Although China's research and development spending has shot up in recent years, the country still suffers from a lack of local innovation, an official from the Chinese Science and Technology Ministry said.

At a conference in The Hague this week, Zhang Weixing, Vice Director General of the ministry's Torch Hi-Tech Industrial Development Center, said to stimulate science and technology development, China is working to integrate science and technology with industry.

China's R&D expenditure, at 37.7 billion U.S. dollars in 2006, was the fifth largest in the world after the United States, Japan, Germany and France, he told a largely Western audience Wednesday at the conference, "Organizing Science-based Business with China."

Around 100 people from the science industry, government agencies, the European Patent Office, think-tanks and intellectual property law firms took part in the two-day meeting which closed Thursday at the European Patent Office.

Zhang said the value of China's R&D had more than doubled in the past decade to 1.4 percent of its GDP in 2006, and invention patent applications amounted to 210,000 that year, the fourth largest in the world.

However, more than 40 percent of these applications came from foreign companies, he said.
China's overall capacity for sustainable innovation is still low, and the intensity of R&D in the hi-tech industry is much lower than that of developed countries.

Moreover, China lacks core technologies, and is highly dependent on foreign input, he said.
A means of integrating science innovation with technology innovation is yet to be established, Zhang said.

But the Chinese government has made serious efforts to address the situation, he said. For instance, the government has set a requirement that funding for science and technology from the state financial budget shall increase at a faster pace than the regular financial revenue of the country.

A legal framework has been put into place to promote the transformation of scientific and technological achievements and the development of a technology market through means like tax exemption, he said.

China also encourages the building of science and technology industrial parks, which pull together hi-tech firms and play an important role in upgrading the local industrial structure, Zhang said.

There are now 54 state-level science and technology industrial parks in China, which are home to 46,000 enterprises, he said.

To lend a hand to technology-based small and medium-sized enterprises (SMEs), the government established an Innovation Fund for Tech-based SMEs in 1999.

Start-ups with less than 500 employees and whose technological personnel amount to more than 30 percent of their staff could apply for aid from the fund, Zhang said.

Until now the central government has approved over 12,000 applications with total funding allocated standing at 7.5 billion yuan (about $1.03 billion).

Source: Xinhua