Chinese economy

Policy brief

published: 21.06.2023

China’s quest for innovation: progress and bottlenecks

Alicia Garcia Herrero

Robin Schindowski

As the Chinese economy continues to decelerate, the central government is investing heavily in innovation, doubling down on research and development (R&D) spending and STEM- oriented human capital.

In this policy brief, Alicia Garcia-Herrero (Bruegel) and Robin Schindowski (Bruegel) assess China’s progress so far, looking at the inputs to innovation (R&D and human capital) as well as intermediate targets, such as scientific research and patents. We then evaluate how China has fared with respect to the ultimate goal of commercializing this progress by looking at the value-added of Chinese exports as well as the overall productivity of the economy. We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.

About authors

Alicia Garcia Herrero

Chief Economist for Asia Pacific at Natixis, Senior Fellow at Bruegel, Non-resident Senior Follow at the East Asian Institute, Adjunct Professor at the Hong Kong University of Science and Technology

Economist specialized in monetary and financial issues in emerging markets, banking crises and resolution strategies, financial development

Robin Schindowski

Research Assistant at Bruegel

Economist with a background in Chinese studies, specializing in China’s political economy and industrial organization