Zhejiang province pledges billions to drive tech innovation
December 18, 2018 Category China News Round-up, Weekly
Zhejiang province, home to e-commerce giant Alibaba Group, has pledged CNY120 billion to drive tech and innovation in the next five years. The investment plan is part of a new technology policy rolled out by the provincial government, with the goal of building itself into a global “high ground” of technology innovation in internet and medical research by 2020. “We will also guide social capital and financial institutions to invest around CNY290 billion,” Gao Yingzhong, head of the provincial Science and Technology Department, was quoted as saying by Xinhua. He added that the total investment in research and development (R&D) in Zhejiang province over the five year period is expected to reach CNY900 billion.
For years, China relied on government subsidies to encourage development of key industries, but starting in 2014, subsidies gave way to so-called “guidance funds”, or state-backed funds and private equity firms. As of October, various levels of governments in China had set up 2,041 government guidance funds, raising a total of CNY3.7 trillion, according to a report by Tsinghua University last month. While the investment by the Zhejiang government is not a government guidance fund, it is part of a broader top-down innovation approach by the Chinese government as it steps up efforts to boost the private sector and increase the competitiveness of its home-grown tech sector, which still relies heavily on foreign suppliers for core technologies such as semiconductors.
Zhejiang is home to many of China’s most successful private businesses, which made up nearly two-thirds of the provincial economy in 2017. Alibaba said in October that it expects to invest USD15 billion in R&D over the next three years. Last year the company spent USD3.6 billion on R&D, according to a PwC survey. Zhejiang province is also aiming to increase the ratio of R&D expenditures to the equivalent of 3% of provincial GDP by 2022. China’s total investment in R&D was equal to about 2.2% of GDP last year, the South China Morning Post reports.
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