R&D in China: Historical and Institutional Perspectives

1. R&D in China: Historical and Institutional Perspectives Erik Baark Division of Social Science HKUST

2. Knowledge Society? • Knowledge society and Innovation have become popular terms in China recently • Modernization and competitiveness relies on innovation • New knowledge is an essential component of innovation • Ultimately, Chinese society should become a knowledge economy • But what do concepts of knowledge and innovation mean in China?

3. Traditional Chinese Concepts of Knowledge • Chinese traditional culture profess much respect for knowledge • Treasuring up of knowledge, learning, and teaching • Imperial examinations • Exploitation and transmission of scientific knowledge • But concepts of knowledge and the process of acquiring it was different from those that emerged in Europe

4. Greek Focus on nature and elements of nature Exploring material objects and causes of phenomena Sought knowledge for fame and livelihood as teachers Contending ideas debated Few opportunities for practical use Chinese Focus on cosmic order and principles (dao) Heaven, earth, society and human body interacted in a resonant universe Chinese intellectuals used knowledge as advisors to rulers Consensus rather than divergence Practical application of knowledge in government Concepts of Knowledge: Greek and Chinese Based on Lloyd and Sivin: The Way and the Word (2002)

5. The Imperial Style of Inquiry • Totalism: An ordered structure integrating everything that exists • The same order runs through both human and natural spheres • Provides justification for imperial authority – that is responsible for universal harmony • Strengths • Stability, shared values through education, self-discipline based on role models • Weaknesses • Failure to recognize new knowledge outside established order • Primacy of mind over matter Based on Munro: The Imperial Style of Inquiry in Twentieth-Century China (1996)

6. Balance of Exploitation & Exploration • Exploitation: Adoption of existing technology or routine (duplicative or creative imitation) • Exploration: Discovery of new technology or creation of new routines (creative innovation) • Chinese organizations are predominantly following an exploitative strategy

7. Learning: From Imitation to Innovation • The dominance of an exploitative approach to learning • Emphasize rote learning • Promotes imitation • Chinese actors need to adopt strategies that also emphasizes exploration, that is, innovation

8. Innovation & Creativity • Innovation also involves a break with the past – the gale of creative destruction • Social and cultural institutions need to foster creativity • Acceptance – or perhaps celebration – of individuals who deviate from the norm: Li Bai, Ren Xiong • Integration of creation and application of knowledge • Cooperation of many actors in the innovation process • Vital importance of flow of knowledge

9. Creativity, Invention and Intellectual Property • Traditional attitude to art and craftsmanship promoted copying of old masters • “To Steal a Book is an Elegant Offense” • Useful for diffusion of technology, but not necessarily for invention • Although China has been home to a large number of important inventions, few were protected by any legal institutions (such as IPR) • The current record of IPR in China shows weak incentives for invention

10. China’s Innovation System • The PRC science and technology system is fragmented and based on traditional concepts of “linear process of innovation” • Ideal: Basic research  Applied research and development  Manufacturing – But basic research weak and isolated • Fragmentation between creation of knowledge and application of knowledge • Based on excessive “division of labor” in the innovation system • Some signs of integration of knowledge creation and application in spin-off firms

11. Problems of China’s National Innovation System • Enterprises still not the center of innovation • Government interferes too much in innovation process • Financing of innovation weak • Innovative potential of small enterprises ignored • Exaggerated reliance on research institutes • Deficient flow of knowledge • Generic infrastructure for knowledge creation and dissemination weak Based on 柳卸林: 21世纪的中国技术创新系统工程 (2000)

12. Concluding Remarks • The process of creation and application of knowledge in China is shaped by the social context of learning and discovery • Confluence of knowledge and power relations • Focus on exploitation, rather than exploration • Innovation also influenced by tradition • Lack of “creative destruction” • Dominance of the linear model concept in policy • Deficient integration of research and development activities • Limited flow of knowledge