Inevitable requirements of meeting the new requirements of globalization and of participating in international competition

Enhancing the capability of independent innovation and building an innovative country are not only the inherent requirements for China’s economic, social, and technological development to enter a new historical stage, but also a strategic choice to deal with the new challenges of contemporary globalization. Premier Wen Jiabao of the State Council pointed out clearly at the National Science and Technology Conference in 2006, “to solve the prominent contradictions and problems that China faces in economic and social development and to enhance China’s international competitiveness, we must insist on independent innovation”.

The establishment of the capitalist system and the continuous promotion of globalization have changed the state of the past in which the nation and the state were self-sufficient and self-reliant. In the world system, a growing number of profound and diverse dependent inter-relations have gradually taken shape. As a complex social and historical process, globalization not only represents a rare opportunity for development for developing countries with relatively backward economy and science and technology, but also represents a huge challenge. On the one hand, globalization provides developing countries with an exogenous supply of knowledge, by which developing countries are likely to strengthen economic and technological international exchanges by adapting and actively participating in internationalization and globalization, so as to get access to the necessary management experience and scientific and technological knowledge from the developed countries and other countries at a much lower cost and a faster speed and to seek breakthrough points to achieve academic and economic leaps and bounds in the process. On the other hand, the ever-increasing interdependence among nations and countries has not changed the essence of their competition. Globalization has neither obscured the interests of nation states, nor the contest for scarce resources made economically and politically has eased. On the contrary, behind the increasingly economic interdependence, the competition between the market share and investment opportunities of countries and enterprises is becoming increasingly intense.

Global competition between contemporary countries and enterprises is showing new characteristics. The contemporary society is changing to a knowledge-based society. This is the inevitable result of the rapid development of science and technology and its rapid infiltration into all fields and various fields of human life. In agricultural society, natural resources and labor force are the main factors that determine productivity. In industrial society, material resources and capital are the dominant forces in the development of productive forces. In the knowledge-based society, knowledge has become a core element in promoting economic development and social progress. With the continuous development of knowledge-based economy, the competition around the elements of knowledge all over the world has become fiercer. This indicates that new changes may take place in the strength of countries. No matter what position it is in now, a country may face challenges and crises that may lead it to be eliminated if it did not attach importance to innovation.

In this new situation, contemporary globalization is entering a new phase in which knowledge and technology have become the core competitive resources. The competitive advantages of developed countries are also increasingly shifting from the monopoly of products and capital in the global market to that of technology and knowledge. The contemporary commanding height of science and technology in most areas is controlled by the developed countries. According to World Bank statistics, among the global R&D investment, developed countries such as the United States, the European Union, and Japan account for 86% of the total. In terms of international trade in technology, high-income countries receive 98% of global technology transfer and licensing revenue. In the distribution of the tripartite patents since the 1990s, only the United States, Japan, and the EU account for more than 90% of those of all the OECD countries. Taking into account that the OECD itself has the character of “developed country clubs”, the United States, Japan, and the EU are even more prominent in the global technical advantages. This technological advantage, under the new shape of contemporary globalization, is being transformed directly and unprecedentedly into an economic competitive advantage on a global scale.

For a long time, developing countries tend to follow the advanced technology of developed countries by imitation. However, the trade-linked intellectual property rules of developed countries have shattered the possibility of developing countries by taking a conventional technology development path. Multinational corporations in developed countries have become the integrators and controllers of their industrial chains by virtue of technological advantages, brand advantages and scale advantages, and shared more benefits. This means that the challenges facing enterprises in developing countries are even greater. Large enterprises and multinational corporations in developed countries all have obvious advantages in the quantity and quality of intellectual property. As for China, most of the patents are granted in the technical fields of automobiles, aircraft, instrumentation, information technology, biology, and new materials, which are also owned by multinational corporations, accounting for 80%-90% of the total. If we did not make a difference in technological innovation and do not grasp the independent intellectual property rights, it would be difficult for Chinese enterprises to get rid of patent barriers of multinational corporations.

Corresponding to the highly imbalanced distribution of knowledge resources, the new international competition order poses a more serious challenge to developing countries. TRIPS, while promoting technology transfer among countries, has also enabled developed countries to use technology standards and intellectual property as an important means of maintaining their technological monopoly interests and competitive advantages and increase the technical difficulty for developing countries to get accessed. “Control through technology” has been considered as a key means for Japan to enhance its overall competitiveness in the global competition. After the 1980s, the United States further extended this “control through technology” to “control through intellectual property”. On September 15, 1986, during the Uruguay Round negotiations (i.e., the eighth round of the GATT multilateral trade negotiations), the United States proposed that the intellectual property issue should be listed as a new issue for negotiation and proposed to include it in the GATT Multilateral trade rules. In November 1990, a Draft Agreement on Trade-Related Aspects of Intellectual Property Rights was reached, which marks the formation of a new' international standard for the protection of intellectual property. The Agreement on Intellectual Property Rights in 1994 laid the foundation for a more global realization of higher standards of intellectual property. The ever-strengthening system of intellectual property rights, as an important manifestation of the new form of contemporary globalization, is further strengthening the competitive advantages of the developed countries. The intellectual property system, through statutory procedures and conditions, grants the intellectual property monopoly enjoyed by intellectual laborers for a certain period of time and guarantees by law' that this right is inviolable. This is not only the institutional arrangement for safeguarding the profits of innovators but also the important system design for establishing a global order for maintaining the competitive edge of developed countries. This institutional arrangement has not only impacted fiercely the public belief of knowledge and the public product attributes of knowledge products but also lead the backward countries in science and technology, and the economy faces higher learning costs and difficulties in introducing core technologies. It also determines that if the backward countries only kept imitating and tracking, they would be more passive in the globalized know'ledge-based economy.

It is in this new international order that the traditional attributes of science and technology as the common wealth of mankind have greatly changed and have become a key factor in seeking the maximization of the interests of one country and one enterprise. Without a core technological base and technological innovation capability, industrial development in developing countries would hardly break the technological monopoly of developed countries and their multinational corporations and would not achieve favorable trade status. After 30 years of reform and opening up, China is already a large developing country linked w'ith the world. The major contradictions that China faces in the future are no longer that in the sense of existence but rather in the sense of development. With the continuous development of China and the continuous promotion of globalization, it will encounter a rising number of fierce external influences and shocks. Faced with this new challenge of contemporary globalization, China should make full use of the global knowledge and technology resources and, at the same time, make the improvement of independent innovation capability a strategic starting point and guideline for science and technology development and strive to build an innovative country. This strategic choice will have an important and far-reaching impact on China’s proactive role in the current and future globalization process.

Therefore, in order to cope with international competition under the conditions of globalization, China must strengthen independent innovation. The key is to make enterprises become the main body of technological innovation and create a batch of innovative enterprises with core competitiveness and continuous innovation ability. Only when enterprises become the main body of technological innovation can China improve its position in the international division of labor, break new barriers such as intellectual property, patents, and technical standards, and form endogenous motivation of economic growth, so as to fundamentally transform the mode of economic development, realized sound and rapid development of national economy, and maintain national economic security.