China's Innovation Index in 2019

According to the calculation of the Research on China Innovation Index [1] group issued by the Department of Social Science and Technology and Culture Statistics of the National Bureau of Statistics (NBS), China's innovation index in 2019 reached 228.3 (compared with 100 in 2005), an increase of 7.8 percent over the previous year. In terms of areas, the innovation environment index, innovation input index, innovation output index and innovation effectiveness index reached 249.9, 199.1, 295.3 and 168.8, increased by 10.5, 3.0, 11.8, and 3.1 percent compared with the previous year. The calculation results show that in 2019, China's innovation environment was significantly optimized, innovation input had increased steadily innovation output had greatly improved, innovation achievements had further revealed, and new momentum of innovation and development had continuously enhanced.

I. Innovation environment index.

In 2019, China's innovation environment index was 249.9, an increase of 10.5 percent over the previous year, maintaining double-digit growth for three consecutive years. All the five evaluation indexes in this field had achieved growth. Among them, the proportion index of enterprises enjoying additional tax deduction and tax reduction had increased significantly, with a growth rate of 38.9 percent. It had become the fastest growing index among all 21 evaluation indexes for three consecutive years.

II. Innovation input index.

In 2019, the innovation input index was 199.1, an increase of 3.0 percent over the previous year. All the six evaluation indexes in this field had achieved five up one down, among them, the full-time equivalent index of R&D personnel per 10,000 people had increased rapidly, with a growth rate of 9.2 percent; the proportion index of R&D funds in GDP and the proportion of enterprises carrying out industry university research cooperation had increased steadily, with growth rates of 4.2 and 4.1 percent respectively; and the per capita expenditure index of basic researchers had decreased by 4.7 percent.

III Innovation output index.

In 2019, the innovation output index reached 295.3, an increase of 11.8 percent over the previous year.  All the five evaluation indexes in this field had achieved growth. Among them, the turnover index of technology market per 10,000 scientific and technological activities personnel and the patent authorization index per 10,000 R&D personnel reached 489.1 and 429.3 respectively, ranking the top of all evaluation index indexes.

IV Innovation effectiveness index.

In 2019, China's innovation effectiveness index was 168.8, an increase of 3.1 percent over the previous year.  All the five evaluation indexes in this field had achieved four up one down. Among them, the per capita main business income index and the proportion index of new product sales revenue in the main business income increased rapidly, with the growth rate of 8.6 and 5.7 percent respectively; the proportion index of high-tech products export in goods export decreased by 2.7 percent.

Note [1]: Since the historical data of GDP and other indicators are revised according to the routine statistical system, the historical calculation results of China's innovation index are adjusted accordingly.

China Innovation Index

Annotations:

China’s  Innovation Index System and the Compiling Methods of the Index

I. China’s Innovation Index System

China's innovation index system is divided into three levels. The first level is used to reflect the overall development of innovation in China, which is realized by calculating the total innovation index; the second level is used to reflect the development of China in four fields, including innovation environment, innovation input, innovation output and innovation effect, which is realized by calculating the sub field index; the third level is used to reflect the specific development of all aspects of the innovation ability, which is realized by the above-mentioned 4 fields and 21 evaluation indexes selected in each field (see the attached table for the framework of index system). Four areas and 21 evaluation indicators are briefly described as follows:

1. Innovation Environment

This field mainly reflects the support of human, financial and other basic conditions necessary to drive the development of innovation ability, as well as the guidance and support of policy environment for innovation. There are five evaluation indicators.

i. Population with Technical Secondary School, College or above Degree among Economically Active Population

This index is used to reflect the comprehensive quality of labor force in China. Labor force refers to the population aged 16 and above who have the ability to work and participate in or require to participate in social and economic activities. In 2015 and prior years, the index is named as the number of people with college degree or above in the economically active population.  

ii. Per Capita GDP

This is the most representative indicator of a country's economic strength, which can reflect the interdependence and mutual promotion between economic growth and innovation capacity development.

iii. Proportion of Science and Engineering Graduates in School Age Population

This index reflects the situation of potential innovative human resources in China. Graduates of science and engineering refer to the number of graduates of science, engineering, agriculture and medicine at or above the undergraduate level, and the population of school age refers to the population aged 20-34 in China.

iv. The Proportion of Science and Technology Funds in Financial Allocations

The government's financial allocation for science and technology plays a leading role in the innovation investment and innovation activities of the whole society. This indicator reflects the government's direct investment in innovation as well as the planning and guidance on key, important and frontier fields.

v. The Proportion of Enterprises Enjoying Tax Breaks of R&D Costs Deduction

The policy of adding and deducting R&D expenses before tax is considered as one of the most direct and favorable supporting policies to encourage enterprises to increase R&D investment and carry out innovation activities. This indicator can reflect the implementation of relevant government policies, and then reflect the innovation environment of enterprises from one side. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises.

2. Innovation Input

This field reflects the role and relationship of each subject in the national innovation system through the human and financial input of innovation, the construction of departments (R&D institutions) that play a key role in the innovation subject of enterprises and the cooperation of innovation subjects. Due to the lack of human and financial input indicators for innovation and R&D is the most important link of innovation in China, the input indicators here are replaced by R&D input indicators. There are six indicators in this area.

i. Full-time Equivalent of R&D Personnel per 10 Thousand Persons

Refers to to the full-time equivalent of R&D personnel based on the average of the total resident population. This index reflects the input scale and intensity of independent innovation manpower. R&D personnel include R&D personnel of enterprises, scientific research institutions and colleges and universities. They are the joint forces of R&D manpower input of all kinds of innovation subjects in the whole society. The full-time equivalent of R&D personnel refers to the R&D personnel converted by workload.

ii. The Proportion of R&D Expenditure in GDP

This index, also known as R&D input intensity, is the core index that is generally used in the world and reflects the level of national or regional scientific and technological input, and is also an important evaluation index in the outline of China's medium and long-term scientific and technological development plan.

iii. Per capita funding for basic research personnel

It refers to the average basic research funds according to the full-time equivalent of basic researchers. Basic research is the foundation of the development of science and technology, and its level can represent a country's original innovation ability to a certain extent. This indicator system uses this indicator to reflect the national efforts to strengthen the original innovation capacity.

iv. Proportion of R&D Expenditure in Main Business Income

Enterprises are the main body of innovation activities, while industrial enterprises play a leading role in enterprise innovation activities. This indicator reflects the investment of the main body of innovation activities. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises with R&D activities.

v. Proportion of Enterprises with R&D Institutions

R & D institutions run by enterprises are specialized institutions for enterprises to carry out R&D activities and important guarantee for enterprises to carry out innovation activities continuously and stably. This indicator reflects the ability of enterprises to carry out innovation activities continuously from one side. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises.

vi. The Proportion of Enterprises Developing Industry-University-Research Cooperation

This index is an important index reflecting the cooperation between industry, university and research institute. This index system reflects the cooperation among innovation subjects in China through the cooperation of industry, university and research. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises.

3. Innovation Output

This field reflects the intermediate innovation output through papers, patents, trademarks, and technological achievements. The field consists of five indicators.

i. Number of Scientific Papers per 10 Thousand Persons

Scientific and technological papers refer to the academic papers produced by scientific and technological projects approved by enterprises and institutions and published in journals with regular numbers. Scientific and technological papers are one of the important forms of achievements produced in the process of innovation activities. This indicator reflects the output level and efficiency of R&D activities.

ii. Number of Patents Granted per 10 Thousand R&D Personnel

It refers to the average number of patent authorizations according to the full-time equivalent of R&D personnel. The number of patent authorizations in this indicator system refers to the number of domestic patent authorizations, which is another important form of intermediate output of innovation activities. This indicator is also an important indicator reflecting the output level and efficiency of R&D activities.

iii. The Proportion of Invention Patents Granted in Patents Granted

Invention patents have the highest technology content among the three patents, which can reflect the level of patents, and also reflect the market value and competitiveness of research and development achievements. The number of invention patents authorized in this indicator system refers to the number of domestic invention patents authorized. This index is the key index reflecting patent quality.

iv. Trademark Ownership per Hundred Enterprises

Trademark ownership refers to the number of trademarks that are protected by intellectual property law and registered by intellectual property departments at home and abroad. To a certain extent, the index reflects the ownership of independent brand and the operation ability of independent brand. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises.

v. Technical Market Turnover Per 10,000 Scientific and Technological Activity Personnel

Refers to the average transaction amount of technology market per 10,000 scientific and technological personnel. This indicator reflects the overall scale of technology transfer and transformation of scientific and technological achievements. The turnover in the technology market refers to the total amount of the contracted projects in the national technology market.

4. Innovation Effectiveness

This field reflects the impact of innovation on economic and social development through product structure adjustment, industrial international competitiveness, energy conservation, economic growth and other aspects. There are five indicators in this area.

i. The Proportion of Sales Revenue of New Products in Main Business Income

Sales revenue of new products is an indicator that reflects the innovation achievements of enterprises and successfully pushes new products to the market. This index is used to reflect the effect of innovation on product structure adjustment. Limited by data sources, the data caliber of this indicator is large and medium-sized industrial enterprises.

ii. Proportion of High-Tech Products Export in Goods Export

There is an interactive relationship between high-tech industry and innovation. This index reflects the effect of innovation on the international competitiveness of the industry through the change of high-tech products export. The data caliber of this index is industrial enterprises above designated size.

iii. Energy Consumption for Unit GDP

The indicator refers to the energy consumed in standard coal per 10,000 yuan of GDP. Energy conservation is one of the purposes of enterprise technology innovation. Innovation is the way and guarantee of energy conservation, and plays a decisive role in energy conservation. This indicator reflects the effect of innovation on energy consumption reduction.

iv. Per Capita Main Business Income

It refers to the ratio of the main business income of industrial enterprises to the average number of workers in a certain period of time to reflect the production efficiency. Innovation is an important factor affecting production efficiency, and improving production efficiency is one of the purposes of enterprise innovation. This index reflects the role of innovation in promoting industrial economic development. The data caliber is industrial enterprises above designated size.

v. The Contribution Rate of Scientific and Technological Progress

Refers to the contribution share of  generalized technological progress for economic growth, i.e., the contribution of other factors to economic growth except capital and labor. The index data comes from the evaluation results of the contribution rate of scientific and technological progress carried out by the relevant departments. It is a comprehensive index to measure the competitive strength of science and technology and the transformation of science and technology into real productivity. This indicator system uses the average level of the reporting period and the previous four years to reflect the promotion effect of innovation on national economic development.

II. Compilation Method of China Innovation Index

1. Determine the Index Weights

On the basis of comparing the advantages and disadvantages of weighting methods at home and abroad, this topic adopts the "level by level equal weight method" to distribute the weights, that is, the weights of each field are all 1 / 4; in a certain field, the weights of indicators to their fields are 1 / n (n is the number of indicators in this field); therefore, the final weights of indicators are 1 / 4N. See the attached table for the weight of each indicator.

2. Calculation of Index Growth Rate

Generally, the growth rate or development speed of indicators is compared based on the indicator value of the base year. In a certain index system, if the growth rate of each index is calculated according to the usual method and weighted average is carried out, there may be a situation that the growth rate of some indexes is too high (or too low), which will cause the incompatibility between the growth rate of indexes (that is, the effect of some indexes with too high or too low growth rate covers the role of other indexes), thus causing the distortion of the whole index system. Therefore, it is necessary to control the growth range of each index in the index system. A better method is to set the benchmark value of index growth as the two-year average value of the index, so that the calculated growth range of each index can be controlled within the range of [- 200, 200].

In this index system, except that "10,000-yuan GDP energy consumption" is the inverse index, the other 20 indexes are all positive indexes. Take the reciprocal of the inverse index and calculate the index growth rate.

The calculation method for the growth rate of each index in the adjacent years is as follows：

Where i is the serial number of indices, t is the year, t>=2006.

(As , and , for and , we have .

3. Compose Indices of Sub-Fields and General Index

Index Composition is divided into the following three steps:

i. Calculate the Weighted Growth Rate of The Indices in Every Field

Where is the weight of indices in the field, k is the number of indices in the field, t is the year, t>=2006.

ii. Calculate the Accumulated Development Sub-Indices with Fixed Base of Every Field

Where t is the year, t>=2005, =100.

(when calculating the development speed of a certain indicator in the indicator system, if this method is adopted, the result is consistent with the usual method, that is, the development speed of the indicator in the current year is equal to the product of the development speed of the indicator in the previous year and that in the current year divided by 100, and the development speed of the indicator in the current year is equal to the ratio of the value of the indicator in the current year multiplied by 100 and that in the base period.)

This is because:

===,there is,= ××…×××100=×100）

iii. Calculate the Accumulated Development General Index with Fixed Base

Where t is the year,  is the weight of each field to the total index.

 ※Note: the weight of each sub field is 1 / 4, and the weight of an indicator in a sub field to its field is 1 / N (“n” is the number of indicators in this field).