Shaping China’s Innovation Future
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Shaping China’s Innovation Future

University Technology Transfer in Transition

John L. Orcutt and Hong Shen

Shaping China’s Innovation Future employs a thorough analysis of a combination of factors including: the role of law and China’s legal system; economic theory and the development of China’s economy; China’s educational, intellectual property, and financial systems; China’s innovation capacity; and Chinese culture. Though the recommendations on how to improve China’s technology commercialization system are unique to China, the scope of the research makes the conclusions found here applicable to other countries facing similar challenges.
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Chapter 7: Planning to be an Innovative Nation – China’s National S & T Plan and its Impact on China’s Bayh–Dole System

John L. Orcutt and Hong Shen


7. Planning to be an innovative nation – China’s national S&T plan and its impact on China’s Bayh–Dole system [I]nnovation is the core of our national development strategy and a crucial link in enhancing the overall national strength. – Hu Jintao, China’s President and General Secretary of the Communist Party1 China’s universities have substantially increased their inventory of patents and their commercialization of patented technologies since the late 1990s. Two factors that will play a prominent role in whether that growth continues will be: (1) the willingness of the Chinese government to continue to fund university R&D at sufficiently high levels and the efficiency of that funding effort; and (2) the R&D proficiency of China’s business sector. One of the most critical aspects of any innovation system is whether adequate resources are being committed to R&D. Economic theory strongly suggests that for even the most free-market economies, the business sector will always under-invest in R&D. Because knowledge is both non-rival (it can be used by an infinite number of people at the same time without depriving any person of its use) and only partially excludable (it is difficult to exclude unintended parties from benefiting from ideas), knowledge tends to generate spillovers that allow unintended recipients of the new knowledge to receive its benefit without having to pay the knowledge producer.2 In many cases, these knowledge spillovers can generate substantial social returns. For example, when a firm invests to improve one of its products or processes,...

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