INNOVATION IN CHINA

Abstract Innovation has been increasingly recognized as a critical force in national economic growth not only in developed countries, but also in emerging countries such as China and India. This paper provides a critical review of the literature related to China's innovation capability. First, I evaluate the current status of China's innovation capability as measured not only by the level of human capital and output of academic research but also by patents, products, and services that directly benefit economic growth. I then review the development pathway of China's national innovation system since the economic reforms, including policies, the role of the government, and the engagement of different actors in the national innovation system. Following that, I examine theories and empirical evidence that help to explain the evolution of China's innovation capability. Finally, using China's experience, I analyze the relationship between innovation capability and economic development and highlight how the uneven spatial distribution of innovation capability may affect China's regional economic development.