China's Innovation Index in 2023

According to the calculation of the research group of Department of Social, Science and Technology, and Cultural Statistics of National Bureau of Statistics on China's innovation index, the innovation index of China reached 165.3 in 2023 (take 2015 as 100), an increase of 6.0 percent over the previous year [1]. By field, the innovation environment index, innovation input index, innovation output index and innovation effectiveness index reached 177.1, 155.0, 199.7 and 129.4 respectively, an increase of 10.4, 5.5, 6.5 and 0.4 percent respectively over the previous year. The results indicated that the country's innovative index showed steady growth in 2023. The innovation environment continued to improve, new growth drivers gathered and grew, and the innovation capabilities kept advancing, which all provided solid support for high-quality development.

I. Innovation Environment Index.

In 2023, China's innovation environment index was 177.1, an increase of 10.4 percent over the previous year. By sub-index, all five sub-indexes in this field have achieved growth. Among them, the sub-index measuring the proportion of companies enjoying tax deductions showed a rapid increase, rising by 24.0 percent from the previous year; the sub-index measuring the proportion of science and engineering graduates to the population of school age increased by 15.1 percent year on year, continuing to maintain double-digit growth; and the sub-index measuring the number of people with college degree or above per 10,000 employed persons, the per capita GDP, and the proportion of science and technology appropriation to financial appropriation increased by 6.6, 5.4 and 2.3 percent respectively.

II. Innovation Input Index.

In 2023, the innovation investment index was 155.0, an increase of 5.5 percent over the previous year. A closer look at four sub-indexes in this field reveals that three indexes increased while one decreased. Among them, the full-time equivalent index of R&D personnel per 10,000 people increased by 14.1 percent, sustaining double-digit growth; the sub-index measuring the proportion of enterprise R&D funds to business revenue and the proportion of R&D funds to GDP increased by 6.1 and 3.6 percent respectively; and the per capita funding index for basic researchers decreased by 1.2 percent over the previous year.

III. Innovation Output Index.

In 2023, the innovation output index was 199.7, an increase of 6.5 percent over the previous year. By sub-index, all four sub-indexes in this field have achieved growth. Among them, the sub-index measuring the number of high-value invention patents owned per 10,000 R&D personnel increased by 15.6 percent, maintaining a trend of double-digit growth; the sub-index measuring the average contract value for technology market transactions, the proportion of enterprises with registered trademarks, and the number of scientific and technological papers per 10,000 people climbed by 5.0, 4.7 and 1.2 percent.

IV. Innovation Effectiveness Index.

In 2023, the innovation effectiveness index was 129.4, an increase of 0.4 percent over the previous year. Breaking down the four sub-indexes in this field, three indexes increased, one held steady, and one declined. Among them, the overall labor productivity index experienced relatively rapid growth, an increase of 5.7 percent over the previous year; the sub-index measuring the proportion of new product sales revenue to business revenue and the proportion of the value added of the "three new" economy to GDP increased by 2.0 and 1.7 percent respectively; the sub-index measuring the proportion of the added value of patent-intensive industries to GDP remained unchanged compared to the previous year; and the sub-index measuring the proportion of the export value of high-tech products to the export value of goods decreased by 6.7 percent.

China Innovation Index

Note :

[1] Due to the revision of historical data for index such as Gross Domestic Product (GDP) in accordance with regulations, the calculating results of China's Innovation Index for 2021 and 2022 have been adjusted accordingly.

Annotation:

Brief Explanation of China’s Innovation Index System and

Index Compilation Method

I. China's Innovation Index System

China's innovation index system is divided into three levels. The first level reflects the overall development of innovation in China, which is presented by the total innovation index; the second level reflects the development of China in four fields, including innovation environment, innovation input, innovation output and innovation effect, which are measured by their respective sub-indexes; the third level details the development of various aspects of innovation capabilities, which is presented by 18 sub-indexes selected from the above-mentioned 4 fields (see the attached table for the detailed framework of index system). A brief explanation is provided as follows:

1. Innovation Environment

The field primarily reflects the support conditions necessary for driving innovative development, including essential resources such as human and financial capital, as well as the policy guidance and support required for fostering innovation.

i. Number index of people with college degree or above per 10,000 employed persons

Refers to the average number of employees possessing a certain level of educational qualifications. This index is used to reflect the comprehensive quality of labor force in China.

ii. Per Capita GDP

It refers to the per capita gross domestic product (GDP, at constant prices). 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 to the Population of School Age

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. Proportion of Science and Technology Appropriation to Financial Appropriation

The government's financial appropriation 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. Proportion Index of Companies Enjoying Tax Deductions

The policy of additional tax deductions for R&D expenses before taxation is one of the most direct and effective measures to encourage companies to increase their investment in research and development. This indicator can reflect the implementation of relevant government policies, and then reflect the innovation environment of companies from one perspective. The data of this indicator pertain to industrial enterprises above the designated size.

2. Innovation Input

This field mainly reflects the scale and intensity of human and financial input of innovation, and input in crucial areas. R&D is the most crucial link in realizing innovation, and the input indicators in R&D here reflect the commitment to innovation.

i. Full Time Equivalent of R&D Personnel per 10,000 People

It 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, representing a collective investment of R&D human resources from various innovative entities across society. The full-time equivalent of R&D personnel refers to the R&D personnel converted by workload.

ii. Proportion of R&D Funds to 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 Researchers

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

iv. Proportion of Enterprise R&D Funds to Business Revenue

Enterprises are the main entities of innovation activities, while industrial enterprises play a leading role in enterprise innovation activities. This indicator reflects the investment of the main entities of innovation activities. The data of this indicator pertain to industrial enterprises above the designated size.

3. Innovation Output

This field reflects the intermediate innovation output through papers, patents, trademarks, and technological market.

i. Number of Scientific and Technological Papers per 10,000 People

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 High-value Invention Patents Owned by per 10,000 R&D Personnel

It refers to the number of high-value and valid invention patents, averaged over R&D personnel. Patent is another important form of intermediate output of innovation activities. High-value invention patents refer to those that are in line with the development direction of national key industry, and those with high patent quality or high value. The specific scope of high-value patent is defined by the China National Intellectual Property Administration, reflecting a transformation to high quality development in the patent landscape. This indicator, as a part of the monitoring of the relevant planning, is an important indicator reflecting the output and efficiency of R&D activities.

iii. Proportion Index of Enterprises with Registered Trademarks

An enterprise with a registered trademark refers to a company that is the primary registrant of a trademark that has been approved and registered by domestic and international trademark authorities and is currently valid. This indicator serves as a significant reflection of the company's ownership of its own brand. The data of this indicator pertain to industrial enterprises above the designated size.

iv. Average Contract Value for Technology Market Transactions

It refers to the average transaction amount of technology market calculated by the number of contracted projects in the national technology market. This indicator reflects the quality and efficiency 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

The field reflects the impact of innovation on socio-economic development through aspects such as economic growth, economic transformation, adjustments in product structure, and international competitiveness in industrial technology.

i. Proportion of New Product Sales Revenue to Business Revenue

Sales revenue of new products is an indicator that reflects the innovation achievements of enterprises and successfully pushes new products to the market. It can also be used to assess the impact of innovation on the adjustment of product structure. The data of this indicator pertain to industrial enterprises above the designated size.

ii. Proportion of High-tech Product Export Value to Goods Export Value

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.

iii. Proportion of Added Value from Patent-intensive Industries to GDP

Patent-intensive industries reflect the close integration of intellectual property rights, scientific and technological innovation, and industrial economy. They are the strong support and important development direction for high quality development. The proportion of their added value to GDP can demonstrate the effectiveness of innovation on economic development from the perspective of guiding the transformation and upgrading of industrial structure.

iv. Proportion of Value Added from the "Three New" Economy to GDP

“Three new” economy plays a crucial role in promoting high quality development. Its added value to GDP can demonstrate the effectiveness of innovation on economic on development from the perspective of economic transition and development and economic vitality enhancement driven by emerging economy.

v. Overall Labor Productivity

It refers to the ratio of gross domestic product (GDP, at constant price) to employed persons in a certain period of time. Innovation is an important factor affecting labor production efficiency, and improving labor production efficiency is one of the purposes of enterprise innovation. This indicator can be used to reflect the role of innovation in promoting economic development.

II. Evaluation Method of China Innovation Index

1. Select the base year

On the basis of comprehensive assessment of availability, consistency, and continuity of indicators, 2015 is selected as the base year.

2. Determine the index weight

The "level by level equal weight method" is adopted to distribute the weights, whereby the weight of each subfield is set at 1/4; within a certain field, the weight of each indicator is calculated as 1/n of the total weight for that subfield (where n represents the number of indicators within that subfield); consequently, the final weight for each indicator is determined to be 1/4n. See the attached table for the weight of each indicator.

3. Calculate the index growth rate

When calculating the development speed with fixed base, the usual method is to calculate the growth rate of each indicator and then carry out weighted average. The original method of setting the benchmark value of index growth as the two-year average value of the index when calculating the development speed with fixed base of the index is continually applied for this index. The range of growth rate of each index is controlled within the range of [-200, 200] to enhance the stability of data, and to reduce the distortion of the whole index system due to excessive fluctuation of values of certain indices. 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>=2016.

4. Compose Indices of Sub-Fields and General Index

i. Calculate the weighted growth rate of the indices in every field:

where i is the serial number of indices, t is the year, Wi is the weight of each index to the field it belongs to, Vit is the calculated growth rate of each index, k is the number of indices within this field, t>=2016.

ii. Calculate the accumulated development sub-indices with fixed base of every field:

where t is the year, t>=2015, E2015=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.

Framework of China Innovation Index System