading companies in a certain industry in letting them get funds to upgrade their R&D centres to State-level ones.

In China, only one-fourth of the more than 28,000 large and medium-sized enterprises have established their own R&D centres.

"If only the number triples could we call it a big leap forward," Li said.

"In the high-tech industry, almost all of the patents for pivotal technologies are monopolized by foreign enterprises."

A lack of R&D funds is the bottleneck. The latest survey from the Ministry of Science and Technology shows that domestic companies only spend 0.56 per cent of their sales income in research and development. Meanwhile, in developed countries, the proportion is 5 per cent.

Liu Xiaodong, deputy director with the Liaoning Provincial Department of Science and Technology in Northeast China, said the central government should lend more favourable policies to help lower the costs of R&D for companies.

(China Daily 12/24/2005 page2)