Geographies in Depth

China is among the 20 most innovative economies for the first time

A man walks in front of skyscrapers at the financial Central district in Hong Kong February 25, 2009. Hong Kong's economy could shrink by 2-3 percent this year as it feels the impact of the global downturn, Financial Secretary John Tsang said on Wednesday in his annual budget, which offered few handouts to help people weather the downturn.    REUTERS/Bobby Yip   (CHINA) - GM1E52P1DJK01

China has had a rapid transformation into an innovation powerhouse. Image: REUTERS/Bobby Yip

Alex Gray
Senior Writer, Formative Content
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China

In the last few decades, China has made huge progress in science and technology. This new age of innovation has seen the birth of ‘unicorn’ tech companies like media giant Tencent, the ‘Uber of China’ Didi Chuxing, and the world’s biggest drone builder, DJI.

Now, for the first time, China has broken into the top 20 of a global list of the most innovative economies.

The latest Global Innovation Index singles out China for its rapid transformation into an innovation powerhouse. It has risen consistently up the rankings, in 2015, it was in 29th place, the following year it rose four places to 25th place and in 2017 up three places to 22nd.

Key drivers behind this upward trend include a high level of spending on research and development and the high number of patent applications made by Chinese companies and institutions.

China’s innovation trajectory has been dynamic, says the report, which is compiled by the INSEAD business school, Cornell University and the World Intellectual Property Organisation (WIPO).

China riding high

Image: UNESCO Institute for Statistics

The report finds that China has the highest concentration of researchers, the highest number of patent applications submitted, and the number of scientific and technical publications is well ahead of the US.

Meanwhile, the latest figures (2016) from the UNESCO Institute of Statistics shows China has 1,200 researchers per million inhabitants, and a total of around 1.6 million researchers.

Image: WIPO

China filed over 1.2 million patents in 2016, according to the World Intellectual Property Organisation. That’s more than the combined total for the United States of America, Japan, the Republic of Korea and the European Patent Office. China filed most heavily in electrical machinery.

Image: UNESCO Institute of Statistics

China spends around 2.1% of its GDP on research and development. Relative to its economic status, it’s a country punching well above its weight. It is one of the few middle income countries to feature so high up in the index.

Rich returns from innovation

Studies have found that every dollar invested in R&D generates nearly two dollars in return. While the rate will vary, R&D is an important driver of economic growth.

Among China’s other notable achievements is being listed 2nd in the world for its number of innovative clusters. It has 18 clusters including Shenzhen–Hong Kong and Beijing. Most of the world’s leading science and technology clusters are in the U.S., China, and Germany.

In terms of the quality of its innovation, China ranks 17th overall. It performs above the high-income group average in the quality of its scientific publications and its universities.

Investments in energy

The theme of this year’s report is Energizing the World with Innovation, and in this sector, China is also among the global leaders.

Much of China’s innovation has been in the energy sector. In recent years, China has made great efforts to move away from its dependency on coal and has enthusiastically embraced renewables. It now leads the world in solar innovation, with 60,000 photovoltaic-related inventions to its credit.

The report states that India and China are delving deeper into the downstream applications of PV technologies, including PV-hybrid plants and PV-grid integrations, which will help supply electricity to remote areas.

China is also the largest electric carmaker in the world, with home-grown start-ups vying to compete with the likes of Tesla.

"China's rapid rise reflects a strategic direction set from the top leadership to developing world-class capacity in innovation and to moving the structural basis of the economy to more knowledge-intensive industries that rely on innovation to maintain competitive advantage," said WIPO Director General, Francis Gurry. "It heralds the arrival of multipolar innovation".

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Geographies in DepthEconomic Growth
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