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Follow the National Strategy and Make Shanghai a Technological Innovation Center with Global Influence

2015-10-12

By Lv Wei,ResearchDepartment of Innovation Development of DRC

Research Report Vol.17No.5, 2015

In May 2014, during his visit to Shanghai, President Xi Jinping pointed out that Shanghai should be in the forefront of promoting technological innovation, and implementing innovation-driven development strategy in the country and the world. He also pointed out Shanghai should accelerate its development into the technological innovation center with global influence, which is not only necessary for Shanghai to carry out transformation and development, but also important for China to implement the national strategy of innovation-driven development. Therefore, this initiative should be well planned for its functions in line with the national strategy and be implemented with a holistic view.

I. A Number of Regional Innovation Centers Should be Built in Order to Make an Innovative Country

In order to carry out the innovation-driven development strategy, regional innovation systems with unique features are needed and a number of technological innovation centers with global influence should be built.

1. Technological innovation centers play an important role in enhancing national competitiveness

Technological innovation center refers to the places where innovation elements cluster and innovation activities take place. Global technological innovation centers have global influence, with their leading ability as theforerunner of technological innovation in the areas of talents, capital, technology, etc. They are the representation of the comprehensive technological strength and innovation competitiveness. Innovation-oriented countries usually have a number of technological innovation centers. For example, the Silicon Valley and the Highway 128 in the USA, the Tokyo Metropolitan Area in Japan, London and Manchester in the UK, Munich and Stuttgart in Germany, Tel Aviv in Israel, and Seoul in Korea are all the world’s leading regional innovation centers.

Although there is no unified standard for international technological innovation center nowadays, global technological innovation centers have the following features. First, they are the places that gather innovation elements and high-end innovative talents, with multi-level capital market and relatively complete innovation and industrial chain. It can not only foster scientific and technological achievements and ideas with international influence, but also realize industrialization and create value right there. Second, they are the places that group companies with innovative vigor and international influence, and play a leading role in a number of industries. Third, they are the places that enjoy fair market competition, regulated legal environment as well as diversified and inclusive innovation culture. Fourth, the innovation centers are large regional concepts that break through the boundaries of cities, focusing on its influence and their leading role. Usually, they are the places with one or several innovative cities as the core, consisting of some surrounding city clusters with a high degree of openness, industrial support and technology absorptive capability as well as intensive innovation elements and production. For example, the world famous innovation center -- the San Francisco Bay Area with the “Silicon Valley” as its core, which includes San Jose, Oakland, San Francisco, and many other city clusters; the innovation cluster of the Highway 128 in the eastern United States is supported by Boston, New York, Philadelphia and other nearby metropolises; Japan’s “Tokyo Metropolitan Circle” is a city cluster with Tokyo as the core; Bangalore, the third largest city in India, is the core of southern city clusters.

Most innovation centers are formed as a result of market-driven forces. However, a few are formed by the market that is guided by government planning. For example, the Tokyo metropolitan area is established through the government’s “capital circle planning”.

China is a country with a large population of 1.3 billion. The implementation of innovation-driven development strategy requires us to create a unique regional innovation system, and build a number of technological innovation centers with global influence.

2. Shanghai has the advantages of building a global technological innovation center

At present, China has formed its own unique innovation clusters. The eastern coastal areas have three innovation highlands, namely the Bohai Rim with Beijing as its core, the Yangtze River Delta region with Shanghai as its core, and the Pearl River Delta region with Shenzhen as its core; the central and western regions have technology-intensive zones such as Guanzhong with Xi’an as its core, Chengyu with Chengdu and Chongqing as the core, and Han River with Wuhan as the core.

As mentioned above, the core cities of the three major innovative highlands, Beijing, Shanghai and Shenzhen have their own characteristics. Shanghai has the advantage of building the core city of the global innovation center. Beijing is the national political, technology and cultural center, as well as the international exchange center. It has the strongest R&D capability and more than half of the country’s universities and research institutes under direct administration of the state agencies. It is also the country’s technological supply center, and incubator of technological achievements, 80% of which outflow across the country. Shenzhen is China’s first special economic zone. Its high degree of marketization attracts a large number of high-tech enterprises and cutting-edge technological innovation and entrepreneurial companies, making it a national entrepreneurial innovation center. The R&D personnel, expenditure and invention patents of the enterprises in Shenzhen take up more than 90% of the total of the whole city.

Compared with Beijing and Shenzhen, Shanghai has a comprehensive advantage. First of all, Shanghai is the country’s economic, financial, trade and shipping center. It has a high degree of internationalization, strong overall strength and great influence over other areas. Secondly, Shanghai’s technology infrastructure and human resources rank top in the country. Shanghai is only next to Beijing in the number of universities under the administration of the state agencies and the number of research institutes, the number of academicians of the Chinese Academy of Sciences and Chinese Academy of Engineering, the number of talents of the National Thousand Talents Plan, the number of national science and technology projects, and the education level of the population. A quarter of the research institutes of multinational companies in China chose to locate in Shanghai; the R&D expenditure of foreign enterprises is higher than that of Beijing and Shenzhen. Moreover, Shanghai is China’s important integrated manufacturing base for major technical equipment. Many major national projects like high-precision lithography machine, nuclear power equipment, arterial civil aircraft, gas turbine and so on are located in Shanghai. At the same time, Shanghai has the advantage of favorable location. The Yangtze River Delta region with Shanghai as the leading city is China’s most developed area in economy, with strong manufacturing capacity and balanced distribution in innovation chain. The concentration degree of innovation elements of this area are highly concentrated such as technology talent, investment, venture capital, entrepreneurial companies and so on, which ranks first among innovation-intensive areas in China. Its R&D expenditure and personnel are one-fourth more than the total of the country, its size of venture capital is over 2 times greater than that of the Pearl River Delta region, nearly 7 times that of the Beijing-Tianjin Region. The proportion of patent applications is 10% higher than that of the Pearl River Delta region and the Beijing-Tianjin region. In addition, having a good basis for manufacturing and relatively complete industry chain in the Yangtze River Delta region, Jiangsu and Zhejiang’s land capacity and the ability to attract entrepreneurs are stronger than those of Shanghai.

Based on the international experience, the Yangtze River Delta region with Shanghai as the leading city is most eligible for being the first technological innovation center with global influence in China if appropriate systems and policies are in place.

II. Shanghai Technological Innovation Center Should Serve the National Strategy

It is the national strategy to develop Shanghai into an innovation center with global influence. This initiative should be considered within the overall development plan of the country and also in the context of international competition. The role of the innovation center should be given full play in supporting transformation and development.

1. We should combine the development strategy of the Yangtze River Economic Belt, and enable Shanghai to play the role of the core city in the innovation intensive zone of the Yangtze River Delta region

In light of the international experience, it is difficult for a single city to build a global technological innovation center. Since the 18th CPC National Congress, the CPC Central Committee has initiated strategies to focus on the three regional development strategies, namely, the “Belt and Road”, the coordinated development of the Beijing-Tianjin-Hebei region, and the Yangtze River Economic Belt. As the intersection of the Yangtze River Basin and the maritime Silk Belt, building the technological innovation center in Shanghai will accelerate the development of the Yangtze River Economic Belt, which is the efficient combination of the national innovation-driven development strategy and the regional development strategy.

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