Indigenous Innovation in China: Implications for Sustainable growth

This paper aims to examine indigenous innovation and draw implications for sustainable economic growth in China. It investigates China’s capacity and achievements in indigenous innovation at both the macro and micro levels. China’s indigenous innovation is also compared to that in other major economies in the world. It is found that China’s innovation development is well ahead of other economies at the similar stage of development but there is a gap between China and the world’s leading innovative economies. Both aggregate and disaggregate evidence shows that China is catching up rapidly with the world’s innovation leaders. If current growth momentum is maintained, China is well positioned to become one of the most innovative economies in the world in the coming decade. There are however some serious issues to be resolved before China’s innovation potential could be realized. Key words: Indigenous innovation, R&D, Chinese economy JEL codes: O32, O33, O38