Meeting the challenge to compete

Insufficient funding, a lack of trained researchers and inadequate IPR protection are hindering domestic technological innovation

The 12th Five-Year Plan Period (2011-15) is of key importance to China's overall plan for technological innovation and industrial upgrading. An innovation-driven strategy is essential for determining whether China can finish the planned task of industrial adjustment and reform.

But it is clear that the majority of provinces and regions still rely on investment and low labor costs to boost economic development, only certain eastern provinces have realized the importance of an innovation-driven strategy and started shifting to the new mode. However, they face some common problems.

Compared with developed countries, China's technological resources are more dispersed, which has hindered them from playing an effective role in leading economic growth. Manufacturing industries are still at the low end of the international industrial chain, while only a very small percentage of enterprises own independent intellectual property rights to their products.

The problem is made worse by the widening gap between the eastern and western provinces and the lack of technological cooperation.

The lack of coordinated, more balanced development is still a bottleneck for China on its development path.

R&D spending generally accounts for more than 2 percent of the GDP for most innovation-oriented countries. The R&D investment of developed countries such as the United States, Japan and those in the European Union account for 86 percent of the world's total. China lags quite far behind - its investment in R&D, although it grew by 28.88 percent in 2011, was only 1.84 percent of its GDP, much lower than the 4.38 percent of Israel and the 3.09 percent of the US. Besides, while developed countries cover their R&D costs mainly through private financing, China follows the government-oriented model.

Insufficient funding also results in a lack of technological human resources. In 2011, there were only 16 researchers for every 10,000 laborers in China; the percentage was only 17.58 percent of that in the US in 2007 and 10.81 percent for Finland in 2011. The shortage of qualified workers is an increasingly common headache for enterprises, while leading experts are rare in China's research institutions.