China’s innovation capacity and competitiveness – What does China’s own ranking say?

China’s innovation-driven development strategy is, since the 13th Five-Year-Plan (FYP, 2016 -2020), the key and strategic policy guideline for China’s innovation capacity building and competitiveness development. However, our perception of...

China’s innovation-driven development strategy is, since the 13th Five-Year-Plan (FYP, 2016 -2020), the key and strategic policy guideline for China’s innovation capacity building and competitiveness development. However, our perception of China’s innovation capacity has been largely built from an “outsider perspective”. For instance, through various international rankings. A less known fact is that, since 2011 China has started to produce its own “National Innovation Index (NII)” as a tool for monitoring the development of China’s innovation system as well as to measure China’s relative competitiveness from an international perspective. The annual NII report is produced by the Chinese Academy of Science and Technology for Development (CASTED), a policy research institute /think-tank, specialised in science and innovation policy, directly affiliated to the Ministry of Science and Technology of China (MoST).

Departing from both the well-known international rankings and the newly released National Innovation Index Report 2020, we will highlight both the similarities and the differences through a combined outsider- and-insider perspective.

A stock-taking – how innovative China is in the international rankings  

China was ranked as number 14th in the Global Innovation Index (GII) for 2020, which is considered as an encouraging and impressive achievement domestically, in particular given the impact of COVID-19 pandemic as well as the complex global environment.

Figure 1. China’s ranking in the Global Innovation Index framework 2020
Source: Global Innovation Index 2020

As another example, according to the European Innovation Scoreboard 2020, between 2012 and 2019 (See Figure 1 below), China has been catching up at five times the EU’s innovation performance growth rate. The catch-up has in particular been driven by both research and innovation inputs and outputs, such as R&D expenditure, international co-publications, most cited publications and applications of trademarks and patents. The predictions show that China will further close this gap and is also likely to overtake the United States if current trends continue.

Figure 2: Global innovation performance – EU compared to selected third counties
(Relative performance 2012 vs 2019)
 Source: European Innovation Scoreboard 2020

Given the stronger focus on basic research and higher education, the international competitiveness of Chinese universities has become a key policy agenda. Tsinghua University and Peking University are among the top 20 of the recently released QS World University Ranking (See Table 1 below), which has become a top news in China’s domestic media.

Table 1: Top 10 Universities in the World – the QS World University Rankings 2022

National Innovation Index – what does China’s own ranking say?

According to the latest National Innovation Index report 2020, released on 3 June, China is ranked as number 14 among the 40 countries included in the ranking.  The overall innovation performance gaps are rather small compared to the more advanced countries, such as the UK, Finland, France and Ireland who are ranked from number 10 to number 13. Sweden was ranked as number 5 in this Chinese innovation index.  

However, the most important and interesting is probably not the ranking per se. The underlying ranking framework is more important and interesting in order to see and understand China’s rationale / interpretation of what an innovation-driven country actually is.  5 key characteristics have been identified as the conceptual basis of high policy relevance for the ranking:

  • High investment of innovation resources, which include not only financial resources, but also talents and infrastructure.
  • Active knowledge creation – and diffusion.  
  • Strong enterprise innovation capacity,in terms of both cost-effectiveness and degree of sophistication.
  • Strong innovation performance, in terms of both output and impact on the economic, social and industrial development. 
  • Favourable innovation environment, which includes market competition, regulatory frameworks, but also policy- and government-driven market-creation.      

Accordingly, a comprehensive indicator system has been created, based on both international ranking practice, such as EU’s innovation performance measurement and global competitiveness index as well as adapted to China’s domestic contexts and priorities (See Figure 3 below):

Figure 3: Indicators included in China’s National Innovation Index
Source: CASTED, National Innovation Index Report, 2018

What to watch in the future? – from an “outsider- and-insider” perspective…

While the common belief of “if you can’t measure it, you can’t manage it” is probably only a half-truth, the indicator system does reflect a high degree of sophistication of China’s view on the key elements of an “innovation-driven country”.  A few similar trends between China’s and the international thinking on the development of innovation capacity and competitiveness can be clearly observed, for instance:

  • The emphasis on the “innovation supply chain”, i.e. seeing talent cultivation, basic research and innovation’s role in the economy and the society as holistically and systematically interlinked components, rather than fragmented and separated.
  • A deeper understanding of and more targeted approach to improving “innovation environment” as enabling conditions and frameworks.
  • The “quality” of innovation is measured to a larger extent by “impact” in terms of disruptive changes and societal contributions.

At the same time, we also see that, the “China-specific” approach also raises new questions, such as:

  • What are the implications of “technology independence” for enterprise innovation?
  • While recognising the importance of both knowledge creation and diffusion/dissemination, how can the diffusion and dissemination be strengthened by international cooperation, which in turn can be reflected in the measurement of innovation capacity and competitiveness?
  • When China is devoting more attention and resources to develop and improve the “innovation environment”, will the openness towards and the linkages to the global innovation eco-system also be enhanced?

Having the above observations and questions, from a combined “outsider- and-insider” perspective in mind, we are looking forward to deepened exchanges and dialogues with our colleagues, both inside and outside China!

Nannan Lundin, Linnea Yang and Jessica Zhang

*Science and Innovation Office, Beijing would like to thank China Europe International Business School (CEIBS) for kindly providing the “Innovated in China” image for this blog post.