Lux reports that China’s public investments in scientific and high-tech research, implemented through national programmes, are embedded in a complex, geographically diverse and evolving institutional landscape, constituting nearly 70% of all R&D funding, which reached $91 billion in 2009.

“China’s R&D funding ecosystem reveals connections between vast public research investment, corporate buy-in, and likely sources of Chinese innovation pivotal in driving the country’s future economic growth,” says Zhun Ma, Lux research analyst and lead author of the report Invigorating Innovation and Adoption: Dissecting the Government Funding behind China’s R&D Ecosystem.

“Such an environment represents both technology scouting opportunity and competitive threat, the seeds of which are already sown,” he adds.

Lux Research’s key conclusions include:

  • Sweeping innovation agenda. China’s innovation programmes are driven by its current manufacturing base, a growing domestic market and an appreciation of the country’s future societal needs. Funding has been significant and focused, and will grow over the next five years.
  • Substantial support for biotech and healthcare. Fundamental R&D spending in the life sciences dwarfs any other area, while a National Science and Technology Major Program will pump over CNY27 billion ($4.26 billion) into pharmaceutical industry development.
  • Focus on renewable energy. China is investing heavily into current and emerging renewable energy technologies. From CNY4.9 billion ($771 million) for EV-related application R&D, through funding for numerous pilot lines for next generation PV, to CNY1.05 billion ($165.16 million) for connecting renewable energy and electric vehicles to large-scale grids, local technology opportunities are strongly supported.
  • Intellectual property (IP) rights regime will reach global standards. China’s focus on innovation means its IP base will spread from a few heavyweights to small and medium enterprises, and start-ups. As Chinese IP assets gain critical mass in foreign countries, its leaders will be forced to provide greater protection to foreign IP in China in order to ensure Chinese rights are protected overseas.