China's innovation system reform and growing industry and science linkages

In this paper, linkages of S&T activities between industry and science are statistically investigated, based on a firm level dataset from an S&T survey by the National Bureau of Statistics (NBS) of the PRC of about 22,000 manufacturing firms. During the transition period of China's innovation system from 1996 to 2002, firms’ S&T outsourcing activities increased significantly. Econometrics analysis reveals that (1) “absorptive capacity” for S&T outsourcing becomes important over time, (2) innovation system reforms for more market-based competition work for better incentive scheme for innovation though S&T linkage activities and (3) government funding of S&T induces more S&T linkages.