Written By Cong CAO.

On 10 May 2012, in his testimony to the US-China Economic and Security Review Commission, Professor Denis Fred Simon, Vice-Provost for International Strategic Initiatives at Arizona State University, and a long-time collaborator of mine, made this observation:

“In the 1980s, when China S&T specialists were asked why China lags significantly behind the West and Japan in science and technology, most responses focused on three critical deficits: 1) not enough money to support meaningful R&D at all levels; 2) not enough talent in terms of qualified scientists and engineers; and 3) a backward infrastructure that had little modern equipment and advanced computing capability.

Ironically, when somewhat that same type of question is posed today, the first response among most serious experts would be: 1) there is more than enough money, with R&D/GDP spending growing some twenty-plus percent over the last half dozen years; 2) there seemingly is more than enough talent with undergraduate and graduate enrollments in science and engineering continuing to grow since 1999 by leaps and bounds; and 3) there is more than enough equipment, considering the fact that today China has some of the most modern laboratories in the world with some of the most advanced equipment in place. So, one might then ask, what is wrong? What’s not working? What is the problem?”

Two months later, at a national conference in Beijing on science, technology and innovation policy, Madam Liu Yandong, then a Politburo member of the Chinese Communist Party Central Committee, who would later be promoted to vice premier, literally repeated what Denis Simon had said.

Observers within and outside China can agree that the pace of change has been extraordinary: three decades of sustained economic growth and concerted government support for research have created a large talent pool whose quality continues to improve. China is increasingly embedded in international networks of innovation, and is acquiring, creating and sharing knowledge at the frontiers of science and technology.

Impressive achievements in human space exploration, super-computing and high-speed rail reflect China’s state-led innovation model. Particle physics, genomics, structural biology are examples of fields where the best Chinese researchers are working at the leading edge of international science.

However, many Chinese scientists and engineers, science policy analysts and especially China’s political leaders remain puzzled as to why China has not progressed more rapidly, given these massive investments and an increasingly sophisticated research infrastructure.

For example, it is a long-running source of frustration that no homegrown Chinese scientist has yet produced a breakthrough worthy of a Noble Prize. Research also remains largely disconnected from truly innovative technologies and products. There is little sign yet of a Chinese equivalent to Apple.

With a few exceptions, Chinese enterprises still depend on foreign sources for their core technologies. According to a recent World Bank study, in 2009 China had a US$10 billion balance of payments deficit in intellectual property, based on royalties and license fees.

With my colleagues Ning Li, Xia Li and Liu Li, I recently published a paper in the journal Science, which explored the reasons for this ongoing under-performance of China’s science and innovation system.

Problems can be identified at every level of the system. At the macro level, there is a lack of coordination among the various government agencies with responsibility for science, technology and innovation. At the intermediate level, there is an unfair distribution of research funds. And at a micro level, there is inappropriate performance evaluation of individual scientists and institutions.

Together, these obstacles have impeded China’s ambitions to embark on an innovation-driven trajectory of development. The next wave of reform needs to focus on tackling problems at each of these levels in a systematic way.

The publication in 2006 of a blueprint for China’s science and innovation system – the Medium and Long-Term Plan (MLP) for the Development of Science and Technology (2006−2020) – represented a conscious effort by China’s scientific and political leadership to face up to some of these challenges. It is unfortunate then that a seven-year window of opportunity has been missed in its implementation.

During the global financial crisis, China should have taken full advantage of its relatively strong economic position to fix the problems in its science and technology system: to invest more wisely; to better utilize its large talent pool; and to push its enterprise sector to move from labor, capital and resource-intensive business models, towards alternative models based on knowledge and innovation.

China’s new political leadership, which has taken over in the past year, seems committed to redoubling efforts in this area. Halfway into its life, the 2006−2020 MLP is under review. And the thirteenth five-year plan, which is now being prepared ahead of its publication in 2016, is expected to include a significant focus on science, technology and innovation.

Indeed, the new leadership is fully aware of challenges in the governance of China’s science and innovation system. It can tackle them if it chooses to; but it is also partially responsible for some of the problems, such that reform may not be in its best interests. Inertia and preservation of the status quo are powerful forces.

China’s President Xi Jinping has emphasized reform of the science and innovation system repeatedly in his recent visits to the Chinese Academy of Sciences, the Dalian High-Tech Industrial Zone and the Zhongguancun Science Park. If China is to move into the premier league of innovative nations, its leaders will need to demonstrate political will, courage and determination to drive these reforms through.

Cong Cao is an associate professor and reader at the School of Contemporary Chinese Studies, University of Nottingham. A version of this post first appeared in the Guardian.