1. Overview of the R&I system
As a result of the post financial crisis stimulus package, China is going through a transition from rapid development (2011 annual GDP growth rate at 9.49%) to a slower but more sustainable economic growth rate of 7.25% in 2014 (EU: 1.3%). However, GDP per capita of China (2014: 9,913 EUR) is much lower than EU average (2014: 27,300 EUR). Gross Expenditure on R&D (GERD) amounted to €277,554 million (USD 368,731 million, current prices and PPPs) in 2014 and R&D intensity (GERD as percentage of GDP) increased from 1.93% in 2012 to 2.05% in 2014, surpassing the level of the EU28 (2014: 1.94%) (OECD, 2015). Government debt of China is 39.2% of GDP in 2014, increasing from 36.7% in 2012 and showing an increasing trend. As for the economic structure of China, the shares of primary, secondary and tertiary industry in the GDP are 4.8%, 47.1% and 48.1% in 2014 (China Statistical Yearbook, 2015). Innovation plays an increasing role in the Chinese economy as China became the world’s second largest spender on R&D in 2005. As China enters a stage that the Chinese leadership terms the “new normal”, facing challenges of sustaining its economic growth and social development, the Chinese leadership called for pursuing innovation-driven development strategy at the18th National Congress of the Chinese Communist Party (CPC) held in 2012 and announced a major reform on the S&T financing system in 2015. Guided by the innovation-driven development strategy and other policies, China has strengthened the R&D investment and continued to provide incentives for innovation activities in recent years.