The role of the state and the intensification of R&D in China: evidence from large and medium-sized Chinese manufacturing firms

Albert G. Z. Hu, Li Yin and Zhang Qilong

Economics of Innovation and New Technology, 2024, vol. 33, issue 8, 1159-1178

Abstract: We investigate the role of the state in the R&D intensification of China’s manufacturing industries. Using a data set that spans the population of large and medium-sized Chinese manufacturing firms from 2007 to 2016, we find evidence of two distinct models of technological innovation in China: state-owned enterprises that invest heavily in R&D and actively seek patents, which are not related to their economic performance; non-state-owned enterprises have been narrowing the gap with the state-owned enterprises in R&D spending, which boosts their economic performance, but these enterprises lag behind state-owned enterprises in patenting. The non-state model has seen its share of China’s R&D spending increasing at the expense of the state model, and government grants for firm R&D are partial to obtaining patents. All of this has taken place as Chinese manufacturing industries are becoming more competitive and less export-oriented.

Date: 2024
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DOI: 10.1080/10438599.2023.2294906

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