By 2020 China is projected to become the second largest R&D industry globally, overtaking Japan. From 2016 to 2020 China planned to increase R&D expenditure’s share of GDP to 2.5 per cent by 2020. The country aims to become a high-tech regional hub encouraging scientific innovations and their commercialisation under the Scientific Innovation 2030 initiative and industrial transitioning plan – Made in China 2025.

The latter initiative is set to fuel innovation in manufacturing industries and support the development of emerging industries such as IT, 5G mobile communications, computerised machines, robotics, electric vehicles, medical devices, artificial intelligence, and bio-pharmacy.

However, industry’s development is projected to be negatively affected by growing skills shortage in the country, with graduates in science recording the lowest increase in number during 2011-2016. One of the most interesting yet least appreciated facets of modern China is its transformation from a low-cost, labor intensive manufacturer to an economy driven by an indigenous, self-sustaining process of technological change. The emergence of home grown research and development culture in China will not only help the country transition from developing to developed country status but also boost its transformation from an export to a consumption-led economy.

For the West, the rise of innovation and R&D in China means that the next big wave of Chinese competition is only a few years away – this time from China’s innovation prowess, not just its cheaper labor.