By Chen Jin et al

CHEN Jin, a professor of the Department of Innovation, Entrepreneurship and Strategy at Tsinghua School of Economics and Management (Tsinghua SEM), and his colleagues published "Seize the Focal Point of National Strategic Scientific and Technological Power" inEconomic Information Daily. In it, CHEN and his colleague express their views about building a new national innovation system to improve its effectiveness. The following is the full text.

China's 14th Five-Year Plan for economic and social development proposes to focus on innovation within the context of China's modernization and to become science and technology independent as a strategy for national development. In the face of the dramatic changes in the global innovation landscape, the substantial transformation of major power relations, major domestic and international challenges and new historical opportunities for Chinese innovation in the post-pandemic era, it is important to understand the strategic significance of accelerating the national innovation system to build a strong scientific and technological foundation for nation. A new national innovation system will strengthen the main position of enterprises in innovation; encourage and support leading science and technology enterprises to play a leading role in innovation; to promote integrated innovation with technology at its core; to quickly realize a high-level of scientific and technological self-reliance and self-improvement; and to shape a new development advantage, build a new development pattern and promote high-quality development.

Since the 18th CPC National Congress, China has made historic breakthroughs in becoming an innovative country and has achieved its first strategic goal of "entering the ranks of innovative countries" with a number of major scientific and technological achievements in the fields of manned spaceflight; lunar probes; deep-sea engineering; super-computing; and quantum information. China's scientific and technological strength is moving from quantitative accumulation to qualitative leaps and from incremental breakthroughs to systemic capacity enhancement. It is steadily moving to a new stage where it is "running with, running alongside and leading," which is a step towards "being among the forefront of innovative countries" and "becoming a world power in scientific and technological innovation." China has laid a solid foundation for its advancement toward the medium and long-term strategic goals of "being among the top innovative countries" and "becoming a world power in science and technology innovation," and has provided a valuable example for other late-developing economies to improve their national innovation and achieve innovation-led development.

At the same time, the international environment is becoming increasingly complex. Instability and uncertainty are increasing, and economic globalization is encountering counter currents. Specifically, shortcomings in the industrial chain and supply chain revealed during the fight against COVID-19 have made us realize China faces multiple challenges on the road to becoming a world power in science and technology, such as ineffectiveness of its national innovation system, insufficient original innovation, and key core technologies being in the hands of others. It's imperative that the country build a new national system, comprehensively improve the effectiveness of its national innovation and become the first mover to achieve a high level of scientific and technological self-reliance and self-improvement, as well as grasp how to establish a new pattern of development and promote its quality.

Exploration of China's National Innovation System

National innovation systems evolved from innovation system theory, which aims to understand and promote national innovation development. In 1997, the Organization for Economic Co-operation and Development (OECD) proposed a definition of national innovation system that has been widely accepted so far: "A national innovation system is a network of various institutions in the public and private sectors whose activities and interactions determine a country's ability to diffuse knowledge and technology and influence its innovation performance." Richard Nelson, a leading scholar, has studied the technological innovation of 17 countries and pointed out that enterprises supported by institutions and policies based on techno-nationalism are the core element that enhances a country's technological innovation and competitiveness. British economist Christoph Freeman proposed the concept of a national innovation system based on Japan's industrial development experience, which emphasized that effective government intervention in technological innovation is an important factor in enhancing a country's innovation capacity.

Formal exploration of the construction of China's national innovation system began in 2006 and has accompanied science and technology reform and the opening up of the country. The National Medium and Long-Term Science and Technology Development Plan (2006-2020) formally proposed the strategy of building a national innovation system with Chinese characteristics. The 19th CPC National Congress once again emphasized the need to strengthen the construction of a national innovation system. In accordance with the spirit of this conference, the government reformed its science and technology innovation system and introduced a series of initiatives, including the Notice of the State Council on the Issuance of the National Technology Transfer System Construction Program.

Continuous strengthening of China's national innovation system has improved its innovation capacity. In particular, the proportion of research and development investment in its GDP has continued to climb and surpassed the EU average in 2017, reaching 2.4 trillion yuan in 2020, higher than the total similar investment in European Union member economies and ranking second in the world. Last year, China's proportion of investment into research and development exceeded 6 percent for the first time; the contribution rate of scientific and technological progress exceeded 60 percent; it became the number one publisher of scientific and technological papers in 2016; the number of cited papers ranked second in the world; its number of new patent applications led the world for 10 consecutive years; and China became the leaser in high-quality international patent applications under the Patent Cooperation Treaty. Regional innovation investment activity continues to rise: for example, Beijing replaced Silicon Valley as the world's most active region for AI investment in 2018. Corporate research accounts for more than 70 percent of the total research investment, and the status of the main innovation players is increasingly consolidated, with a large number of internationally renowned technology leaders emerging, including CMC, CIMC, Huawei, DJI, XCMG, CASC, and CASIC. According to the Global Innovation Index report released by the World Intellectual Property Organization, China's comprehensive national innovation capacity made it the first developing country to ever rank among the world's Top 20: it also surpassed Japan in 2019 when it jumped to 14th place. Overall, China has made decisive achievements in becoming an innovative country.

Building a New National Innovation System

First, it's necessary to develop a new understanding of an old problem. Although China has continuously promoted the reform of institutional mechanisms and improved its national innovation system for more than 40 years since opening to the world, it must be recognized that the level of scientific and technological innovation in China is still low, and there is a lack of original and disruptive technologies. Therefore, its overall innovation capacity must improve. Dependence on technology from foreign countries remains high. Behind these problems are a series of shortcomings in the innovation environment and incentive system, such as a lack of powerful science and technology forces in the national innovation system; a lack of clarity in the functions of various innovation bodies; a lack of efficient collaboration and joint research among innovation bodies; a low degree of integration between innovation and economic development needs; and a slow pace of science and technology system reform. Especially in the context of global supply chain blockage and international strategic competition in the post-pandemic era, China must form a new consensus on these old issues and realize they have become important strategic issues in China's scientific and technological security, economic security and even national security in the new development stage.

Second, it's essential to clarify the new mission. In the new development stage, the national innovation system must clarify how it will achieve its mission of "accelerating the achievement of high-level scientific and technological self-reliance and self-improvement" and its new requirement to "comprehensively enhance the effectiveness of the national innovation system and promote high-quality development." The new mission and new requirements involve building a new national innovation system to coordinate the rejuvenation of the Chinese nation and navigate it through unprecedented changes in the world. China also needs to enhance awareness of opportunities, risks and the bottom line, and to accelerate the comprehensive and integrated innovation, including top-level design innovation, science and technology system innovation, basic research innovation and results transformation. This requires bottom-line thinking and mission leadership so as to comprehensively enhance the effectiveness of the national innovation system and international competitiveness in science and technology.

Third, applying new ideas and new paradigms is beneficial. To build a new national innovation system, China must be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. In this era of global innovation, the competition among countries, industries and enterprises is no longer single-dimensional, but based on their innovation ecosystems. Accordingly, it is urgent to move from openness to autonomy-based openness, and to integrate it with the construction of a national innovation system. China's national innovation ecosystem should feature Chinese characteristics and a core of national strategic science and technology forces: the new innovation theory paradigm should be line with China's history and national conditions to adapt to the country's development pattern. According to the theory of integrated innovation, it is essential to avoid the lack of core competencies and the containment problems caused by excessive openness; to prevent the loss of active planning of global innovation networks and global science and technology governance due to excessive emphasis on autonomy; and to integrate and build a new open innovation ecology. This idea is in line with Chinese philosophy. It is a new theoretical paradigm of management with Chinese characteristics and world significance, which is of theoretical and practical value when integrating the domestic system and global resources, improving the new national system under the conditions of a socialist market economy, accelerating the breakthrough of key core technologies and cultivating leading enterprises in science and technology.

Fourth, the use of new strategies to open up paths is crucial. 2021 to 2035 will be an important turning point in the construction of China's scientific and technological power, during which China is facing fierce competition and assault from existing innovative countries, but also dealing with rapid catch-up and direct competition from emerging economies like India. Meanwhile, the gradual disappearance of the demographic dividend and the gradual reduction of the international market demand dividend brought about by the accession to the WTO, as well as the intensification of international scientific and technological competition and the spread of the global COVID-19 pandemic, make the traditional paths of demand-driven scientific and technological innovation increasingly weak. It will be difficult to adapt to the new requirements for core technology breakthroughs and economic development, and also difficult to take the initiative in competing with developed countries in the West, which rely on strong fundamental research and ongoing science and technology leadership to maintain a dominant position. In this regard, it is necessary to give full play to the advantages of the new national system, break our dependence on the traditional science and technology innovation path as soon as possible, and accelerate the fundamental transformation of the national innovation strategic thinking and path from imitation-following-oriented to leading-first. This would change the current trend of importing, imitating, digesting and absorbing to one of originality, integration and consolidation. The more fundamental change is to accelerate the transition from the "demand-induced science and technology innovation path" to the new dual-engine integrated innovation path of "basic research and core technology supply, supplemented by a demand-induced path", and to focus on self-reliance and self-improvement. China will build a new integrated national innovation system that leads to scientific and technological self-reliance and self-improvement, which is driven by national strategic scientific and technological force, and strives to surpass, catch up and lead.

Fifth, China must seize the focal point and comprehensively improve the effectiveness of its national innovation system. The transformation and reconfiguration of China's national innovation system is a systematic project. China must seize the focal point of strengthening its national strategic science and technology force to enhance the effectiveness of its national innovation system. In this regard, China needs to focus on two major goals. First, it must accelerate the construction of national strategic missions, tasks and needs to build momentum, with national laboratories, national research institutions, high-level research universities and science and technology enterprises as the key support. China should also make a comprehensive national science center or regional science and technology innovation center the carrier of its national strategic science and technology system, which will support to fight the develop key core technologies and achieve a high level of scientific and technological self-sufficiency. In particular, China should establish innovation confidence and cultural self-confidence, embracing holistic thinking, systematic thinking and global thinking and blending it with Chinese philosophy and traditional culture. Besides, the state has a role as the organizer of major science and technology strategies, scientific programs and innovation projects. What's more, China should strengthen its position as a leader of leading enterprises in science and technology and offer full support to in the role of "test-makers". It's necessary to integrate the advantages of centralized power to take on major projects and decisively allocate market resources and target key problems and scientific issues. China needs to strengthen its investment in basic research and original innovation and strongly support organized scientific research and innovation. It should also continue to improve its incentives for task-oriented and free-exploration research, improve the national technology transfer system, accelerate original and disruptive technological breakthroughs and realize the deep integration of science and technology with the economy.

Sixth, China should improve and consolidate the cultural foundation of the new national system. China needs create a cultural and social environment that embraces innovation, stimulates society to continuously support and participate in innovation, and depends on the people to continuously empower and strengthen the national strategic science and technology force and its supply of key core technologies. This will accelerate the realization of high-level science and technology self-sufficiency and self-improvement.

Authors:

YIN Ximing: Special Associate Researcher, School of Management and Economics, Beijing Institute of Technology

CHEN Jin: Professor and Doctoral Supervisor, Tsinghua School of Economics and Management, and Director of Technology Innovation Research Center, Tsinghua University

Editors: REN Zhongxi, LI Ying, Derrick Sobodash