Centralized Regime Gaining Information Capacity: Can China Approach Innovation Frontiers?

ABSTRACT

Why does the Chinese government have unsatisfactory policy performance in frontier innovation compared to its extraordinary achievements in the world factory model? Since the perspective of political system cannot provide an effective explanation, this article looks at this phenomenon from the viewpoint of information capacity. This article argues, the Chinese state has insufficient information capacity to promote frontier innovation—it has not developed an effective system to seize enough information through industrial practice to forge policies for frontier innovation. With the market-oriented reforms, the Chinese government has abandoned a top-down administrative coordinative system to organize science and technology (S&T) activities, and employed more market-oriented innovation policies. This article quantitatively assesses three main types of innovation policies, showing that the Chinese government has not achieved its expected goals of promoting frontier innovation. Interviews and long-term observations prove that the Chinese government lacks professional and penetrating capacities to seize and interpret information through industrial practice, and to effectively formulate and implement innovation policies—especially those aiming at frontier technologies with more complex information. This article sheds light on the relationship between the state and the market in the new era and state capacity building for technology and industrial policies.

Acknowledgments

The authors would like to thank Prof. Shuanping Dai and two anonymous referees who provided tremendous help during our writing of this work.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

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⁴⁶ We found some financial companies in Luoyang High-tech Park publish advertisements, promising to charge 50,000–80,000 yuan, which can help customers complete the full set of application materials for ‘High-tech Enterprise Policy’, and refund them in full if they are unsuccessful. This indicates that the data tested by the government are all explicit indicators that financial companies can manipulate. For example, in many cases, ‘R&D expenditure’ essentially includes the company’s expenditures on most employees with a master’s degree or above in science and engineering, regardless of the specific work they perform.

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Additional information

Funding

This work was supported by the National Natural Science Foundation of China [Project L2224016]; Fujian Municipal Social Science Foundation under the Major Program of State Governance Capacity Building Research Center [Project FJ2022MJDZ001]; the Institute of Public Governance, Peking University under the Key Support for Academic Team Building Program [Project TDXM202103].