January 8, 2010

1

Technology Dynamics and Transition Management in China

Chinese Policy Context and Options

Prof. Mi JianingSchool of Management, Harbin Institute of Technology

Dr Wim RavesteijnSection Technology Dynamics and Sustainable Development, faculty of Technology, Policy and Management, Delft University of Technology

http://inventorspot.com/files/images/Flying%20car--taylor%20aeroca r%20restored.img_assist_custom.jpghttp://livingheritage.org/pix/spraying-

insecticides400.jpg

January 8, 2010 2

Chinese Policy Context and Options Global Warming

Fact, belief or swindle?

Key issue: CO2 cause or consequence of global warming?

Parallel with the smoking causes cancer discussion: how long did it take to prove it?

Precautionary principle: be cautious in case of uncertainties

January 8, 2010 3

Chinese Policy Context and Options Innovation systems: the case of Great Britain’s industrial revolution

1. Open society with room for personal initiative and social mobility2. Powerful institutions guaranteeing freedom, esp. Parliament and

property rights3. Scientific centre since Newtons Principia Mathematica (1687)4. Geographical advantages: cheap transport because island,

navigable waterways, agricultural resources, trade position towards Europe and US

5. Sovereign country protected by the sea6. Coal and steam-engine gave new energy potentialsThe combination of these factors forms GB’s ‘innovation

system’Source: Jeffrey Sachs

January 8, 2010 4

Chinese Policy Context and Options Innovation systems: modern approach

1. Entrepreneurial activities2. Knowledge development3. Knowledge diffusion through networks4. Guidance of the search5. Market formation6. Resources mobilization7. Creation of legitimacy / counteract resistance to change

Source: Hekkert a.o.

January 8, 2010 5

Chinese Policy Context and Options Regional Innovations Systems

• Cities strongly contribute to economic development• Foreign direct investment essential for urban economic

development• Rise of high technological centres guarantees sustained economic

success, esp. in case of increasing labour cost• Creating an innovation environment requires coordination of

different levels of administration and the business community• Bangalore (India) and Nanjing (China) are examples of

developing innovation centres

Prof. Meine Pieter van Dijk: "The Contribution of Cities to Economic Development: an explanation based on Chinese and Indian cities“

January 8, 2010 6

Chinese Policy Context and Options China’s High Technology Policy and its National Technological Innovation System

Outline:Background

History of High Technology policy and Technological Innovation Policy in China

The Technology Innovation Policy as a Public Policy in China

The Agglomeration Effect in High and New Technology Development Zones in China

Case Study: Haidian Scientific and Technological Park

January 8, 2010 7

Chinese Policy Context and Options 1. Background

At the present, as the process of globalization speeds ahead, the national competitiveness of any country in the world strategically depends on both its research on high technology and its high technology industry. The government of any country has to confront this reality as a matter of public policy because to develop high technology requires a huge basic investment. The high technology policy and the high technology development strategy of a country will ideally feature institutional arrangements that adapt to these trends.

January 8, 2010 8

Chinese Policy Context and Options 2. History of High Technology policy and Technological Innovation Policy in China

The technological development program has been the Chinese government’s institutional arrangement to direct technological development since 1949. In exploring the program’s history, we may find some background factors which have influenced the public policy choices of the government. We can divide this history into four stages.

January 8, 2010 9

Chinese Policy Context and Options 2. History of High Technology policy and Technological Innovation Policy in China

The First Stage (1956 to 1977): Technological Policy during the Cold War

The Second Stage (1978 to 1985): Returning to Civil TechnologyThe Third Stage (1986 to 1996): Combination between Defense and

Civil Technologies with Civil Technology Playing a Leading RoleThe Fourth Stage (1997 to present): The Policy Choice according to

Marketing Economic System

January 8, 2010 10

Chinese Policy Context and Options The First Stage (1956 to 1977): Technological Policy during the Cold War

During the “First Five-year Plan”, China set up its better industrial capabilities around 156 key projects supported by the former Soviet Union,

In January 1956, the Chinese State Council issued “the Long-term Plan of Science and Technology Development in China from 1956 to 1967”

In March 1962, the National Commission of Science and Technology issued “the Plan of Scientific and Technological Development from 1963 to 1972”

January 8, 2010 11

January 8, 2010 12

Chinese Policy Context and Options The Second Stage (1978 to 1985): Returning to Civil Technology

During the unstable time following the conclusion of the Great Cultural Revolution, the Chinese government did not look for a stable policy direction. China lacked the institutional resources for technological innovation.

In 1978, the Scientific Conference in China issued the “Outline of the Plan on Scientific and Technological Development in China from 1978 to 1985”

January 8, 2010 13

Chinese Policy Context and Options The Third Stage (1986 to 1996): Combination between Defense and Civil Technologies with Civil Technology Playing a Leading Role

In November 1986, both the Central Committee of the Chinese Communist Party and the State Council signed “the Outline of Plan of High Technology Research” (calling it for short “Plan 863”).

In 1995, the Central Committee of the Chinese Communist Party made “the Decision to Progress Development of Science and Technology”

January 8, 2010 14

Chinese Policy Context and Options The Fourth Stage (1997 to present): The Policy Choice according to Marketing Economic System

In 1996, the National Commission of Science and Technology along with some other ministries formed “The Outline of Plan for National Science and Technology Research from 2001 to 2010”

In August 1999, the Central Committee of the Communist Party and the State Council held the National Conference of Technology Innovation, and made a “Decision to Strengthen Technology Innovation, Develop High Technology and Realize its Industrialization”

January 8, 2010 15

Chinese Policy Context and Options The Fourth Stage (1997 to present): The Policy Choice according to Marketing Economic System

In March 2000, both the Central Committee of the Chinese Communist Party and the State Council raised “Some Suggestions to Develop Scientific and Technological Achievement Transfer”.

January 8, 2010 16

Chinese Policy Context and Options 3. The Technology Innovation Policy as a Public Policy

In recent years, the making of the policy of technology innovation has been based on the idea that “modern high technology development is not only based on great progress in basic research, but also on the pulling by the demand of society and the market”.

January 8, 2010 17

Chinese Policy Context and Options Model

Government

R I &Univ Firm

January 8, 2010 18

Chinese Policy Context and Options Relationship

Government: policy, law, and capital , information

Research institutes and universities: talent, achievement, and knowledge

Firms: information and tax revenues , capital and demand

January 8, 2010 19

Chinese Policy Context and Options Relationship

Establishing the above tripartite relationship as a model for technology innovation, the Chinese government started to carry out “Touch Plan” in 1988, this plan symbolized the linkage between the national technology innovation strategy and high technology-led industrialization; furthermore, it set up a national technology innovation system. Since 1990’s, 53 national high and new technology development zones have been established.

January 8, 2010 20

Chinese Policy Context and Options Further Model

R. Decision

P.Supporting

Market

P.Supporting

R.I. &Univ.

Firm

Patnt Hatch Prod.

P. Supporting

January 8, 2010 21

Chinese Policy Context and Options China’s situation…

According to China’s situation, we have to agree with the view that the government can create a better environment concerning policy, law, and infrastructure for enterprise technology innovation. Especially by means of its policy- making, regulatory, planning, procurement, intellectual property-protecting, and service delivery functions, the government can raise the level of innovation efficiency. (Xue Lan and Liu Xielin, 2001)

January 8, 2010 22

Chinese Policy Context and Options 4.The Agglomeration Effect in High and New Technology Development Zones in China

Government policies alone do not determine the successful development of the new and high technology zones. While China’s new and high technology development zones employed different models and attained different level of success, each zone did greatly promote the growth of high technology firms in its own geographical area. However, from the practical operation and the results in these zones, none could compare with Silicon Valley in America. The agglomeration effect of innovation factors supports the ongoing escalation of innovation activity, and Silicon Valley provides an instructive example of this.

January 8, 2010 23

Chinese Policy Context and Options 4.The Agglomeration Effect in High and New Technology Development Zones in China

The high and new technology development zones comprise an important part of the national technology innovation system. The national technology innovation system is an organization and institutional network of both public and private components which creates, spreads, and uses new knowledge and technology.

January 8, 2010 24

Chinese Policy Context and Options 4.The Agglomeration Effect in High and New Technology Development Zones in China

Such a national technology innovation system in China harmonizes with the regulation of the economy by market force and with WTO principle, and it also a system which will adjust the Chinese economic structure strategically to fulfill various demands for technology development. It must possess the capability to absorb and apply scientific knowledge in the world, as well as to store this knowledge. Finally, it is a innovation system which will support Chinese economic development to advance in the future. (Li Xueyong, 2002)

January 8, 2010 25

Chinese Policy Context and Options 5. Case Study: Haidian Scientific and Technological Park

Besides presenting the history of high technology policy-making in China, we must objectively and seriously assess high technology policy, technological innovation strategy, and the national technological innovation system from the standpoint of public policy. Between the technology invention as a public good and the technology innovation as some commercial value, the Chinese government has to think about how to play its suitable role by its high technology policy.

January 8, 2010 26

Chinese Policy Context and Options 5. Case Study: Haidian Scientific and Technological Park

Haidian Scientific and technological Park is located in the Haidian District of Beijing. It is one of the most successful of China’s 53 national high technology development zones at present. Its location in Haidian District offers two advantages. One is a high quality of human resources in this area. Haidian District feature the densest gathering of intelligent human resources in China. Here are 73 universities (the most famous being Hsinghua University and Beijing University), 232 research institutes concentrated around China Science Academy, and 60 key national laboratories and engineering research centers.

January 8, 2010 27

Chinese Policy Context and Options Experiences

• Haidian S & T Park chose its management model as “small government and much service”, a choice which led it on a rapid developing road.

• During the construction of the park, with more and more marketing effect, the Management Committee of the park has gradually enlarged its government service capability and set up its service platform. This has created a good environment to develop high technology industry, and to potentially socialized resources through building regional resources.

January 8, 2010 28

Chinese Policy Context and Options The Management Committee has done two kinds of work to set up the government service platform

First, the Management Committee specifically carried out preferential policies for technology innovation decided by the government of both the nation and Beijing. It combined the policy resources with intelligence resources and human resources to motivate technology innovation. The preferential policies include 7 items about attracting talents, 13 items about capital and taxes, and 10 items about management reform. The implementation of such policies advanced the investment environment and the innovation environment in the park.

January 8, 2010 29

Chinese Policy Context and Options The Management Committee has done two kinds of work to set up the government service platform

Second, the Management Committee positively developed organization of service agencies. This is a strategic choice to breed market mechanisms and make the government withdraw from direct interference with innovation activity. Thereafter, the government would use policy measures to establish a service system and to realize its aim of “small government and large society”.

January 8, 2010 30

Chinese Policy Context and Options Haidian Scientific and Technological Park

January 8, 2010 31

Chinese Policy Context and Options Haidian Scientific and Technological Park

January 8, 2010 32

Chinese Policy Context and Options Haidian Scientific and Technological Park