ABSTRACT
The aim of this chapter is to identify determinants of China's innovative capacity at national and regional level as well as strategic directions and goals of China's science, technology and innovation (STI) policies and their relevant instruments. China's emergence as challenger to established world innovation leaders is a result of the interplay of factors shaping its innovation capacities. At the national level, the innovative capacities have been generated by the central government's provision of policy, financial and regulatory support, the size and growing sophistication of the domestic market, increasing expenditures on R&D, improvement of the quality of higher education, steadily growing R&D personnel, as well as aspects of China's culture such as collectivist system, low level of uncertainty avoidance that influence the entrepreneurial and innovative drive. At the regional level, innovative capacities have been centred in coastal areas shaped by inflows of foreign direct investments, local governments agile in creating innovative ecosystem and venture capital. The chapter concludes with possible challenges in developing innovative capacities for achieving breakthrough innovations and, thus, the technological self-sufficiency desired by China's leaders.
