Zhang Junkuo, Development Research Center of the State Council

2016 is the first year of the 13th Five-Year Plan period and a crucial year to propel various reforms. Among the arrangements of the 13th Five-Year Plan, innovation, coordination, openness, sharing, and green development are the five ideas and crucial approaches to realizing the development goals of the 13th Five-Year Plan, resolving obstacles to development, and cultivating developmental advantages. The arrangements of the 13th Five-Year Plan state that innovation should be the focus of national development. Innovation-driven development strategy is not an improvised makeshift for resolving short-run or local problems, but rather an important strategy regarding the entire landscape of China’s modernization. Understanding innovation-driven development is significant for China’s modernization. First, without innovation-driven development, it would be difficult for us to break away from the traditional extensive growth mode that relies excessively on factor investment, get rid of the constraints imposed by resources, environment, and market demands on economic growth, and realize sustained and sound economic development. Second, without innovation-driven development, it would be hard for us to stand out from fierce international competition. Third, without innovation-driven development, we might not be able to become an economic power and untimely realize China’s dream of rejuvenating the nation. Innovation plays a key role in sustaining constant and healthy development of China’s economy during the 13th Five-Year Plan period. It seems that the factor leading to economic downturn is inadequate demand, which results in surplus production capacity and decreased enterprise efficiency. But an in-depth analysis reveals that a deeper or fundamental reason is the low-quality of supplied products that cannot meet the requirement of increasing demands. From the perspective of enterprises, the key for them to gain success in market competition is to sharpen their competitive edges, especially core competitive edges. Innovation is an essential way for enterprises to raise product quality and efficiency and obtain new competitive advantages. Efforts should be made to strictly and effectively implement the strategy of innovation-driven development and be fully aware of the connotations of innovation and the means for its realization. First, we should be clear about the notion of innovation from the perspective of economics. Second, we should fully implement the strategy of innovation-driven development during the current stage. And third, we should fulfill the key tasks related to the innovation-driven development strategy. The government should correctly and efficiently bring its role into play, which is crucial to the successful promotion of innovation-driven development. 1. The crucial role of nation in fundamental research and key generic technology research should be strengthened by means of increasing investment, organizing problem-tackling tasks, and speeding up breakthroughs in core technology in such fields as information communications, new energies, new materials, aviation and aerospace, biomedicine, and intellectual manufacturing. 2. Endeavor should be made to exercise strict enforcement, enforce penalties, and enhance protection of property rights especially intellectual property rights. 3. An environment conducive to fair, just, law-based, and transparent competition should be created by way of government procurement, subsidies and rewards, as well as financial support policy. 4. Efforts should be made to promote such standards as product quality, security, and environment-friendliness, break regional protectionism, exercise strict enforcement and supervision, strengthen the construction of social integrity system, prevent the incidents of “the bad money driving out the good”, and form an incentive mechanism for innovation-driven development. And 5. An atmosphere should be nurtured to advocate innovation and accept failure, and relevant measures should be taken to free innovators from worries induced by failures.