Innovation is an institutional design

By the end of February, the number of China's 4G users hit 138 million, according to the Ministry of Industry and Information Technology. [Photos provided to China Daily]

The Chinese invented the compass, gunpowder, movable-type printing and mastered the tecchnique to make paper. But China fell behind a West better armed with these inventions, in both political and cultural terms, in the century after the mid-1800s.

If innovation, especially in the field of science and technology, is a consequence of a certain set of institutions, as was shown by some countries, China has not ceased in exploring to establish the system that fits its national conditions for the nation's independence and prosperity.

Some experiments failed, some succeeded. The latest efforts are embodied in an ambitious action plan issued late last month, in which the central authority vows to implement the "Internet+" strategy, promoting the convergence of information technology and ten key industries. These include equipment manufacturing, new energy and bio-pharmaceuticals, and aims to upgrade the manufacturing industry from a world workshop to a world-class industrial power by 2025.

After missing the industrial revolutions of coal, oil and electricity, China regards the development of the Internet as an opportunity to catch up with more advanced economies.

To pave way for the transformation, in another guiding opinion published at the same time, the authority expounds explicitly on the importance and steps of building a pro-innovation environment.

China will expedite reforms of some monopoly industries of State-owned enterprises, restrict government's intervention in the economy, lower the threshold for new technology and emerging industries, and boost competition by making the market more transparent and fair.

China will also draft laws and rules on angel investment, play up the capital market's role in promoting innovation, and support qualified innovative enterprises to issue corporate bonds.

It will also make it easier for foreign professionals to obtain permanent residence, and bring in draft regulations on skilled migration.