Innovation in Chinese science and technology continues to be driven by the state rather than by the grass roots. Government impetus has primarily involved building massive new research facilities such as two of the world’s largest radio-telescopes (LAMOST and FAST), a VLBI deep space network, the Shanghai Synchrotron Radiation Facility, the North Star GPS satellite network, and the China Spallation Neutron Source, just to name of few.

To fund these Big Science projects, the Chinese government pledged in 2005 to boost R&D spending from 1.3% to 2.5% of GDP by 2020 (see Science, 17 March 2006, p. 1548). However, the danger is that the government failed to meet a similar pledge in its last five year plan. According to the “95 Plan” covering 1996 through 2000, the government pledge to raise R&D spending to 1.5% of GDP by the end of 2000, around 135 billion yuan at the time. Although China approximately met its GDP goal of 9 trillion yuan by 2000, R&D spending only grew by little more than half of what the government had pledge 5 years earlier (see below the official statistical charts published in 2006). This means that many of these projects may meet either construction or operating budget crunches long before any productive work can be done.

Moreover, little attention and funding has been given to how these showcase facilities will actually be used. In rare cases such as the China Spallation Neutron Source are users consulted as to their needs and the operating and maintenance budgets necessarily to make projects successful. Funding often comes as a lump sum and the design and location of the facilities are often subject to political jockying, as many of these projects represent the legacy of a political leader. The training of researchers to man these facilities also lags and the lack of communication and cooperation among competing labs continues to hamper progress.

Chinese enterprises have also failed to drive innovation as few invest in research and development. For example, a survey by China's top advisory body, the National Committee of the Chinese People's Political Consultative Conference (CPPCC), found that most do not employ a single person in R&D and in state-owned enterprises, performance is assessed based on increase of assets rather than innovation. Not surprisingly, in contrast to the heyday of Silicone Valley, China’s microprocessor technology suffers due to a lack of commercial R&D investment.

In a new twist, a recent Pentagon report finds that China has turned to forging closer ties between the military and businesses to try and kick-start research into cutting edge technology where the commercial sector has sagged. Companies such as Huawei, Datang,and Zhongxing collaborate closely with the PLA on dual-use information technologies. Borrowing a page from Vannevar Bush’s playbook, the military also plans to work more closely with universities in funding research in key areas such as aviation, information, new materials, energy (hydrogen energy and fuel cell technologies, alternative fuels), and marine (three-dimensional maritime environmental monitoring technologies, fast, multi-parameter ocean floor survey, and deep-sea operations) technologies.

(See attachment for charts)