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How government promotes technological innovation through the market (No 136, 2014)


By Lu Wei, Department of Techno-Economic Research, Development Research Center of the State Council (DRC)

Report No 136, 2014 (Total 4635)


The Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee proposed that government improve its market technological innovation mechanism. And in implementing a new innovative development strategy, how relations between government and the market presented a real problem that needed to be dealt with. International experience has shown that, in a market economy, the government can find scientifically reasonable policies for markets and get social resources involved in innovation.

This report introduces cases where governments of market economy countries use their market mechanism to promote technological innovation, including the US in its shale gas development, Germany in its solar power pricing, the EU in automobile emissions standards, and the US in promoting digital TV technology.

The report studies domestic practices and gives suggestions, for example, on how the government should carry out inclusive policies and form an incentive mechanism for fairer competition. It needs to make policies more stable and transparent to get better returns on investments. It is also important for it to promote industrial technology progress through standard adjustments, while paying attention to the market and facilitating the popularization and application of new technologies.