Innovation in China

doi:10.1017/9781009649339.004

3 - Innovation in China

Drivers, Challenges, and Future Directions

Published online by Cambridge University Press: 30 October 2025

Kevin Zheng Zhou and

Meitong Dong

Edited by

Hanming Fang and

Marshall W. Meyer

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Hanming Fang: Affiliation:
University of Pennsylvania
Marshall W. Meyer: Affiliation:
Wharton School, University of Pennsylvania

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Summary

This chapter examines the evolution of China’s innovation system over the past thirty-five years, detailing how government policies, R&D investment, and strategic international engagement have spurred a remarkable surge in patent activity and technological advancement. It outlines the transition from a weak, planned economy to one where domestic enterprises dominate innovation, emphasizing the shift from quantity-focused utility model patents to an increasing quality of invention patents. The analysis highlights the role of FDI and regional dynamics in boosting local innovation while comparing domestic and foreign patenting trends. Key external challenges are discussed, including the impacts of the Belt and Road Initiative, the Sino-US trade war and technology decoupling, and the disruptions caused by the COVID-19 pandemic. Looking forward, the chapter proposes future directions in sectors such as electric vehicle batteries, semiconductors, and digital startups, stressing that achieving sustained independent innovation will require enhanced basic research, collaborative international efforts, and a move beyond reliance on government policy alone.

Keywords

innovation China S&T reform patents R&D government policy FDI Belt and Road Initiative trade war COVID-19 independent innovation digital transformation semiconductor electric vehicle battery

Information

Type: Chapter
Information: The Arc of the Chinese Economy , pp. 67 - 98

DOI: https://doi.org/10.1017/9781009649339.004 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2025

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