Measuring China’s success in developing a framework for domestic innovation

This report attempts to assess the degree to which China is developing a framework that supports domestic innovative capacity. This framework is not a predefined set of components, but is instead a combination of political, institutional, market, and technology factors and linkages that support information flows, interactions between entities, and incentives necessary to increase domestic innovation. Literature suggests that factors contributing to this framework may be influenced by domestic policy, and this report attempts to identify Chinese policies that contribute to the development of this framework within the Chinese solar photovoltaic (PV) and automotive industries. This report uses patent and export data as proxies for innovation in these two industries to measure the presence of this framework. The data suggest that the framework supporting domestic innovation in China is further developed for the solar PV industry than the automotive industry, but that the solar PV industry is still far from leading global innovation. Finally, the report identifies potential factors that have contributed to the variations between these two industries, and challenges that both industries may face in the near future.