China to better finance science development

China will improve the way it provides financial support to science and technology development, Finance Minister Lou Jiwei said on Tuesday.

When delivering a report to the country's top legislature, Lou said despite increasing financial support to the sector, reforms are needed to improve the system's effectiveness.

Basic research relies heavily on financial support from the central government rather than local governments or enterprises, and the proportion of research and development expenditures spent on basic research is too low, Lou said in the report to the Standing Committee of the National People's Congress.

In addition, the science and technology funding system lacks coordination between departments, and relations between the government and the market have not been clearly defined, impacting the effectiveness of fiscal support.

Lou said the most fundamental way to address these problems is to further deepen reform of the science and technology system. He said the government will continue to transform its functions and build a science-technology innovation system with enterprises as major players.

The government will also promote other forms of financial support, such as angel investment and government procurement of services.

Lou said the science and technology evaluation system and management of financial funds in the sector should be improved, and in the meantime, the monitoring and supervision of its use should be strengthened.

The country's fiscal expenditures in science and technology development increased from 168.9 billion yuan in 2006 to 560 billion yuan in 2012, an average annual growth rate of 22.73 percent.

Expenditures in research and development in China reached 1 trillion yuan ($164.1 billion) in 2012, about 1.98 percent of its gross domestic product, according to the report.

The report came at a time when the misuse of research funds has become a serious issue in the country.

"The more money invested, the more problems there will be, if the system stays the same," Zhang Weiying, a well-known Chinese economist at the Peking University, said at a forum on Oct 13.

Zhang said that research institutes and colleges in China are scrambling?to spend more research funds, because they would be punished if they fail to spend every penny listed on the budget they submitted to authorities.

"Tsinghua University was fined tens of millions yuan last year," Zhang said.

In 2012, the National Audit Office investigated more than eight major national science and technology programs, which the central government invested a combined 34.76 billion yuan on, but found that 98 percent of research tasks under these programs did not even receive an acceptance check.

Li Lianda, a member of the Chinese Academy of Engineering, criticized the ill management of research funds on his blog.

"An important reason that the research tasks could not receive an acceptance check is that the money was allocated too late. When the task starts, there is not?a?single penny?paid. A small amount is usually allocated one year later, and all the money comes together when you are about to finish," he wrote.

"So when all the money is finally given out, the researchers are so busy spending the money that they have to put off the research progress and the acceptance check."

Wan Gang, minister of Science and Technology, said the administrative department should create conditions to make the use of research funds in a more open and transparent manner.

"Only through greater transparency is it be possible to avoid serious misuse of the funds, and thus increase the efficiency of the use of research funds," Wan said at a press conference on Oct 11.

The ministry is building a science and technology report system in China, which requires State-funded research projects that have passed acceptance tests to submit reports that contain the research goal, method, process, technical content and lessons learned, to provide references for peer researchers.