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China has yet to see the benefits of investments in research and development, says a report released by the Organisation for Economic Cooperation and Development (OECD) this week (27 August).

The review of China's National Innovation System was requested by China's Ministry of Science and Technology (MOST).

China's funding of research and development (R&D) has more than doubled in the last decade, reaching 1.34 per cent of gross domestic product in 2005 from 0.6 per cent in 1995.

But the report says China is still far from building the "innovation-oriented" economy it aims to achieve by 2020.

R&D spending increased at an annual rate of 19 per cent after 1995 and reached US$30 billion in 2005. But 70 per cent of R&D focused on research for new products rather than on the basic research — focusing on theory and knowledge — needed for long-term innovation.

The report also points out how public research organisations, such as universities, have renewed their equipment and facilities, but have not seen a corresponding growth in the number and quality of researchers.

It also warns that China could face a shortage of skilled workers in science and technology, as the number of students choosing to study science subjects at undergraduate level has fallen.

The report also calls for China to improve its governance of science and innovation policy and allow for a more open, market-oriented approach.

China's ability to allocate public resources to support government priorities has played a key role in closing the technological gap with the rest of the world, according to the report. But it calls on the central government to create an independent agency to monitor and evaluate the success of innovation programmes.  

Wan Gang, Chinese minister of science and technology, said that to enhance innovation capacity, China should seek international cooperation by both setting up research institutes abroad and inviting more foreign research units to China.

Tian Lipu, director of the Chinese Patent Office, says that the lack of effective intellectual property rights protection in China affects innovation. He believes that sound implementation of intellectual property regulations is a priority for China to move towards an economy based more on innovation.