As China vows to build itself into an innovator-friendly country, it is no surprise that domestic cities have been busy with championing the creative industries.

Shanghai has now become the first to come up with an index of its creative industries.

By combining industrial scale, research and development, cultural environment, human resources and social environment into a comprehensive measure, the new index aims to reflect the overall development of industrial businesses in this metropolis.

Mainly thanks to rapid growth in research and development investment, Shanghai's creativity index increased to 109.1 in 2005 from 100 in 2004, the benchmark year. Since design and development is crucial to creative businesses like music, film, design, television and publishing industries, the enhanced capacity of innovation indicates that Shanghai will likely be able to better bolster its creative economy.

Currently, the contribution to the Chinese economy of the creative industries stands at an estimated 3 per cent of gross domestic products. In developed countries, that figure ranges roughly between 6 per cent and 12 per cent. And globally, the output that creative industries generate has reached US$20 billion a day and is growing 5 per cent yearly.

Given the tremendous growth potential of creative industries, it is fairly understandable why government efforts to promote these businesses have been significantly shored up across the country.

In recent years, China benefited a lot from its rise as a world-manufacturing centre. Deepened integration with the world economy has enabled the country to make full use of its cheap and huge labour force.

Yet, while more and more "made-in-China" goods are flooding the global market, the country has keenly realized the necessity to develop "designed-in-China" and "invented-in-China" products.

 Rising prices of imported resources and raw materials and declining profit margin of exports have caused both policy-makers and domestic enterprises to rethink the risk of excessive dependence on cheap labour cost. Besides, low value-added manufacturing also puts an increasingly unbearable burden on the country's resources and environment.

Creative industries are certainly a better choice. Typically, they consume less of limited resources and energy from the nature but demand more of infinite creativity from the people.

However, difficulties for the creative economy to take root and prosper in China remain huge in spite of the enthusiasm domestic cities have expressed.

On the one hand, creative industries need more intellectual property protection. Both the central government and local governments still have a lot to do to ensure a strong and fair intellectual property regime.

On the other hand, regulatory barriers should be removed as rapidly as possible to reduce the burden on creative industries, which are more than often supported by small companies.

Shanghai has taken the lead in measuring its progress in boosting creative industries. But to become the real leader of China's creative economy, it must demonstrate greater creativity than that.