The Year 2020 Saw Further Growth of China Innovation Index and Continued Improvement of Innovation Capacity and Level

Interpretation of 2020 China Innovation Index by Li Yin, Principal Statistician of Department of Social, Science and Technology and Cultural Statistics, National Bureau of Statistics

The Research of China Innovation Index research group of the National Bureau of Statistics has recently released the evaluation results of the China Innovation Index for 2020. Li Yin, Principal Statistician of the Department of Social, Science and Technology and Cultural Statistics, National Bureau of Statistics, has interpreted the results.

As the evaluation results show, China Innovation Index went up by 6.4% YoY to 242.6 in 2020. Among the 21 evaluation indexes under the four specific indexes of China Innovation Index, 19 attained growth from a year before, especial the six evaluation indexes that showed two-digit growth rates: The Index of Number of People with College Degree or Above in Labor Force, Index of Proportion of Science and Engineering Graduates in Working-age Population, Index of Proportion of Enterprises Enjoying Additional Tax Deduction and Exemption, Index of Patents Granted per 10,000 R&D Personnel, Index of Trademark Ownership per 100 Enterprises, and Index of Technology Market Turnover per 10,000 Scientific and Technological Practitioners. China Innovation Index showed a clear evolution trend. In complex domestic and global situations, especially in the face of uncertainties like the COVID-19 pandemic, China kept innovation at the core of the broader modernization cause and made in-depth efforts in innovation-driven development. Thanks to that, this country was seen further improved in innovation capacity and level, and the driving forces for innovation were released in an accelerated way, which served as key support for ensuring a stable, fast and high-quality economic development.

I. Continued Improvement in Innovation Environment

In 2020, the Innovation Environment Index was 266.3, an increase of 6.3% over the previous year. Under the impact of the pandemic, the national fiscal expenditures on science and technologies shrank to some extent, leading to the drop of the Index of Proportion of Science and Technology Appropriation to Fiscal Appropriation. Fortunately, growth was seen in the other four evaluation indexes under the Innovation Environment Index.

The additional tax deduction and exemption policies further worked. With policies like raising the deduction percentage, enlarging the application range and optimizing the declaration procedures rolled out, enterprises were entitled to more preferential policies, and their identity with those policies and the tax deduction level further rose. In 2020, there were as many as 71,000 industrial enterprises above the designated scale benefited, 40.3% more from a year before. Taxes amounting to RMB 171.34 billion were deducted in general, up 22.4%. Of the total, 89.4% of enterprises considered those policies quite effective, 2.3 percentage points more over the previous year.

The number of science and engineering graduates grew faster. Those graduates are potential resources of scientific and technological innovation, and a key indicator in the European Innovation Scoreboard and other international mainstream innovation evaluation systems. In 2020, the number of graduates of science, engineering, agriculture and medicine reached 2,434,000 in China, up 172,000 year-on-year, a growth rate of 7.6%. This was a record high since 2013.      

II. Continued Growth in Innovation Input

In 2020, the Innovation Input Index was 209.7, an increase of 5.4% over the previous year, 2.4 percentage points faster in growth. The six evaluation indexes under this index increased in varying degrees.

R&D input maintained faster growth. In 2020, China’s R&D fund input was reported RMB 2,439.31 billion, growing by 10.2% YoY. A two-digit growth had been maintained for five consecutive years, and the No.2 place in terms of the total such input worldwide was secured. The input intensity (ratio of R&D funds to GDP) was 2.40%, 0.16 percentage points higher than that in the previous year. The growth was a recorded high since 2010. China was lifted from No.16 in 2016 to No.12 among the input intensity rankings of major economies across the world. It’s approaching the average of OECD nations. The full-time equivalent of R&D personnel was as high as 5,235,000 person/year, up 9% YoY and remaining the No.1 worldwide.

The dominant position of enterprises in innovation was consolidated. In 2020, R&D funds of Chinese enterprises were reported RMB 1,867.38 billion, a growth of 10.4% over the previous year. Among them, industrial enterprises above the designated scale reported R&D funds of RMB 1,527.13 billion, a growth of 9.3%. Enterprises’ R&D funds accounted for 77.9% of the total R&D funds, up 9.4 percentage points from a year before. Among the industrial enterprises above the designated scale, 208,000 carried out technological innovation, a share of 52.1%, which exceeded the 50% mark for the first time and was 2.5 percentage points higher YoY.

III. Fast Growth of Innovation Output

In 2020, the Innovation Output Index was 319.8, up 8.5% YoY, claiming the highest one among the four indexes under China Innovation Index. Among the five evaluation indexes under the Innovation Output Index, except for the Index of Ratio of Invention Patents Granted to Patents Granted due to a much lower growth rate of the invention patents granted than that of the total patents granted, all other four showed growth.

Rich fruits were achieved in innovation output. In 2020, 3,521,000 patents were granted in China, growing substantially by 42.3% from a year before. Among them were 441,000 invention patents, up 22.1%. A total of 1,952,000 papers on science and technology were published, up 0.3%. Further progress was made in enterprises’ brand building. By late 2020, large and medium-sized industrial enterprises in China had held 616,000 registered trademarks, up 14.5% YoY.

Rapid development was attained in the technology market. In 2020, China’s technology market reported a total contract amount of RMB 2,825.15 billion, up 26.1% YoY. The rapid growth of technology transaction value was a manifestation of the accelerated technology transfer and application. In 2020, the average technology market turnover per 10,000 scientific and technological practitioners grew by 19.1% to RMB 2.19 billion. The growth rate was 2.4 percentage points higher than in the previous year.  The Index of Technology Market Turnover per 10,000 Scientific and Technological Practitioners grew (from 100 in 2005) to 582.3, claiming the highest among all the 21 evaluation indexes.

IV. Innovation Efforts Showing Further Effect

In 2020, the Innovation Effectiveness Index was 174.7, growing by 3.8% from a year before. The growth rate was one percentage point higher YoY. The five evaluation indexes under this index increased in varying degrees.

Another good result of new product sales was recorded. In 2020, large and medium-sized industrial enterprises in China reported a total sales of new products of RMB 18.3 trillion, accounting for 27.4% of their main business income. The ratio was 2.5 percentage points higher than in the previous year, marking an all-time high. To be specific, sales of the new products meeting international market standards was RMB 2.5 trillion, 6.3% higher year-on-year; sales of the new products meeting domestic market standards was RMB 6.5 trillion, up 7.3%.

Energy consumption further dropped. Technological innovation further supported green development. By initial calculation, the total energy consumption of China was 4.98 billion tons of standard coals in 2020, up 2.2%. The total coal consumption took up 56.8% of the total energy consumption, 0.9 percentage points lower from a year before; the ratio of clean energies like natural gas, hydropower, nuclear power and wind power in the total consumption grew by one percentage point to 24.3%. By comparable prices, the energy consumption per unit GDP was down 0.1% YoY.

In general, as China Innovation Index in 2020 showed, our country keeps improving in innovation capacity and level. Yet to be honest, China is still weak in basic scientific research and lack significant original achievements. We still depend on other countries for important core technologies. The ability to apply scientific research achievements is still to be improved, as well as the talent development and incentive mechanisms. Next, we need to further implement the innovation-driven development strategy, build up new development advantages in all aspects and accelerate the cause of building a powerful country in science and technology.