Written by Richard P. Suttmeier.

In its latest “Science, Technology and Industry Outlook,” the OECD has again called attention to the rapid rise of China’s research and development expenditures and the likelihood that Chinese spending on R&D will surpass that of the US in the not-too-distant future. But, this latest report also reminds us that one of the more curious aspects of scientific and technological development in China over the past 15 years has been that rapid increases in expenditures on research and development have occurred in the face of an institutional environment that has been unsettled, has not always been well-suited to the effective use of generous funding, and has therefore been subject to rounds of reforms. Since 2000, and the beginning of the R&D expenditure surge, spending has clearly outpaced institutional design.

Wen Jiabao’s speech to the National Conference on Science and Innovation in July 2012, in which he bemoaned the performance of China’s systems for research and innovation can be taken as the start of the latest round of these reforms. Two months later, with the issuance of the important “Opinions on Deepening the Reform of the Science and Technology System and Speeding up the Building of a National Innovation System,” the CCP Central Committee and the State Council brought a sharper focus to the need for further institutional reform. Clearly, as the second decade of the 21st Century began, China’s top political leaders were asking hard questions about the efficiency and effectiveness of all the money that was going into science and technology.

Since March this year, Xi Jingping’s government has taken an even more robust approach shaping the reform agenda, starting with an important initiative to reform the administration of research funding. In late October, further changes in the funding of research were announced, with hints that major reorganizations of the state’s science bureaucracy and research organizations were in the offing. Responding to this new environment, the Chinese Academy of Sciences has initiated a reform program to reconfigure its institutes into four major thematic categories and enhance its educational and policy advisory missions, measures which have the potential to bring about the most radical changes in CAS since the 1950s.

These various reform efforts have important implications for the emergence of China – as anticipated by some – as a science and technology “superpower.” On one hand, one could argue that the changes unleashed will better align the institutions of China’s national innovation system with R&D spending increases and, thus, ensure that the funding that is being pumped into research will serve China’s aspirations for scientific distinction and technological leadership. But these reform activities also introduce major uncertainties into the research environment, uncertainties that are also exacerbated by the current anti-corruption drive which affects science and technology-related organizations as well as many other sectors of Chinese society. Chinese scientists and engineers are therefore facing an environment characterized by significant additional administrative churn which affects  R&D routines, professional incentives and career paths, and adds considerable unpredictability to the broader science and technology policy environment.

While Chinese reform leaders seem to recognize the disruptive potential of change, and have therefore called for more gradual, multi-year implementation of some of the reforms, the fact remains that the longer-term consequences of administrative churn are largely unknown. China’s current funding system, for instance, has fostered a hyper-competitive search for research grants which has resulted in the support of projects with short time horizons and to wasteful duplication of expenditures in support of “hot” topics. While the reforms are intended to overcome such outcomes, one can well imagine that churn-induced uncertainty would nevertheless increase incentives for short-term opportunistic behavior at the expense of well conceived research and innovation programs requiring sustained efforts over the longer-term.

That so much has been accomplished in recent years in spite of the unsettled institutional environment is itself impressive, and represents another puzzle. Perhaps policy and administrative arrangements are less important for scientific and technological progress than we sometimes think. Perhaps there is an abundance of capable scientists and engineers in China who are adept at transcending administrative churn in ways that serve national accomplishments.  Perhaps, contrary to the views of skeptical Chinese and foreign observers, money IS what really matters and CAN buy scientific and technological achievements. Or, perhaps the combination of generous funding, hyper competition, and administrative churn have been especially suitable for scientific and technological development through a “catch-up” phase which may now be ending. It is doubtful that the institutional styles which characterized the  “catch-up” experience can serve the objective of moving “beyond catch-up” to create environment supportive of original research at the international frontier and the fostering of an ability to set new technological trajectories. Reforms are thus unavoidable, but the administrative churn they induce should not be underestimated.

Richard P. Suttmeier is a Professor of Political Science, Emeritus, at the University of Oregon. He has written widely on science and technology development issues in China. Image credit: CC by Wolfgang Staudt/Flickr

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