In self-sufficiency drive, party moves R&D to centre stage

The use of science and technology to boost China’s self-reliance has taken centre stage in China’s economic plans – a message reinforced at the country’s key legislative meetings earlier this month – as growth and consumption slow and China’s trade is hampered by United States restrictions on trade, particularly exports of semiconductor chips and other equipment vital for China’s high technology ambitions.

“Scientific and technological policies should aim at building up our country’s strength and self-reliance in science and technology,” Premier Li Keqiang said, delivering his final government work report at the start of the of the annual meetings of the National People’s Congress (NPC) and its advisory body the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) held from 4-11 March in Beijing.

Li, who retired during the NPC session after serving two five-year terms as premier, said: “We should better leverage the role of the government in pooling resources to make key technological breakthroughs.”

He was referring to greater government oversight of research funding decisions unveiled at the ‘two sessions’ – a term commonly used to refer to the legislative meetings.

Li’s report said China would also increase support for basic sciences, strengthen the role of private enterprise “as the primary innovator in science and technology” and facilitate reforms to better train and use scientific talents.

China’s science and technology spending is being increased despite the fact that overall spending has been tightened, reflecting the importance of the sector to the economy.

Restructuring

The leadership is also changing the way big R&D projects are managed.

A revamp of the Ministry of Science and Technology (MoST) is a major plank of the restructuring plan and involves hiving off some of the ministry’s key research-related roles while at the same time centralising party control over big research projects, particularly in areas such as AI and semiconductors to counter US decoupling and export restrictions relating to technologies on which China has relied for its own technology-driven growth.

State Councillor Xiao Jie said the party would establish a new permanent body called the Central Science and Technology Commission that will delegate tasks to the existing MoST.

Though few details have emerged on the new body, its formation will put science and technology at the heart of the government’s economic planning and ensure consistent policies across all government agencies, analysts said.

However, it also effectively puts the Communist Party in charge of research and technology, elevating it to a key national priority, with some suggesting the new commission could be chaired by China’s President Xi Jinping himself.

Sources said the formation of the commission would also mean that China’s technology companies, which have been brought together in an advisory role to government, could have a bigger influence on the direction of state-funded research projects previously influenced largely by universities and state-run enterprises.

It might also mean that technology companies will have access to additional government funding and subsidies for R&D without the performance goals normally imposed on universities, the source said.

The focus on science and technology at this year’s joint sessions was evident in part from the number of technology company executives newly appointed as NPC representatives and CPPCC delegates, including senior executives and academicians involved in the semiconductor sector, reflecting that sector’s growing importance to the Chinese economy.

Among the academics elected to the NPC for the first time was Li Shushen, a renowned semiconductor expert and president of the University of Chinese Academy of Sciences.

Changes to funding decisions

The changes will see many of MoST’s management and subordinate agencies, which include those responsible for rural development, social development and high technology development, relegated to other ministries with specific expertise in those areas. The ministries will also oversee industrial developments and technological innovations in their fields, previously the remit of MoST, according to state media reports.

For example, the agriculture ministry will take on responsibility for agriculture research funding and innovation, and the environment ministry for environmental research funding and innovation.

Although MoST previously had responsibility for setting research priorities, allocating money, and evaluating projects, it had limited control over how other ministries conducted their research. That led to inefficiencies and sometimes lacklustre results, analysts have said. The revamp gives agencies greater responsibility for research within their mission areas and creates a more independent mechanism for evaluating results.

Under the new structure, MoST will retain a broader monitoring role. Until now, the ministry has been responsible for research funding decisions and assessments of projects that were often closely linked to research publications and citations, and research awards.

Chinese academics note that academic publications have become a major indicator for science funding applications, which is seen as skewing research priorities as journal publishers tend to prefer novelty to in-depth, longer-term research.

Li Zhimin, deputy president of the National Centre for Science and Technology Evaluation, a specialist agency affiliated with the ministry, said the biggest change was that MoST was no longer responsible for funding, which could have a big impact on technological innovation in China.

“Some of the ‘bottleneck’ problems, such as [semiconductor] chips, are no longer scientific problems but technical or economic problems. The ministry of industry or other relevant ministries know best about these economic or technical issues,” he told official media.

Under the MoST restructuring the emphasis on research funding will be redirected towards research applications; in particular, developing particular products that can be patented and ‘owned’ by China rather than relying on Western high tech.

A wake-up call for China

US sanctions and export controls have spurred China’s officials to address longstanding and deeper problems in the country’s research environment, according to Denis Simon, a China science policy expert at the University of North Carolina at Chapel Hill in the United States and former executive vice-chancellor of Duke Kunshan University in China.

The goal of the MoST revamp is to get China producing “usable, desirable, needed technology that can be put into application sooner rather than later”, Simon told University World News. “One of the goals of that restructuring is to facilitate more demand-driven research – research that can get translated into outcomes that have applications, and not just lead to [academic] publications.”

While China is fond of touting its huge increase in scientific publications and citations, it is not seen as enough in an era of decoupling and China’s drive for science and technology self-sufficiency.

“I think Xi Jinping knows that it is really nice to say China is ‘number one’ in [research publication] citations, but that does not mean it can produce world-class products,” Simon said, adding: “Xi doesn’t see any impact in terms of new products, new services, new capabilities that are going to catapult China ahead in terms of competitive advantage.”

Simon noted that since former US president Donald Trump’s administration in 2016, US policies – in particular, decoupling of trade, technology transfer and research – have been “a wake-up call” for the Chinese leadership.

“They realise they have to control the IP [intellectual property] and the knowhow,” Simon said.

“Before, [universities] produced research, and then looked for an application. Now they’ve moved a lot of functions out of MoST, so that MoST can focus more on the connectivity [of research] with applications – [the government] wants to structure research around meeting that need,” he explained.

Over the years, China’s government gave MoST – a sprawling agency that oversaw a wide range of research efforts – increased responsibility and resources to build an innovation economy, said Simon, but “leadership has not been impressed by the results”.

Scott Moore, director of China programmes and strategic initiatives at the University of Pennsylvania in the US, concurred: “I view these proposed institutional reforms as a sign that China’s progress in innovation has not been as marked as was hoped, and that Beijing is preparing for an era of reduced dependence on the US and other countries for scientific and technological progress.”

Moore told University World News the overall effect of ‘decoupling’ would be negative both for China and the rest of the world, “but more so for China. How negative that effect is depends on the extent of decoupling,” he said, adding: “I would not expect decoupling to prevent China from eventually acquiring key advanced technologies like quantum computing, etc, though more slowly than had decoupling not been initiated.”

Control over science output

Irrespective of decoupling, the rate that inventions at Chinese universities were industrialised last year was 3.9%, up 0.9% year-on-year, according to the 2022 China Patent Survey Report released by the China National Intellectual Property Administration.

The invention conversion rate at elite universities was 4.4%, with 73.7% of those having a research cycle of less than two years. This has come to the attention of the Chinese leadership, analysts said, noting that China wants clear ownership of research outputs to shore up its drive to self-sufficiency, which can only be secured by IP ownership rather than relying on imported technologies and technology licensing agreements.

Self-sufficiency has become even more important as China enters an era in which it could be at a negotiating disadvantage in technology trade and transfer as the US as well as Europe, Australia and Canada become more suspicious of Chinese ‘influence’ and appropriation of technology.

You Zheng, president of Huazhong University of Science and Technology in Wuhan, Hubei province, told China’s state television CGTN that universities have a role to play in “strengthening research in basic science and high-tech fields [and] in generating core technologies with independent intellectual property rights”, as well as supplying high-level talent to the manufacturing industry.

You added that combining the training of highly skilled talents in basic disciplines with the training of elite engineers would deliver the applied impact the government was highlighting.

Basic research

Notably, universities were not much mentioned during the joint sessions, according to Simon, though prior to the March meetings their role in basic research had been highlighted.

Li, in his work report, said overall spending on research and development had risen from 2.1% to over 2.5% of gross domestic product (GDP) over the past five years, and scientific and technological progress had contributed more than 60% to the country’s economic growth.

In 2022, China’s gross domestic expenditure on research and development (R&D) reached CNY3.09 trillion (US$449 billion), exceeding the CNY3 trillion mark for the first time ever, and accounting for 2.55% of the country’s GDP, according to official data released on 20 February. This made China the second-largest spender on R&D in the world last year, behind the US.

However, spending on basic research reached CNY195.1 billion in 2022, 3.9 times higher than in 2012, accounting for 6.32% of total annual R&D expenditure. This proportion is lower than the US, where basic research spending makes up about 15% of the total R&D expenditure.

“In 2022, China crossed over that magic line of 2.5% of GDP on research. They made it to 2.55%, which is big achievement for them. That was their goal for 2020. They didn’t make it then, but they’ve made it now,” said Simon.

However, this comes as “external political pressure” – a reference to US technology decoupling – was a significant challenge to China’s basic research. “We have to build more completely independent basic scientific research capabilities and facilities,” Sun Yuzhong, a researcher at the Institute of Computing Technology at the Chinese Academy of Sciences, was quoted by the official Global Times newspaper as saying.

More than 600 Chinese firms spanning the semiconductor, artificial intelligence and aerospace and aviation sectors have been added to the US export blacklist, barring them from accessing US technology and components without US government approval.