As the Central Economic Work Conference that concluded on Dec 18 pointed out, China must stop depending on other countries for core technologies and equipment, and for that to happen, the State must strive to make breakthroughs in key technologies and industries and improve the self-reliance of its industrial chains.
However, innovation in the technologies for which China depends on foreign countries largely takes place in private enterprises. Even though China invests heavily in its State innovation system, private enterprises, especially the small and medium-sized enterprises, are the largest contributors to new technology.
In contrast, Germany's advantage in technology and industries does not originate from the State's direct investment in innovation, but instead from its high-quality vocational education system, developed market, innovation-driven industries and strict intellectual property rights protection mechanism.
As in many other developed countries, although it is necessary for the State to ensure self-reliance in technologies related to national security, its main responsibility should be to create a pro-innovation environment in which the rule of law, the stability of supporting policies and protection of the IPR serve as the foundation for innovation.
Developed countries that are strong in innovation have many enterprises dating back to more than 100 years, and some of them not only hold a large number of patents, but also are front-runners in many key technologies today.
Instilling entrepreneurs with a strong sense of security in their business, assets and know-how, as well as confidence in a rules-based market, fair competition and predictability of policies is crucial for innovation.
Although many more Chinese enterprises now figure among the world's top 500 than before, they focus more on monopoly profits than engaging in innovation-driven competition.
Therefore, fostering innovation in China can only be a systematic project, of which the State-funded innovation system is only a small part, as it entails a series of profound changes happening in the country's economic, governance, legal, education and social systems to help sow the seeds of innovation.
Innovation will not become a problem itself until the pro-innovation environment becomes one.