Editor's note: An international symposium, focusing on the innovation, development and overseas expansion of Chinese companies, was held at the Tokyo Opera City Tower in Japan on Dec. 1, 2024. The event was organized by Cloud River Urban Research Institute.

Key speakers included Yang Weimin, deputy director of the Economic Affairs Committee of the 13th Chinese People's Political Consultative Conference; Qiu Xiaohua, professor at City University of Macau and former director of the National Bureau of Statistics; Li Guoping, dean of Beijing Development Institute at Peking University; and Zhou Muzhi, head of Cloud River Urban Research Institute. They discussed the strengths and weaknesses of Beijing as one of the world's top three technology clusters.

Zhou Muzhi: Beijing has a powerful academic research clout

The World Intellectual Property Organization (WIPO) releases the Global Innovation Index report annually to evaluate global technological clusters. Given that the evaluation in this report is based on only two indicators — the number of Patent Cooperation Treaty (PCT) patent applications and the scientific publications count — the Counsellors' Office of the People's Government of Beijing Municipality and Cloud River Urban Research Institute jointly conducted a study and introduced the "Comparative Study on the Sci-Tech Innovation Performance of the World's Top Three Science and Technology Clusters" report.

Based on an in-depth analysis of the Global Innovation Index, this report uses the indicators from Cloud River Urban Research Institute's China Integrated City Index to conduct a comparative analysis of the Tokyo-Yokohama, Guangzhou-Shenzhen-Hong Kong, and Beijing technological clusters. It further explores the characteristics, merits, and demerits of Beijing's technological innovation. The report also gave some policy recommendations, suggesting that although Beijing has strong academic research capabilities, its practical application abilities are relatively weak.

Beijing has a very large administrative area, whereas Guangzhou-Shenzhen-Hong Kong only covers 74.3% of Beijing's size, and Tokyo-Yokohama is merely 16% of Beijing's area. In terms of population, Guangzhou-Shenzhen-Hong Kong is the largest with 44.12 million people, doubling that of Beijing and 2.5 times that of Tokyo-Yokohama. 

Guangzhou-Shenzhen-Hong Kong also leads in economic size, 1.2 times larger than Tokyo-Yokohama and 2.1 times the size of Beijing.

Guangzhou-Shenzhen-Hong Kong has the largest number of R&D personnel, 1.1 times that of Tokyo-Yokohama and 1.4 times that of Beijing. The highest R&D expenditure is found in Tokyo-Yokohama, which spends 1.4 times more than Guangzhou-Shenzhen-Hong Kong and 1.6 times more than Beijing. However, Beijing has the highest R&D intensity, while Guangzhou-Shenzhen-Hong Kong has the lowest.

Tokyo-Yokohama has 160 universities, the most among the three major technology clusters. The cluster also has the highest concentration of top-tier universities. Guangzhou-Shenzhen-Hong Kong has the second-highest number, while Beijing has the fewest. In terms of the number of enrolled university students, Guangzhou-Shenzhen-Hong Kong leads, followed by Tokyo-Yokohama, with Beijing having the smallest number.

Regarding the number of companies listed on main stock exchanges, Tokyo-Yokohama ranks the highest, followed by Guangzhou-Shenzhen-Hong Kong, with Beijing having only 28% of the listings in Tokyo-Yokohama. Nevertheless, Beijing has more Fortune 500 companies than the other two clusters, primarily because many of China's state-owned enterprise are headquartered in Beijing.

Through our research, we have found several key characteristics of Beijing's technological innovation.

First, Beijing focuses more on academic research than practical application. Beijing is a leader in scientific paper publications, but lagging in patent applications.

Second, Beijing has high R&D intensity but falls behind in expenditure. While Beijing has the highest R&D intensity among the three clusters, it has the smallest total R&D expenditure. Moreover, Beijing has a lot to catch up with the Tokyo-Yokohama cluster in terms of per capita R&D expenditure.

Third, Beijing puts limited R&D investment in the headquarters-based economy: Despite a hub of headquarters of central and state-owned enterprises, Beijing sees relatively low R&D investment from these companies.

Qiu Xiaohua: Innovation has been the center of development

Beijing has a small number of innovation-driven tech enterprises. For instance, except Xiaomi, there are few well-known innovation-driven tech companies based in Beijing. Additionally, the majority of companies listed on the New Third Board are from outside Beijing.

Let me elaborate on Professor Zhou's topic with my understanding of the three major technological clusters. Indeed, China's development has entered a new phase, referred to as the high-quality development stage. During this phase, changes are occurring in the pace and structure of development, as well as in industrial patterns and driving forces, distinguishing this stage from previous ones. 

At present, the pace of development is more stable, the structure has been improving, the industrial patterns are becoming more advanced, and the driving forces are newer. Innovation has become the main theme of development, encompassing technological innovation, management innovation, theoretical innovation, and institutional innovation.

A technology cluster refers to a geographical area where enterprises, research institutes, universities, and other institutions converge around technological innovation. These entities collaborate and compete, collectively driving the development of new technologies and converting scientific breakthroughs into applications. Tech clusters usually foster a conducive environment for innovation, attracting talent, capital, and information resources. They become hotspots of innovative activity, significantly propelling regional economic development.

According to the WIPO's assessment, seven out of the top 10 global tech clusters are located in Asia, while three are in the U.S. The Tokyo-Yokohama cluster is the largest worldwide, followed by the Guangzhou-Shenzhen-Hong Kong cluster, with Beijing in the third place. Seoul ranks fourth, the Shanghai-Suzhou cluster comes at fifth, and the California-San Jose cluster at sixth. Among the top 100 global tech clusters, China leads with the highest number of clusters for two consecutive years, totaling 26, followed by the U.S. with 20.

China's tech clusters exhibit the following characteristics:

First, guidance by national strategy. Government policies and strategic planning play a crucial role. Second, diversified development models. Multiple pathways to innovation and growth are pursued.

Three, effective market mechanisms. Market forces drive innovation and resource allocation efficiently. Fourth, emphasis on talent cultivation and recruitment. Significant focus is placed on developing and attracting skilled professionals. Fifth, international cooperation and exchange. Engagement in global partnerships and knowledge exchange is heavily promoted.

These combined attributes have bolstered the growth of China's tech clusters, contributing significantly to the country's scientific and economic progress.

Compared to clusters in Europe, the U.S., and Japan, Chinese tech clusters have their unique advantages and shortcomings. The key advantages include strong governmental support, a large market size, and comprehensive industrial chains. The disadvantages are relatively lower innovation capability, increasing difficulties in international cooperation, and significant gaps in industry-academia-research integration.

To address these weaknesses, efforts should be concentrated on the following six areas:

First, increase investment in fundamental research and core technologies. Ensuring robust funding for basic research and breakthrough technologies is essential for long-term innovation.

Second, optimize industry-academia-research collaboration mechanisms. Strengthening the cooperation between universities, enterprises, and research institutions can enhance the translation of research into practical applications.

Three, break barriers and expand the scope of international collaboration. Increasing international cooperation broadens the horizon for innovation and helps assimilate diverse ideas and practices.

Fourth, create a more favorable environment for innovation. This includes fostering a culture that encourages innovation, establishing mechanisms to protect the interests of innovators, creating a financial environment conducive to innovation, and simplifying administrative approval procedures with supportive fiscal policies.

Fifth, clarify that enterprises are the primary drivers of innovation. Innovation that translates into commercial products and industries needs to be driven by businesses, particularly the private sector. Encouraging enterprises to increase their investments in technological innovation is crucial as they are the main force behind practical and scalable innovations.

Sixth, implement a pro-talent strategy. Attracting and nurturing high-level researchers is necessary to provide a solid intellectual foundation for technological clusters.

Professor Zhou recently mentioned that Beijing focuses more on academic papers and less on practical applications, which is indeed a nationwide issue. In the evaluation of scientists, there is often an excessive emphasis on the publication of papers. This issue needs to be addressed to shift the focus toward practical and impactful innovation.

Yang Weimin: Accelerate efforts to commercialize sci-tech research 

Beijing's innovation landscape is prominently characterized by a dual-system structure. First, there are many state-owned research institutions; second, there are numerous innovative enterprises. Beijing hosts the Chinese Academy of Sciences, the Chinese Academy of Engineering, a multitude of universities, renowned hospitals, and state-owned research institutions. A majority of the academicians from the above-mentioned academies are based in Beijing, and the Chinese central government allocates a substantial portion of its foundational research funding to the city.

Under the current system, many researchers are primarily tasked with publishing papers, as producing more publications increases their chances of becoming academicians, resulting in a low conversion rate of research outcomes into practical applications. One major reason for the high publication rate and low conversion rate is the ambiguous property rights of job-related inventions. The Patent Law stipulates that by using property rights incentives, such as equity, options, and profit-sharing, inventors or designers should reasonably share the benefits of innovation. However, this policy has not been fully implemented yet.

Beijing is also home to many leading innovative companies. Tech giants like Huawei, Alibaba, Tencent, Xiaomi, Kuaishou, and Baidu either have their headquarters or significant operations in Beijing, primarily due to the city's large pool of top talent.

Beijing faces difficulties in the industrial conversion of its scientific research outcomes. Many companies relocate to other regions due to high costs in Beijing. However, there is also a reverse trend where companies established in other areas move to Beijing as they grow, attracted by the better business environment in the capital.

China's three major urban agglomerations, including the emerging Chengdu-Chongqing cluster, are currently the most active hubs of innovation in the country. Each cluster presents a different scenario, requiring detailed and precise indicators for evaluation and assessment.

Li Guoping: Beijing should position itself as a national and global center of sci-tech innovation

Reflecting on the previously mentioned indicators, the comparison among the three major technological clusters reveals significant differences. In fact, in terms of technological innovation, Beijing leads the Guangdong-Hong Kong-Macao Greater Bay Area and Shanghai. Beyond hosting the Chinese Academy of Sciences and the Chinese Academy of Engineering, Beijing is home to leading educational institutions such as Peking University and Tsinghua University. Therefore, Beijing is a center for technological innovation not only nationally but also globally.

In the past, China's development model relied on the import of technology. However, there are now pressing issues related to the security of the industrial and value chains. Hence, there's a critical need for original innovation, and it's crucial for Beijing to develop foundational research. This is why basic research constitutes a significant portion of Beijing's technological capabilities. In contrast, regions like the Yangtze River Delta and the Pearl River Delta have lower proportions of basic research and are more focused on transforming research outcomes originating from Beijing. Judging Beijing's performance solely by GDP might lead to an underestimation, which would be unfair.

The Pearl River Delta, particularly Shenzhen, is an example of a new development model. Institutions like Peking University and Tsinghua University have established graduate schools there. By integrating resources and combining academia with industry within the established industrial clusters, the Pearl River Delta is forming innovative sci-tech clusters. This new model is fostering the creation of cutting-edge technology hubs.

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