China's S&T Policy: A View From Within
A report from U.S. Embassy Beijing December 1996
Summary: China takes stock of its path of development for the last
forty-five years and the verdict is mixed. Nuclear weapons, delivery systems,
artificial satellites, high energy physics, and hybrid rice are all solid
achievements. But can their past achievements vault China into the 21st
Century? In the view of China's leadership, the answer is no, unless China
can absorb, internalize and develop an indigenous capacity to produce new
technology that is competitive in the world market. Which tools ought it
use? Some tried and true ones of the developed economies such as government
support for basic research, looking for development in the private sector
and use of venture capital to spur the transition of technology from the
laboratories into the markets. End summary.
The Past -- Chinese S&T Achievements Since 1949
Fostering the growth of a great army of scientific and technical workers
has been one of the principal aims of the Chinese Communist Party since
the birth of New China in 1949. When the PRC was founded China had only
50,000 scientific and technical workers; with the return of prominent scientists
from abroad during the early 1950s the PRC was able to establish 840 research
organizations throughout China and increase the number of scientific and
technical workers to 400,000. International isolation, the Great Leap Forward
and the three years of difficulties (during which many research workers
were hungry), the break with the Soviet Union, and then the ten years of
disorder that was the Cultural Revolution severely damaged Chinese S&T.
Deng Xiaoping said "If since the 1960s China had not built an atom
bomb, a hydrogen bomb and artificial satellites, then China would not have
the important position it enjoys in the world today. These things reflect
the ability of a nation are milestones in the development of a nation and
a people." During the ten years of chaos that was the Cultural Revolution,
China lost a golden opportunity for rapid technological development, for
it was the during 1960s and 1970s that the economies of Japan, the United
States and the four dragons of East Asia took advantage of high tech advances
to achieve high rates of economic growth. Nonetheless, science and technology
have advanced faster in China over the last 45 years than ever before.
Despite many difficulties, Chinese science and technology workers have
upheld the basic line of the Communist Party, have boldly explored new
frontiers, put their ideas into practice, and laid the foundations for
the development of science and technology as well as for the economy as
Chinese scientists have also made important contributions in the area
of creating new, highly productive strains of hybrid wheat, in high temperature
superconductivity, and high energy physics research done at the Beijing
electron accelerator. Progress in agricultural science made it possible
to boost Chinese grain production from l00 million metric tons in 1949
to 435 million tons in 1990 and meat production from 2.2 million tons to
28 million tons over the same period. After 1949 China made many kinds
of foreign technology indigenous to China by creating its own research,
development, design, and manufacturing systems in many sectors. Chinese
medical achievements include an effective abortifacient drug (Chinese trichosanthes
root), hepatitis B vaccine, and methods for early diagnosis of cancer of
the liver or of the digestive tract.
The Present -- Chinese R&D Establishment Grows Under Reform and
The number of Chinese S&T workers had climbed to 18.6 million by
1994, over four times the number in 1978. Many private companies have their
own R&D labs. Some once government funded research units now receive
industry funding and work closely with other labs in industry and academia.
International cooperation is a fast growing area for Chinese S&T. Chinese
labs are involved in government to government S&T agreements with 83
foreign countries and with 134 countries and areas overall. Reform during
the 1980s aligned research lab S&T work more closely with the needs
of industry and encouraged labs to look to industry for funding. Earnings
from the private sector helped to greatly improve research infrastructure
and lab equipment. Today 80 percent of Chinese lab instrumentation date
from the second half of the 1980s or later.
Thirty percent of the products made by China's machine and electronics
industries today have reached quality standards achieved by manufacturers
of the advanced countries during the 1980s. Many industries such as the
electronic, electric power and chemical industries were able to bring the
proportion of Chinese-made equipment used in these fields up to the 60
- 80 percent level. Improved technology makes Chinese products more competitive
on world markets. Manufactures now total 80 percent of Chinese exports
(compared with 49.3 percent in 1985). High tech exports now total 5.9 percent
of all Chinese industrial product exports. China should boost this figure
to 15 percent by the year 2000 and 25 percent by the year 2010.
The Present: S&T for Agriculture and Township Enterprises
In Agriculture as well, science and technology make possible large increases
in production. The Chinese multiple cropping index (more than one crop
per year) rose 27 percent between 1952 and 1993 -- this is equivalent to
opening up new land to production. Current low efficiencies in fertilizer
and water use show opportunities for making very large gains in productivity
in the future. If we rely on science and technology, we can be optimistic
about the future of Chinese agriculture.
Township enterprises face especially serious problems of low productivity,
uneconomic small scale production, pollution and backward technology. The
Spark plan launched in 1985 to bring S&T to China's vast rural areas
had by 1994 trained over 2 million technicians and managers at 42 centers
nationwide. The purpose of Spark is to help find work for the approximately
170 million person rural surplus work force and to assure the well being
of the 80 million Chinese peasants who live in absolute poverty. Spark
goals include achieving grain production of 500 million tons by the year
2000. One hundred Spark focus regions and 300 regional support industries
were designated in order to spur the development of village and township
The Torch plan grew out of a 1988 State Council Decision to accelerate
the development of Chinese high tech manufacturing technology. By 1994
1940 national-level Torch research programs and 4750 local-level Torch
research programs had been completed which resulted in increases in the
value of industrial production totaling 142.7 billion renminbi along with
24.4 billion renminbi in tax and profits. The Torch development plan deploys
S&T resources to help industry commercialize on advances in S&T.
The value of industrial output at the fifty-two high tech industrial parks
established throughout China has doubled almost every year since 1991.
Production value reached RMB 78.9 billion (US$9.5 billion) in 1994. Fifty-two
high tech industrial parks with a total surface area of 480.6 square kilometers
built thus far had in 1994 a total high tech product production worth 79.8
billion renminbi, yielding profits and tax revenues of 10.4 billion renminbi.
(Comment: The Torch program is specifically designed to raise the technological
level of state enterprises. End comment)
The '863 Plan', China's strategic high technology research development
plan, was created in 1987 to seek breakthroughs by concentrating efforts
in several promising fields such as biology, aeronautics, information technology,
lasers, automation, energy, and new materials. The 863 Plan is a large
and complex project which brings together specialists in many fields on
cross-disciplinary projects such as computer integrated manufacturing systems
in order to reduce the technology gap between China and foreign countries.
Fossils and New Life Forms: S&T Lessons of the Last Forty-Five
What have the last forty-five years taught the Chinese people about
- Carry out S&T work according to the basic line of the Communist
- Implement "Economic construction must depend on S&T; S&T
work must depend upon economic construction". S&T work should
be directed towards the needs of the economy; economic construction should
actively support S&T".
- S&T workers should expand links with the people and all sectors
- Hold fast to the lines "Cherish knowledge and cherish talent"
and "Let a hundred flowers bloom and a hundred schools of thought
- Make use of the superiority of the socialist system by concentrating
efforts on big projects.
- Create more links between Chinese science and international science.
Stay up to date on international science developments and use them to serve
the needs of Chinese science and the Chinese economy.
- Make decision making more scientific and democratic. Expand science
policy research. Develop a comprehensive set of rules and regulations.
Chinese science and technology needs to gradually shift to operating according
to laws and regulations.
Into the Future -- Economic Reforms Needed to Promote Corporate R&D
In industrial science and technology, China needs to boost its ability
to create its own technology and to effectively absorb foreign technologies.
The contribution of S&T to economic growth must be steadily increased
to assure China's future competitiveness in world markets. The government
should restructure the economy so as to stimulate R&D work in the private
sector. In the next round of private sector economic reform, the government
should establish measures such as favorable tax treatment, depreciation,
and incentives to encourage private enterprises to strengthen their S&T
capacity. The Chinese government should promote cooperation between companies,
including between private and state-owned companies, so that Chinese companies
can withstand international competition better after WTO entry.
Into the Future -- Making Technologies Indigenous, Building Own Creative
China has imported much foreign technology over the last 45 years but
often has been unable to master and then improve on these technologies.
As a result technology gaps have often widened rather than narrowed. China
needs to change its technology import policy. Multinational companies are
highly protectionist of their technology and prefer to sell obsolete, high
pollution technologies to developing countries. When considering technology
imports, the Chinese side should consider what China is learning. For projects
already underway, plans should be made to gradually, stage by stage increase
the proportion of raw materials and parts purchased in China.
Into the Future -- Imported High Tech and Know-how Must be Absorbable;
If Not, Rejected
Merely buying advanced foreign products doesn't transfer to Chinese
companies the technology they need to become more profitable and more competitive
on international markets. The Chinese government intervene more frequently
and effectively to ensure that imported technologies are absorbed, digested
and an indigenous capacity to improve on the technology is created.
The goal should be making in China the materials and the parts needed
for imported systems. The government should examine the technology digestion
plan, the investment capital and the investors. Any technology import plan
which does not contain a new technology absorption plan should be rejected.
China's industrial base is largely obsolete. Only ten percent dates
from the 1970s or 1980s; about one-third is so old and inefficient it should
be junked as soon as possible. Market reforms increase the pressure for
the reform of industry -- a reform which must be made according to the
dictates of market forces. Investments in new plant and technology are
increasingly the responsibility of private companies and investors rather
than that of the government. Government policies to promote technological
reform should include low interest loans, tax incentives, and better macroeconomic
Into the Future -- Selective State Support of S&T
In line with the slogan "Anchoring one side while letting the other
side be free", in certain areas such as the support of basic scientific
which benefits the entire society government support is maintained, but
in other areas the government "lets go" of the development of
applied technologies which can be better supported and guided by the market.
Scientific institutes should have full autonomy in their guidance of their
own scientific research. Funding from private research contracts should
gradually replace government funding to a large extent at many research
institutes. Research institutes are creating more and more joint ventures
with private enterprises and with foreign partners. About 4000 joint ventures
of this kind existed in mid 1995, l0 percent of them with foreign partners.
Although the Chinese economy grows at the rate of more than eight percent
annually, the rate of R&D spending must climb by 30 percent annually
in order to hit the target of spending 1.5 percent of GDP on R&D by
the year 2000. Currently the state provides half of all Chinese R&D
spending. For China to achieve its R&D spending goals, the government
must finance higher S&T spending despite financial constraints in other
areas. Measures should be adopted to encourage and protect private investment
(especially venture capital) in S&T. Special funds should be established
to promote the incubation of new technologies. "Soft" no-interest
loans to high tech companies from international financial organizations
and contributions, both by Chinese and foreign organizations, as well as
by private persons to high tech development projects are important sources
of S&T investment capital.
Into the Future -- Venture Capital May Play the Trick
The two main obstacles to the transformation of Chinese S&T results
into high tech industrial products are a poor system of product development
and a shortage of capital. Inspired by the great success of the alliance
of S&T workers with venture capitalists in U.S. high tech industry,
China plans to encourage venture capital high tech companies in 52 high
tech parks approved by the State Council. The rapid growth of stock exchanges
in China, the development of comprehensive financial sector laws and regulations,
and favorable tax treatment of investments in Chinese high tech companies
are making investment in China more attractive.
Strategy: Specific Goals
Specific goals in many fields have been set, said the report:
- Maintain annual growth rate of 8 - 9 percent annually.
- Concentrate on maintaining growth in food and cotton production and
aim at achieving 500 million ton level of grain production.
- Achieve 1.4 billion ton production level of coal; boost electric production
to 1.3 trillion kilowatts, increase use of electric power thermal cogeneration
and nuclear power energy sources; achieve annual energy savings of 3 percent
- Create an integrated railroad, highway, waterway and air transportation
network capable of transporting 2.1 billion tons of freight annually.
- Increase steel production to 120 million tons or more; fertilizer production
to about 120 million tons; and ethylene production to 4 million tons.
- Increase the proportion of China's economic growth attributable to
advances in science and technology from the 30 percent today to 50 percent.
Sustainable Development Strategy for Economy and Society
According the SSTC report, sustainable and harmonious development involves
a wide range of issues. These issues include population, medicine and public
health, rational utilization and conservation of natural resources, protection
and management of the environment, ocean protection and exploitation, prevention
of natural disasters, housing, rural development, recycling of resources,
public safety and employment security, commercial distribution channels
and service to the public, as well as work in cultural, travel, and historic
preservation fields. For China better family planning, better, warmer and
more energy-efficient rural housing, improved weather prediction to avoid
disasters, improved waste water treatment and water purification to meliorate
the fresh water crisis, clean coal burning technology, improve understanding
and sustainable use of the ecologies of western regions such as Xinjiang
must be among sustainable development priorities.
Policy -- Bring the Message of the Conference to the Country
Although science and technology has been contributing to Chinese economic
progress, the part S&T plays in China's economic growth is still relatively
small. The role of the leading government and party cadres is key. The
leading cadres need to become younger as a group, gain a good understanding
of S&T and to become more specialized. The leading cadres, when they
return to their homes, should instill the spirit of this conference into
each level of local leadership. Each level of the party and government
must study the State Council "Decision on Accelerating
the Progress of Science and Technology .. Everyone should bear in mind
that "Science and technology are the chief productive force".
'We must in the spirit of Comrades Jiang Zemin and Li Peng, establish policies
and design measures to accelerate the progress of science and technologies
in our own regions and ministries. We should all do our part to achieve
overall goals such as raising Chinese R&D spending to 1.5 percent of
GDP by the year 2000.' concluded this section of 'Science and Education
for a Prosperous China'.
Comment: How to Develop Indigenous Technology? Government Spark, 863
Programs Not the Answer
This section of the report, while gloating about Chinese science and
technology achievements such as nuclear weapons and credits the Communist
Party for their remarkable achievements, regrets the setbacks China suffered
through the two decades of the Great Leap Forward and the Cultural Revolution.
The contradictions of these two decades are especially poignant because
while institutionalized S&T was making its greatest progress (nuclear
weapons, strategic weapons, nuclear submarine program) the rest of the
country was moving backwards even as the world enjoyed prosperity bred
In looking at the present, China realizes that the ten year old Spark
program to bring modern technology to the agricultural and state sector
as well as the 863 strategic program are not sufficient to propel China
into the fiercely competitive international market and (once WTO entry
has opened the Chinese market wider to highly efficient foreign companies)
the much more competitive Chinese domestic markets of the twenty-first
century. The sense of the document is that as China couples to the global
economy, Chinese S&T structures must decouple from the State sector
and become much more responsive to market forces. Under the new scheme
of things ("Anchor at one end and let the other end be free")
the role of the State is to support basic research (especially agricultural
research) while the industrial sector largely directs and funds applied
The need for an indigenous self-propagating technological base is well
understood. It is plenty evident that china is attempting to muscle technology
out of joint ventures with foreign companies to achieve this purpose. In
addition, china has consistenly rejected digestible technology that is
offered which is appropriate to the chinese market in favor of technology
that china cannot absorb and support (this is especially true in the automotive
In Embassy's view, just bringing in cutting edge technology and even
digesting it will not turn the trick. EST Counselor has seen perhaps close
to USD$2 million dollars worth of sophisticated laboratory equipment in
Chinese laboratories he has visited just sitting under covers used. China
needs a combination of economic incentives that will reward efficient use
of existing resources as well as incentives to reward innovative thinkers.
Chinese society has a long way to go in this regard.
"Science and Education for a Prosperous China" Series
"Science and Education for a Prosperous China" written by
the State Science and Technology Commission (SSTC) (overview)
elaborates on the national science policy propounded in the CPC Central
Committee and State Council "Decision on Accelerating
the Progress of Science and Technology" and in speeches by President
Jiang Zemin and Premier Li Peng Chinese S&T Policy:
A View From the Top . Reports in this series summarize and comment
at greater length this 400 page document written for Chinese Communist
Party (CPC) and Chinese government officials. The reports summarize and
analyze the economic, food
security (including the Lester Brown "Who
Will Feed China?" controversy and Chinese
Critics Confront Lester Brown) , the challenges
of absorbing and creating technology and military
aspects of the new Chinese S&T policy which emerged from the May 1995
conference. The reports also summarize and analyze
the environmental portion of the SSTC volume. The SSTC volume examines
S&T lessons China can draw from the S&T policies
of other countries as well as lessons China draws from its own
S&T experience since 1949. The report Chinese
S&T and the Challenge of WTO Accession reviews the effect of S&T on
the risks and rewards China will encounter when it joins the WTO.