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Innovative approach to boost businesses

By Xu Wei | China Daily | Updated: 2019-05-21 07:47
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[Photo by Shi Yu/China Daily]

Investment, tax policies among new key measures

The unleashing of policies by the State Council to boost the innovation capacities of businesses indicated the country's resolve to move its manufacturing sector up to the medium-high end of the global value chain, according to experts and officials.

The Cabinet decided at an executive meeting, chaired by Premier Li Keqiang, on May 14 that a host of steps will be adopted to see that businesses can increase their investment in research and development. The meeting also pledged better implementation of policies to support the innovation efforts of businesses of various ownerships.

To ensure that enterprises can take up a principal position in technological innovation, more favorable tax policies, mainly in the form of tax-deductible R&D costs, will be rolled, according to a statement released after the meeting.

More fiscal and tax support will be extended to business, with the growth of venture capital investment funds set to receive more incentives. Financial institutions will also be incentivized to improve the percentage of medium-and long-term loans to the manufacturing sector to support innovations, the statement said.

"The measures, all concrete and forceful, have shown the resolve and confidence of China to accelerate the fostering of new growth engines and promote high-quality development of the manufacturing sector," said Huang Libin, head of the bureau for operations, monitoring and coordination under the Ministry of Industry and Information Technology.

The Cabinet has also called for efforts to promote the sharing of innovation resources, such as major facilities for scientific research as well as ground research platforms, which has shown that the government has attached more importance to giving play to the market mechanism in promoting innovation, he said.

The meeting has also urged greater efforts to achieve breakthroughs in core technologies and make the manufacturing sector smarter, greener and better integrated with the service sector in its upgrading process.

The construction of new infrastructure, such as the industrial internet, will be advanced together with technological innovations in the manufacturing sector, the statement said.

Li Xiaohua, a researcher on the industrial economy with the Chinese Academy of Social Sciences, said it is a crucial measure for the country to encourage innovation in core technologies against an international background of rising protectionism.

"The emerging of new business models has also made it difficult for the government to predict the direction of future innovations. Thus it is important to encourage businesses to boost their innovation activities," he said.

Innovation is also the key to seizing new opportunities arising from the latest round of technological revolution and to narrowing the gap in key technologies with developed economies, he added.

The meeting also decided on measures to step up services for the innovation of small and medium-sized enterprises and speed up the transformation and promotion of innovation outcomes.

It stressed the need to enhance protection of intellectual property rights and step up punishments on infringements.

Li, the researcher, said better protection of IPR can incentivize businesses to increase their investments in R&D, and will benefit the country's innovation capacities in the long term.

"For businesses, the more they devote to innovation, the greater the risks will be. Thus, it is important to ensure their innovation benefits could be fully protected," he said.

Technological advances contributed to 58.5 percent of China's economic growth last year, according to the Government Work Report this year.

Last year, the country spent 1.96 trillion yuan ($291.58 billion) on research and development, or 2.18 per cent of its GDP, an 11.6 per cent increase from 2017, according to data from the National Bureau of Statistics.

Zhang Peng, a senior statistician with the NBS, said in a report in August that the country's input in R&D has been on a steady increase in recent years.

However, the R&D by non-manufacturing enterprises took up only 14.9 percent of the total input in 2017, which is far below the United States' level of 33.1 percent, he said.

"The allocation of R&D resources should be further optimized so that businesses could take up a more dominant role and innovation activities can be more market oriented," he said.

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