Abstract— China has challenged the dominance of advanced

OECD countries in high technologies by emerging as a leading country

in nanotechnology; projected as a key technology of the 21st century.

Stakes are high as estimated market value and economic and social

benefits are immense for countries that can attain competency in this

technology. The study makes a broad assessment of nanotechnology

performance of China; to reveal to what extent it is making an assertion

in this technology. We then investigate macro and micro level policies

and strategies in China’s emergence as a key player in nanotechnology.

China’s emergence in nanotechnology is discussed in a broader context

to distill how a country that is still at a low end of technology value chain

with limited innovative ability has been able to create capacity and

capability in a high technology area. This can be learning for countries

in transition that face similar constraints in trying to become an

‘innovation oriented’ society.

Index Terms— (anotechnology; Innovation Strategy; China; Innovation

Policy; (anotechnology Performance Indicator.

I. INTRODUCTION

N anotechnology has generated a great deal of excitement

worldwide with its boundless potential to revolutionize a wide

range of industries [1] [2]. The interest in this area stems from

novel properties that manifests at the nano size scale (roughly

1-100 nanometers) and the ability to manipulate and artificially

construct structures at that scale. The pervasive potentiality of

nanotechnology makes it most attractive [3]; it has the

potential of generic technology (reaching out to diverse

industries), enabling technology (add new functions to existing

products, making them more competitive, acting as

prerequisites for other technologies, products and processes)

and also can be disruptive (can displace existing products).

Nanotechnology is also a horizontal technology as it makes

possible applications in a number of sectors [4].

There have been some influential studies forecasting the

global market and impact of nanotechnology. NSF [5] estimate

that $1 trillion worth of products worldwide will incorporate

nanotechnology in key functional components by the year

2015. They have also projected requirement of 2 million

workers in nanotechnology, and about three times many jobs

Received March 9, 2011.

in supporting activities. Roco [6] has estimated that by 2015,

half of the newly designed advanced materials and

manufacturing processes will be built using control at the

nanoscale. Holman et al. [7] has estimated nanotechnology

market at $2.6 trillion by 2014 (15% output in that year).

These forecasts suffer from difficulties in defining the value-

added of nanotechnology to existing manufacturing processes

as well as its role for generating new products [8] In spite of

skepticism of these estimations, it is not difficult to see that the

country that attains first mover advantage in this technology

can derive huge benefits. Nanotechnology is already

addressing key economic sectors namely materials and

manufacturing (coatings and composites for products like

automobiles and buildings), electronics (displays and

batteries), health and fitness, food and beverages and life

sciences (pharmaceutical applications). Nano-applications are

already visible in computer-chip minimization, drug delivery,

food processing, solar energy, water purification and in a host

of other products and services (see for example

http://www.understandingnano.com).

Nanotechnology intervention can address some of the

world’s most critical development problems in health, energy

solutions, agricultural productivity, water treatment and

remediation [9] [10]. Figure 1 illustrates sectors where

nanotechnology based applications are visible.

Figure 1 provides an indication why nanotechnology is

emerging as the most promising area of research and

innovation in OECD and emerging economies [11] It is

perceived as a key national competency’ (capability) helping

existing industry to become more efficient and competitive,

advancing knowledge and emerging technologies, and

developing unprecedented products and medical procedures

that could not be realized with existing knowledge and tools

[6]. Stakes are becoming higher as success can provide

monopoly to a firm or a country in areas where they can

position their nanotechnology enabled products. However,

developing competency is an immense challenge as it is an

emergent science based area having idiosyncratic

characteristics and complexity requiring development of

competitive R&D infrastructure, significant R&D investment,

requirement of skilled manpower having inter-disciplinary

competence, access/development of sophisticated instruments,

entrepreneurship, and requiring synergy among divergent set

of stakeholders. Creating competence would require factoring

Investigating the Role of Policies, Strategies,

and Governance in China’s Emergence as a

Global Nanotech Player

Sujit Bhattacharya, Madhulika Bhati and Avinash Prasad Kshitij

all these issues in the policy and creating institutional

structures for implementation.

Figure 1: (anotechnology and its Applications

Advanced OECD economies have long term commitments

in knowledge based areas i.e. pharmaceuticals, ICT,

biotechnology, that has helped them achieve unprecedented

technology-led economic development. Key ingredients for

innovation (innovation climate) already exists in these

countries such as enabling institutional structures, existence of

strong university-industry linkages, venture capital funding,

regulatory structure, demanding users, technology market, etc.

This environment is ideal for engagement in an emerging

frontier knowledge based area like nanotechnology (OECD,

2007). In the last decade or so China has been able to

challenge the dominance of OECD economies in

manufacturing1 [12]. Factor cost advantages and production

capabilities have made China a major producer of products for

world market. However, it is still at the lower end of the value

chain with core competency behind product development

residing with developed economies.

China’s emergence as a manufacturing hub does not acquire

for it the value that resides with technology creators. China has

many similarities with other countries in transition that are

1 India similarly has created a niche in providing services for global market

(see for example [61])

trying to create an innovation climate that would help them to

move closer to frontier technologies and ‘catch up’ (defined in

terms of production to innovation capabilities) with OECD

economies [13]. In this context, it is a major achievement for

China to create a niche in nanotechnology2 as visible through

various performance indicators. In some indicators such as

research publication output, it has emerged as a global leader.

China’s emergence as a key player in nanotechnology is being

seen as a serious challenge to global technology leaders (cited

as a key technology of the 21st century) and requires deeper

introspection. Its emergence can be learning, particularly

important for developing countries like India, Brazil, and

South Africa who have similar capacity constraints and intend

to address developmental issues through technological

intervention. What are the policy strategy(ies)?, how effective

is the translation of policy into practices? what types of

institutional structures have been created?, different

stakeholders involved and synergy among them?, and related

factors has helped China emerge as a key player in

nanotechnology research and innovation are important issues

that needs to be analyzed. These questions drive this paper.

We investigate some of the above issues by analyzing the

macro and micro (specific to nanotechnology) policies of

China, bringing out the salient aspects of their policy

formulation and implementation. We also look at performance

indicators in nanotechnology to assess to what extent various

measures to strengthen research and innovation has succeeded

in China particularly in this frontier technology.

The paper is structured as follows: Section 2 provides

nanotechnology characteristics and technology challenges and

a brief overview of the initiatives undertaken by some

developed and developing economies to stimulate research and

innovation in nanotechnology. Section 3 underscores China’s

performance and achievement in nanotechnology. In section 4,

we examine policy, strategy and governance of

nanotechnology in China; to discern its role in China’s

emergence as one of the leading countries in this field. To put

this in a ‘proper’ context, we examine macro policies and

strategies designed by China to become an innovative state.

Section 5 discuses the findings and implications of this study.

II. NANOTECHNOLOGY CHARACTERISTICS

Nanotechnology is at an early phase of development with

many applications still at the concept stage requiring much

more basic research before they can be incorporated into a

viable product [14]. However, nanotechnology application is

already visible in a host of industries , refer Figure 1). There

are various definitions of nanotechnology3. There is however a

general consent of what nanotechnology domain should cover;

2 Increasingly the competence of countries achieved in nanotechnology is

used as a benchmark for a country’s technological competence [See for

example [62].

3 European Patent Office, International Standard Organisation, US

National Nanotechnology Initiative, OECD have come up with different

definitions of nanotechnology for planning and implementing policies and

initiatives in this field.

the key aspects are (a) materials or processes for which

maximum one component of nanometer scale is involved, (b)

involving engineering or functionalizing process step in

categorizing a product/process as a nanoscale application, and

(c) enabling feature of nanotechnology ─ new industrial as

well as technological innovation and its convergence

characteristics. Another key attribute of this field is its

interdisciplinary [4]. Interdisciplinary implies that

development in this field requires cross-fertilization of ideas

from different disciplines. Developing nanotechnology

capability thus requires scientific and technological capacity in

material science, applied physics, applied chemistry, etc.

Knowledge in this field is changing very rapidly and

uncertainty is very high. Nanotechnology is strongly science

based where knowledge useful for science, technology and

industrial innovation is practically indistinguishable.

Innovation in this area i.e. translation to final product and

process requires strong interaction with basic research. Thus

technological success in this area increasingly depends on

strong scientific capabilities and on the ability to interact with

science and scientific institutions, a characteristic of science

intensive areas [15] [16]. Technology is aggressively patented

as appropriability through patent is high, typical of science

based areas [17]. Thus the trend of new developments can be

gauged from the nature and growth of scientific publications

and patents. This has prompted a number of recent studies to

measure the progress of this technology using quantitative

indicators derived from scholarly publications and patents (see

for example [18] [19]) these studies contribute to academic

discourse concerning ‘catch-up’, ‘capability’ debate and are

used by firms/countries to assess strengths in this critical area.

However, it is always a big challenge to translate knowledge

capacity into applications i.e. lab to commercialization [20].

This is more so for an emerging science based technology such

as nanotechnology in which firms need to have the required

absorptive capacity to understand the nuances/underlying

scientific behavior that drives potential applications.

Institutionally, a close relationship between science and

innovation implies that the traditional boundaries of actors and

of activities become blurred. In this scenario, new forms of

division of labor need to evolve with channels of interaction

between the public and private domain to be created and

managed. Along with the promising potentiality of this

technology, concerns have also been voiced of the health and

environmental hazards of this technology [21] They mainly

emerge from the small size that can create adverse effects

when they enter the human/environmental system [22]. This

has also led to funding in this direction; to uncover the hazards

if any and how they can be mitigated.

A. Broad Overview of government stimulation in different

countries

Unlike some of the other knowledge based sectors, the

barriers to entry in nanotechnology is very high; as risk (return

to investment) is unpredictable, technology is highly uncertain

and capital intensive, requires skill manpower, and

sophisticated capital instruments, etc. The above

characteristics make government stimulation a very important

ingredient for capability creation in nanotechnology.

Technology leadership in this area is perceived as a key to

global competitiveness [23] that has led to active government

intervention in various countries to create capacity and

capability. Developing countries also look upon this

technology as helping them leapfrog4 the ‘catch up’ process

and address their pressing developmental issues.

Governments of United States, Germany, Japan, Russia and

some 80 other countries are putting significant amount of their

research budget to develop competency in this field [24] Japan

was first in the world to start a major ten year nanotechnology

program (the Atom Technology Program) in 1992 with the

amount of USD250 million, and was the largest government

investor in nanotechnology R&D until 2003 [25]. U.S

Government spending is coordinated through the National

Nanotechnology Initiative (NNI), a multiagency U.S.

government program that started in 2000. The main thrust of

the program is in enhancing fundamental nanotechnology

research that can contribute towards accelerating the

discovery, development and deployment of nano-meter scale

science, engineering and technology [26]. NNI has made a

major global impact and led to a number of countries placing

nanotechnology as a priority area in their science and

technology policy (see for example European Community

initiative in Porch and Desy [26]. US estimated to have spent

US$3.7 billion (2005-2008) and has reached USD 1.5 billion

in 2009, Japan has spent $3 billion during the same period and

European Commission (US $ 1.7 billion during period 2002-

06) [25]. Russia is making a strong assertion in

nanotechnology by committing to invest 318 billion rubel

(US$11 billion) in its ambitious plan to develop and

commercialize nanotechnologies [27]. It plans to develop

infrastructure in nanotechnology to increase exports of

products built in Russia with the use of this technology. It is

targeting nanotechnology based product value of $30 billion

by 2015.

South Korea started its National Nanotechnology Initiative

(KNNI) in 2001, committed 2.391 trillion won (USD2 billion)

over the period 2001-10. South Korea aims to join the world’s

top three nations in global nanotechnology competitiveness by

2015. Taiwan has also launched major nanotechnology

infrastructure building program. From 2003 onwards under its

National Nanotechnology Program it has invested USD 1000

million [25] But, even emerging economies such as BRICs

countries are not lagging in intention [28] These countries are

adopting nanotechnology as one of the priority area of their

S&T plan. India entered the nanotechnology race in 2001 with

the launching of ‘Nano Science & Technology Initiative’

(NSTI) with investment of $15 million for the first five years.

To give further thrust to nanotechnology development, Nano

Science and Technology (Nano Mission) was initiated in 2007

with an allocation of USD250 million for five years focusing

4 Luc Soete articulated the concept of technological leapfrogging (is being

used in the context of sustainable development for developing countries as a

theory of development which may accelerate development by skipping

inferior, less efficient, more expensive or more polluting technologies and

industries and move directly to more advanced ones [63]. Leapfrogging is a

central strategy of China’s quest to become an ‘innovative society’ [23].

on basic research, infrastructure development,

commercialization, education, and international collaboration.

Brazil has also started a number of initiatives for development

of nanotechnology in the country. It has invested US $200

million till date, has established four nanotechnology institutes

around the country, a nanotechnology network for linking

research institutes and universities involved in nanotechnology

and the Brazilian Agency of Industrial Development (ABDI)

has a 15 year industrial nanotechnology plan to help

commercialise products leveraging nanotechnology. China has

included nanotechnology as one of the four basic priority

science research areas which include protein research,

quantum manipulation research, and growth and reproduction

research [29]. Equivalent of US $600 million has been given

as direct government funding to create nanotechnology

infrastructure and other suitable mechanisms for translation of

research to commercialization. China has already made some

tangible achievements that we explore further in this paper.

III. CHINA’S SUCCESS IN NANOTECHNOLOGY

China has become an important player in the global

nanotechnology landscape. It is one of the fastest growing

nanotechnology markets in the world with value (defined as

output value) estimated to reach US $31 billion by 2010 and

US $145 billion by 2050 [30]. Bai Chunli, a leading scientist

of China created “Atomic Force Microscope” a key instrument

for nanotechnology research as early as 1989. This indigenous

developed instrument was commercially manufactured by a

Chinese company, ‘Shanghai AJ Nano-Science Development

Company’. This firm also manufactured the “Scanning

Tunneling Microscope”, another highly sophisticated and

capital intensive instrument (these instrument cost $1 million

or more) required for nanotechnology research. China claims

pioneer status in the important area of carbon nanotubes,

where research began as early as 1992 and emerged as a world

leader in the commercialization of basic nanomaterials

application such as coatings and composites [31]. China

created the world’s smallest carbon nanotubes (0.5nm in

diameter) in 1999. The country’s rapid results and creative

uses of carbon nanotubes, polymer coatings and mesoporous

materials have created a niche market in several traditional

industries. They are able to create new products from existing

ones, from nano-enabled textiles to building materials. Some

of the applications have captured world attention [32]

Tsinghua University made yarns out of carbon nanotubes.

After appropriate heat treatment, these pure carbon nanotube

yarns should eventually be able to be woven into a variety of

macroscopic objects for different applications, such as

bulletproof vests and materials that block electromagnetic

waves. Institute of Metal Research in Shenyang discovered the

superplastic property of nanostructured copper in 2002.

Copper with these nanoscale structural motifs has a tensile

strength about 10 times as high as that of its conventional

counterpart, while retaining electrical conductivity comparable

to that of pure copper. Fudan University demonstrated a

general synthetic strategy for creating stable multi-component

materials—such as mixed metal phosphates, mixed metal

oxides, and metal borates—featuring a variety of porous

structures. Such materials could lead to new families of

catalysts, environmental filtration devices, and other

technologies that rely on molecular interactions occurring in

tiny nanoscale spaces.

Performance in various output indicators are further testimony

of China’s emergence as a global player in nanotechnology.

China is producing the maximum number of research papers in

peer reviewed journals. It is very active in the domestic patent

office. However, it is lagging in international patenting;

although this is changing. A visible change is seen in

universities linking up with industries for joint patenting, a

sign of collaborative technology development. China is among

a few countries that has developed standards in this area. It is

chairing one of the four working groups of ISO/TC 229 for

development of nanotechnology standards. This working

group, WG4 is dealing with nano materials [33]. China’s

visibility is also seen in products that have been globally

registered. The section below illustrates some of the key

outputs.

A. Patenting Activity

Patent as indicators of innovation has limits: innovation does

not always correspond to patented invention and not all

patented invention possesses technological or economic value.

Not all products are patented and not all patents yield

products. However, nanotechnology being an area of intense

capital mobility, the dynamics of patenting offers potentially

valuable intelligence on the ability of a firm or a country to

bring out emerging products. Thus examining patenting

activity in nanotechnology provides good indication of a

country’s innovation capability.

Some interesting insights are visible from a recent study [34]

of nanotechnology patent applications covering the period

1991 to 2008. The study is comprehensive as respective patent

families have been evaluated for 15 national patent office’s

covering 98% of the global activity. China patent office

emerges as one of the important locus of patent filing. It ranks

2nd after USA in receiving pap tents in nanotech; it received

18,438 applications during the period 2001-08. In comparison,

USA received 19,665 applications whereas its nearest rival

Japan was way behind having received 10,763 applications

respectively. On examining the data further, it is observed that

it has a significant change in applications received if one takes

snapshot of two different years namely 2000 and 2008. In

2000 it had received only 105 applications ranking 3rd after

USA and Japan whereas in 2008 it received 5030 applications

ranking 1st with USA following with 3729 applications

received. China with 17,000 applications along with the US

lead the number of patent applications filed globally (includes

patent filing in domestic patent office). However, China’s

international patenting activity is only 4% unlike the US that

has 20% of the activity internationally. This is one of the

drawbacks of China’s activity. However, China is very active

in filing in South Korea, ranking third with 53 patents in that

office.

Nanotechnology patent applications in the USPTO country

wise in the last few years shows changing trends5. One of the

striking finding is the emergence of China. During the period

2005-09, 3rd position is held by Tsinghua University (China).

The only other active university in the top ten ranks is the

University of California (rank 7th). Unlike US, patenting in

China is dominated by the academia. But this trend is also

changing. Universities are also developing linkages with

university; for example Tsinghua University and Hon Hai

Precison Industry has 256 joint patents applications filed in the

USPTO during the period 2005-09.

B. Publication Activity

China has emerged as the top publishing country in

nanotechnology (data captured through web-of-science)

surpassing USA. Figure 2 highlights the activities of some

major developed and developing economies in

nanotechnology.

Figure 2: Publication Activity of Different Countries in

(anotechnology

USA accounted for 27% of the nontechnology papers in 2000

whereas Japan accounted for 14.5% of papers and China 9.8%

in that year. In 2009, China has emerged as leader accounting

for 23% of papers with USA accounting for 21% of paper

whereas Japan is considerably less visible, accounting for 8%

of total papers. Nanotechnology is highly interdisciplinary

emerging out of strong intersection of different traditional

disciplines. Thus, for a country to create competency in

nanotechnology research requires it to develop strengths in

different disciplines of natural and engineering sciences.

Indeed, China’s research activity highlights this fact. From

1980 to 2005, Chinese research output grew by a factor of 100

[35] and is now second only to USA. However, Kostoff

reports that if we look at INSPEC and Compendex, China has

outpaced USA as well. The fact that 19 of the 20 most prolific

nanotechnology authors have Chinese surnames, along with

half of all first authors [35], is an indicator of the increasing

5 Patent applications and publications were searched using an extensive

nanotechnology/nanoscience query (of 300 terms) identified by [64].

centrality of Chinese scientists and engineers in

nanotechnology. Some of these are citizens or permanent

residents of countries other than China, while many are

graduate students or post-docs studying in Europe, Japan, or

the United States, or working in laboratories in those

countries.

On further examination we find that Materials Science

(Multidisciplinary), Chemistry (Physical), Physics (Applied),

and Chemistry (Multidisciplinary) show the highest growth

during the period 2000 to 2009. Material science

(multidisciplinary) alone accounts for approx. 31% of research

output of China during this period. It is important to note that

these areas strongly influence nanotechnology domain.

Inspite of Chinese researchers increasingly publishing in high

quality journals, it is still lagging behind USA and European

Union in attracting citations [36]. Table 1 highlights the

countries that had papers among the top 1% cited papers in

nanotechnology in 2000, 2005 and 2009.

TABLE 1:

TOP 1% CITED PAPERS IN DIFFERENT COUNTRIES

Source: Constructed from Web of Science expanded.

The above table highlights the fact that Chinese papers are

gaining visibility. However, in comparison to total output they

have much less papers in the top 1%. It can be noted that in

2009, where China had the maximum output, except Japan, all

the other countries have higher percentage of papers relative to

their total output among the top 1% cited papers.

C. �anotechnology Products

Analysis of nanotechnology based products in the international

market show China’s emergence as a key player in

nanotechnology. Nanotechnology products are analyzed based

on Woodrow Wilson International Center for Scholars’ Project

on Emerging Nanotechnologies database that covers

nanotechnology product inventory globally (see

www.nanotechproject.org). This database is comprehensive to

the extent that it tracks nanotechnology products that are in the

international market and thus gives a good estimation of

country’s activity and impact of nanotechnology in industry

sectors. As of September 2010, the list contains over 1000

consumer products in eight different application areas. Twenty

one countries have visibility in terms of nanotechnology

products. Companies based in the United States dominate

followed by companies in Asia (227) and Europe (108). USA,

Korea, Germany, China and Japan have major presence with

605, 139, 78, 63, and 43 products respectively. Taiwan,

Malaysia, Thailand and Singapore are the other Asian

countries that have nanotechnology products as per this

database. The Table 2 below highlights areas in which China is

active.

Majority of the products (60% of the total products)

globally are in health and fitness segment in which China is

also active. Home and garden segment is another area that

dominates global activity. China (as per this database) has no

nanotechnology product in the automotive sector where

incidentally China is very active. TABLE 2:

CHINESE NANOTECHNOLOGY BASED PRODUCTS

Source: http://www.nanotechproject.org/inventories/consumer/

Products are not visible in two key medical segments where

nanotechnology based applications can play a key role namely

drug delivery and therapeutics, and biosensors and medical

devices. This may be due to the limitations of this database

and selection criteria6 used for creating product inventory.

6 Three selection criteria is used for inclusion of products in this database;

namely that the products can be readily purchased by consumers, that they

can be readily identified as nanotechnology based by the manufacturer or

another source, and the nanotechnology based claim for the products appear

reasonable.

D. Standards

China is among a few countries involved in developing

standards for nanotechnology. In fact China was the first

country to issue national standards for nanotechnology in

April, 2005 [37]. International Organization for

Standardization (ISO) Technical Committee (TC) 229 is

responsible for developing international guidelines for

nanotechnology. ISO had initially categorized nanotechnology

standards in three TC’s working groups: WG 1 ─Terminology

and Nomenclature, WG 2─ Measurement and

Characterization, and WG 3─ Health, Safety, and

Environment. In 2007, the Standardization Administration of

China (SAC), China’s national standards body, submitted two

new work item proposals- addressing specifications for

nanomaterials in terms of possible applications. TC 229

members recognized some aspects of the SAC- Proposed work

items, fell under the scope of each of the WGs but not all

aspects. In response to these newly identified needs, in 2008, a

new working group on Material specification (WG4) was

formed which had already been identified as a priority area in

the TC 229 business plan. China was given convenorship of

his group in recognition of its key role in the creation of WG4

[33].

China’s active involvement in standard creation and

adoption in nanotechnology is not surprising as it is a

component of its overreaching strategy for future technology

domination in this critical field. Standard setting has been

undertaken in parallel with other activities taken by China so

as to gain early mover advantage in this technology [38]. For

an emerging technology, standard setting is an important way

of shaping future market for domestic firms if the technical

standards created by a country are adopted internationally

[39]. For a country with a large domestic market, technical

standards created by it in a particular product class can also

become a useful strategy for dominating internal market and

influence future adoption of that standard internationally. As

per information available, China has created 27 Nano-

dimensional material and characterization standards, two

standards on terminology & nomenclature and 12 nano

materials/products standards [40] [25]. Twenty one standards

have been implemented so far. Table 3 shows the standards

implemented by China.

As it is evident, China has developed a range of standards;

initiating this process from 2003 onwards with different

agencies involved in this process. The standards created cover

various nano-material types, new means of measuring

nanotechnology product dimensions, behaviors and properties

for quality assurance. Nanotechnology standard developed for

example in textile industry can regulate the products being

created. This is important in the context of entry of ‘proper’

product into the market i.e. in this case it would check that the

nanotechnology embedded textile is conducive for apparel.

This also increases acceptance level of consumers for

nanotechnology enabled apparel.

TABLE 3:

NANOTECHNOLOGY RELATED STANDARDS IMPLEMENTED IN CHINA

Source: Liu, 2009[25] www.iso.org

*Concordance with ISO working groups (Author’s delineation)

IV. CHINA’S MACRO POLICY

China’s economy is in transition, from state-owned to

privately-owned enterprises and still suffers from a lack of

private investment capital. Almost half of the firms are state

owned. Government plays a key role in creating infrastructure

for research and innovation. Unlike OECD economies,

government funding extends across the value chain, from

fundamental research to commercialization. The development

of frontier areas is an outcome of China’ overall policy to

apply science and technology for socio-economic

development. In the last decade or so there has been a strong

thrust by the Government to make China an Innovative state

[41] [42]. Macro policies influence policies designed to

increase capability and capacity in nanotechnology. Thus to

have a deeper understand of how nanotechnology is

developing in China, it is essential to capture the essence of

the activities undertaken to create a proper innovative climate.

China’s has taken a number of policy initiatives at different

levels and articulated strategies and governance mechanism for

implantation. The State council of China (China’s cabinet) is

the top layer of governance providing leadership and

coordination. The key bodies under it address various aspects

of S&T and Innovation, have clear demarcated roles and

complement each other in attaining the overall objective of

creating knowledge based economy. Local state governments

also play an important role in implementing the national

programs and also create their own programs to enhance

capability and capacity [8]. The architecture of its S&T policy

over the year’s exhibit both change and continuity.

China’s 10th Five year Plan (2001-05) set goal for short

term, medium term and long term development. It calls for

special attention to enterprises, promotion of local high

technology and high-tech industry, international cooperation,

and synthesis and integration with other national S&T

programs in order to form a complete chain of R&D activities

comprising basic research, applied research and experimental

development.

China’s 11th Five-Year Plan (2006-2010) extends the goals

of the 10th Five Year Plan by placing heavy emphasis on

innovative technologies [42] This plan strongly articulates

China’s intention to become an ‘innovative State’7 by

emphasizing the importance of independent innovation, as the

key to scientific and technological development, and the new

mode of China’s economic growth. It stresses on building a

market oriented innovation system in which firms are the main

actors and production and academic research are integrated.

The key policy formulated by the State Council to achieve the

plan objective is the National Mid- and long- Term Scientific

and Technological Development Plan Guideline (2006-2020)

(Sci-Tech Guideline also called as MLP) in December 2005.

The Sci-Tech Guideline sets basic guidelines for scientific and

technological development in the coming fifteen years

outlining areas of attention and targets to be met by 2020.

MLP plan calls for spending 2.5% of China’s GDP on R&D

[43] [44]. and reduce dependence on foreign technology by at

least 30% by 2020. Guideline has identified eleven priority

sectors, and eight technology areas which include twenty-

seven scientific disciplines and four major scientific research

schemes. The state council issued the ‘Complementary

Policies’ (CP) in February 2006 to support the implementation

of the Sci-Tech Guideline.

The Figure 3 illustrates China’s major innovation policy

initiatives and their implications for nanotechnology research

and innovation.

Figure 3: China’s Major Innovation Policy and their

Implications in (anotechnology Development

7 A country is considered an ‘Innovative State’ if it scores high in

innovative indices. Some of the common innovative indices are contribution

rate of scientific and technological advancement to economic growth, ratio of

R&D investment over GDP, rate of dependence on imported technology,

patenting activity, etc. [42].

Source: Constructed from various sources particularly Asia-Pacific Nanotech

Weekly (Various Issues), Plan Policy documents, CAS annual reports

A. Major Policy Outcome

MLP thrust on increasing investment in R&D has resulted in

significant change in R&D investment. From $2.65 billion

investment in R&D in 1990, investment has increased to

$65.94 billion in 2008. In terms of percentage of GNP, it has

increased from 0.71% in 1990 to 1.54% in 2008. This increase

has to be seen in the light of the enormous increase of GNP in

the numerator. S&T manpower also increased from 3,14,1000

in 2001 to 4,96,2000 in 2008.

Chinese governments at various levels have developed

favourable policies for the return of the emigrants that has led

to tangible outcomes. 1051 researchers have been supported

during the period 1994-2006 in the hundred talents program.

42,000 (31%) of the students have returned to China of the 1,

34,000 studying abroad in 2006. They are now attached to key

research institutes under Chinese Academy of Sciences (CAS)

or Chinese Academy of Engineering (CAE).

The return overseas scholars have played a major role in

CAS and CAE. They account for 81% and 54% scholar in

these two institutions [45]. Thirty one model research institutes

have been created by restructuring the CAS. Four hundred spin

off firms have emerged from CAS research institutes. Lenova

is among the major firms that have emerged from CAS.

Five hundred Thirty Four S&T business incubator facilities

have been created in China. Fifty Four high tech technology

industrial parks have been created. Many parks have sub-

parks. Parks have distinct identities and have dominant hub of

key sector(s). Some of them have developed important

linkages with incubators, special economic zones (SEZs).

V. POLICIES SPECIFIC TO NANOTECHNOLOGY

The Chinese Academy of Sciences, jointly with the National

Natural Science Foundation of China and the State Science

and Technology Commission (predecessor of the Ministry of

Science and Technology), began supporting nanoscale

research as early as the mid-1980s. The 863 program launched

during the start of the 7th plan (1986-1990) identified

advanced materials as one of the six priority fields for

development, along with “forming intellectual property rights”

as well as projects geared to market demands and practical

application, to be implemented centering around major key

high-tech or engineering” [46]. At the end of this plan period

i.e. in 1990, a 10 Year ‘Climbing Up’ Project was announced

by MOST. The nanomateriais project was funded under this

program which supported nanotechnology research for ten

year period between 1990 to 1999 [47] it was much ahead of

its time and started many years before the American National

Nanotechnology Initiative. The development of

nanotechnology in China in a true sense began with this

project [48].

Since 2000, national-level planning, coordination, and

policy-making for nanotechnology are the overall

responsibility of a National Steering Committee for

Nanoscience and Nanotechnology. The Steering Committee

was created by MOST, the State Development and Planning

Commission, the Ministry of Education, the Chinese

Academies of Sciences and Engineering, and the National

Natural Science Foundation of China, among other

organizations. Nanotechnology has been given priority in

different plan periods after that, as can be seen from the

articulation in major programs (refer Section 3: China’s macro

policy). The Chinese government, in their Guidance for

National Development in 2001 declared nanotechnology a

critical R&D priority. In the same year, the Chinese Ministry

of Science and Technology, the National Development and

Reform Commission, the Ministry of Education, the Chinese

Academy of Sciences, and the National Natural Science

Foundation jointly issued a Compendium of National

Nanotechnology Development (2001-2010). This plan

document proposes nanotechnology development strategies for

the next ten years. This can be seen as a continuation of the

thrust given under the “Climbing Up” project.

China invested some $400 million in nanotechnology during

the 10th Five Year Plan (2000-05). Primary funding sources

were MOST’s 973 programme, NSFC, CAS, and MOE [49].

One can observe roadmap for long term nanotechnology

development in this plan period. Goals have been set for short-

term (development of nanomaterials), medium term

(development of bio-nanotechnology and nano-medical

technology), and long term (development of nano-electronics

and nano chips). 973 program provide key thrust to basic

research in nomaterials and nanostructures. Torch program has

given priority for development of new and high technology

industries (nanotechnology, biotechnology, etc.) and

commercialization, industrialization and internationalization of

these industries research results in conformity with the market

economy laws. The Chinese Academy of Science’s

“Knowledge Innovation Program”, piloted in 1998 and fully

implemented in 2001, also gives priority to nanotechnology

(among other high-tech fields, such as quantum information,

biophysics, and human genome) and emphasizes technology

transfer, including the incubation (by CAS) of high-tech

startups by CAS-affiliated institutions [50] The program

currently includes at least 20 academic institutions, 1000 to

1200 scientists as principal investigators, and another 2,000

graduate scientists as assistants in nanotechnology research

[51].

MLP is the key strategy designed by China in the 11th plan

to uplift indigenous innovation capacity in advanced

technologies. Nanotechnology is treated as a priority domain

under the MLP. CAS, responding to national policy priorities

identified in the national 11th Five-Year Plan (2006-2010),

defined a “1+10” strategy, in which activities of its research

institutes are linked to 10 mission objectives. A commitment to

interdisciplinary basic research in frontier areas supports this

effort. ‘Materials science, Nanotechnology, Advanced

manufacturing’ is among the priority mission identified by

CAS. The CAS funding is towards large scale (and longer-

term) key Projects, reflecting its own priorities (this includes

nanotechnology) and resulting from calls for proposals from its

researchers; and smaller, shorter term directional projects,

proposed by CAS Institutes.

China has also created technical standardization committees

and health, safety and environment institutions. National

technical working group for nano-materials was created in

2003. In 2005 it created a committee on nanotechnology

standardization (SAC/TC279). SAC/TC279 is a coordinated

body for drafting essential nanotechnology standards. China

nanotechnology standards are reviewed by the National

Standardization Technical Committee (NSTC), the technical

committee under the Standardization Administration of China

(SAC) before they are issued/ adopted. TC279’s parent agency

the General Administration of Quality Supervision, Inspection

and Quarantine (AQSIQ) is the issuing authority for most of

the nanotechnology standards; it mainly publishes, administers

and enforces nanotechnology standards. There is only one

standard provided by the industry- GB/T 22925-2009-

established by The China Association of Textile Industry

(CATI).

China is also positioning itself as a nanotechnology

regulator in the global scenario. It has created specialized

institutions for risk management and funding for Environment,

Health and Safety (EHS) research in China (NSFC 2006). Lab

for Bio-Environmental Health lab was established in 2003 at

the Institute of High Energy Physics (IHEP), CAS. The

research activities include not only ways to identify the

possible adverse effects of nanomaterials, but also ways to

recover or reduce the release of nanoparticles in manufacturing

processes and mitigation of nanotoxicity [52]. Nanosafety lab

was established in National Centre for NanoScience and

Technology in 2006, focusing on the economic, environmental

and social aspects of research, standardization, regulation, etc.

This lab has incorporated the BIO-Environmental lab of IHEP

[53].

Local regions and municipalities also support their own

nanotechnology development programs. For example, the

Shanghai government funds the 2006 project Dengshan [54]

(“Climbing Mountain”) Action Plan; this includes a fund

dedicated solely to nanotechnology that will support

fundamental research in such diverse areas as imprinting

techniques, nanobio diagnostic technology, nanomaterials for

controlled release drug delivery, and primary exploration of

the novel properties of nanomaterials. The Program also

supports applied research more closely tied to industrialization

– for example, low-energy high-efficiency cold lighting

sources, nano composite materials for construction usage, nano

painting materials for high voltage electricity transporting,

nano fibers and textiles, and nano products for use in

environmental purification and industrial catalysis [55].

A. Policy Outcome of Macro and Micro Policies to

�anotechnology Research and Innovation

Governmental efforts have been instrumental in stimulating

nanotechnology R&D and commercialization activity with 500

research institutes (including CAS institutes), 70 major

universities and around 380,000 R&D staff [32] engaged in

nanotechnology research. 80% of nanotech research and

companies are concentrated in either North China (centered on

Beijing) or in East China (centered on Shanghai). In addition,

Shenzhen in southern Guangdong province also has major

concentrations of nanotech R&D activity. Presence of key

research institutes and prominent universities in Beijing and

Shangai has played an important role in making these regions

as nanotechnology hub. Two industrial parks Zhongguancun

Science Park and Zhangjiang HIDZ located in Beijing and

Shangai respectively are also instrumental in developing

entrepreneurial culture in the universities and research

institutes located there.

One can see two distinct types of activities in Beijing and

Shangai. Beijing tends to focus more on basic research

primarily on carbon nanotubes, nano-magnetic liquid material,

nano semi-conductors, high-polymer nano composite material,

nano functional coating, and nano functional membranes [32]

Chinese Academy of Science (several institutes), National

Center for Nanoscience and Technology (NCNST), Tsinghua

University, Peking University, China University of Science &

Technology, and Tianjin University are the key centers in

Beijing where nanotechnology research is conducted. NCNST

is responsible for nanotechnology planning and coordination,

providing platform for domestic researchers from research

institutes and industries, communication window for

international linkage or collaboration in nanotechnology, as

well as setting standards for working with nanomaterials

(http://www.nanoctr.in). NCNST has coordination labs

distributed in different universities and public institutions.

Shanghai tends to focus more on applied research. Key

universities and research institutes active in Shanghai are

Fudan university, Shanghai Communications university,

Tongji university, East China university of Science, Zhejiang

university, National Engineering Research Center for

Nanotechnology (NERCN), and Divisions of the Chinese

Academy of Science. Their main focus is in

nanopharmaceuticals, nanoelectronics, nanomechanics,

nanobiology and other nanomaterials and nanodevices. The

Table 4 below shows key nanotech research centers in China.

TABLE 4

KEY NANOTECH INSTITUTIONS IN CHINA

Source: Constructed from various sources (see particularly Applebaum et al,

2006 [41]; Shapira and Wang , 2009[46], various issues of Asia Pacific

Nanotech Weekly Summary)

Other nanotechnology research centers are in Beijing

University (Beijing University Nanoscience & Technology

Center), Tsinghua University (Micro & Nanotechnology

Center), Beijing University of Science and Technology

(Surface Science, Nanotechnology & Engineering Center),

Chinese Academy of Science, Beijing (CAS Nanotechnology

Research Center), Institute of Solid State Physics, HeFai

(Nanomaterials Development and Application Center), Xi An

Electronics Science & Technology University (Nanotech

Center), Guanzhou Southern University (Guangzhou Southern

Nanotech Center), Wuhan University (Nanotechnology

Center), Hunan University (Nanotechnology and

Biotechnology Center), Shang Dong University (Micro and

Nanotechnology Center), Shen Yang University (Shen Yang

Nanotechnology R&D Center).

Over 90% of research, particularly of nanomaterials is

conducted in university research centers and in state-sponsored

research institutes. Public and private companies (e.g. State

owned enterprises and non-state firms) contribute less than

10% to overall research. Establishing industrial parks is one

of the central strategies of China for high technology

development. Setting up of nanotechnology industrial parks is

part of this strategy. These parks are set up by local

governments or jointly with foreign investors and are usually

located near research centers, with the intention that

companies develop linkages with them, attract investment,

provide incubation facility and help bring research to market.

Three nanotech industrial parks have been established in China

with this objective. A famous example includes the

International Nanotech Innovation Park in Suzhou (near

Shanghai), which began construction in 2007 – the third

national-level innovation park. The aim of this park is to create

an internationalized innovation platform and technology

incubator for nanotechnology, with the help of the

Singaporean and Finnish governments and their research

centers. The park is the largest nanotech industrial base in

China, with estimated annual output of over RMB 10 billion

(~US$ 1.5 billion). In addition, some state-sponsored research

institutes such as CNANE8 are also planning to establish their

own industrial parks. CNANE plans to start a nanotech

association (along with its four subsidiaries as main members)

to be completed in 2011. This new nanotech industrial park

should offer access to both strong nanotech research and

development facilities. The Table 5 below lists some of the

key nanotech industrial parks in China.

TABLE 5

KEY NANOTECHNOLOGY INDUSTRIAL PARKS IN CHINA

Source: See particularly Miyazakia and Islam, 2007, [56]

http://www.sipac.gov.cn/english/zhuanti/NanotechforSustainableGrowth/inde

x.htm

B. Academia-Industry Collaborations

Government initiative has helped national universities and

research institutes to forge linkages with foreign research

institutes and foreign-invested companies. These linkages have

resulted in creation of dedicated nanotechnology research

funds, joint research centers, etc. CAS has been particularly

active in promoting linkages. The successful outcomes include

(a) creation of “The Nanometer Technology Research Center”,

a joint venture between the CAS and U.S. Veeco Instruments,

a leader in nanoscale metrology, and manufacturer of atomic

force and scanning tunneling microscopes. The collaboration

will provide Veeco’s instruments for Chinese researchers. (b)

the establishment of “CAS Suzhou Nanotech and Nanobionics

Institute”, which has a research cooperation agreement with

the Finnish National Technological Resource Center (c)

“Tsinghua-Foxconn Nanotechnology Research Center”

directly on the campus of Tsinghua University. Chinese

Academy of Medical Sciences has created a nanotechnology

R&D fund in cooperation with Anson Nanotechnology Group,

8 CNANE is a state-sponsored research institute that is already has an

industrial base, research institute and product inspection center.

an HK-invested company based in Guangdong province.

Anson also invested US$ 25 billion to set up research centers

in Shanghai with the Chinese Academy of Science.

While large national-level universities and research

institutes have nanotech research centers that are well-funded

by the government, smaller universities have to find other

funding – often cooperating with private enterprises. Regional

/ less prestigious universities tend to collaborate with local

nanotech enterprises or foreign multinationals based nearby,

e.g. Essilor (France) and Shanghai University. As a result,

these smaller universities have become an important source for

applied research.

C. �anotechnology Companies

It is estimated that the number of nanotech companies in

China has grown to about 800-1000 in 2009 – a significant

increase from ~300 companies in 2001 [30]. Nanotech

companies are mainly located in Beijing and Shanghai, but

strong concentrations exist in Jiangsu, Zhejiang, Shandong,

and Guangdong provinces. Over 90% of nanotech companies

are domestic companies, of which 95% are small SMEs. The

majority of the companies (80%) focus on production of

nanomaterials, primarily nanooxide, nanometal powder, and

nano compound powder. The remaining domestic companies

focus on nanotechnology research and applications in

consumer products such as daily cosmetics and paint. Less

than 10% are foreign-invested companies, which typically

prefer Shanghai as the first place to invest. Foreign companies

tend to focus on commercializing nano-devices (e.g. sensors,

healthcare detectors, storage, and display devices) and

nanobiology (e.g. DNA and protein chips, nanoscale tools for

early diagnosis) – higher value items. The following table

highlights the key differences between Chinese and foreign

nanotech companies: TABLE 6

OVERVIEW OF CHINESE AND FOREIGN NANOTECH COMPANIES

Source: JLJ Analysis (2009)

Over 80% of local Chinese nanotech companies collaborate

with universities or research institutes – either in China or

abroad. Collaboration models include: joint research centers,

sharing of facilities, sponsorship arrangements, contract

research, technology licensing agreements, or commercial

spin-offs. By outsourcing, companies save on R&D costs

while gaining access to new research progress; research

centers can obtain funds and see their research brought to

market – a “win-win” cooperation model. However,

cooperation between domestic companies and foreign research

centers is still relatively uncommon, as they have few

commonalities. On one hand, domestic companies mainly

focus on nanopowder and coatings, lower-value technology

derived research from domestic research centers. Foreign

research centers, on the other hand, mainly focus on new and

more advanced technology research and development. The

Table 7 below shows the most commonly found cooperation

schemes. TABLE 7

TYPICAL TYPES OF INTERACTIONS OF DOMESTIC COMPANIES WITH OTHER

ENTITIES

Source: http://www.nanotech-now.com/columns/?article=469

VI. DISCUSSION

China has been able to transform itself from a backward

agricultural economy into a global ‘manufacturing’ hub. This

success has few parallels in the world. Manufacturing

dominated export has led to a regular growth rates of around

10% in China; making it one of the world's most successful

economies and at the same time a major economic engine.

However, inspite of its success in manufacturing, the

embedded technology in the products manufactured in China

resides mainly with advanced OECD economies. It is at the

lower end of the value chain where China is active. China

wants to position itself as an ‘innovative state’. Science and

innovation is promoted as a political agenda [57]. As the study

highlights, China has taken major policy initiatives to develop

competency in frontier technologies. China's Strategy for

Innovation (2006 to 2020) and its five-Year Plans from 7th

plan onwards clearly show that China's political leadership

regards research and development as a basis for the growth of

the country's economy and intends to make use of science and

technology as resources for industry and services. It shows

China’s long term strategic goal of achieving convergence with

advanced OECD economies. Through the lens of

nanotechnology development in China, the study also discerns

China’s policies, strategies and governance in a frontier

technology. It reveals that China’s catch-up model is centered

upon large-scale strategic technology development with

government-affiliated research institutes and universities

taking leading role. It is trying to build basic research

capabilities in frontier knowledge areas, promote innovative

start-ups and technology transfer from academia to industry by

developing world class universities and research institutes and

through various institutional mechanisms such as science

parks, incubation centers, and industrial high technology

zones. There is a strong coordination among the ministries and

agencies. Government through various programmes is trying to

improve education and skill development and tap oversees

Chinese scholars. Government provides generous tax credits,

tax waiver, and tariff exemption for R&D equipment to firms

for conducting R&D. Government is also trying to develop

innovative capabilities in various regions across China to

address regional imbalances.

The study also points out the various challenges China

faces. As Shipra and Wang, 2008 pointed out the weak

innovative and absorptive capacities of domestic firms. State

plays a larger then required role that may be counterproductive

in the long run. Almost 50% of the firms are state owned that

may not be ideal for entrepreneurship. Many of the programs

are very ambitious and can lead to lock-up of resources

without significant tangible benefits. There is still a long way

for China to translate its scientific research activity in

nanotechnology feeding into the innovation process. Patenting

activity is still at the nascent stage. Nanotechnology products

in China are dominated by nanomaterials with low levels of

sophistication. It has still to make its presence in design and

fabrication of nanodevices and applications.

VII. CONCLUSION

Areas such as nanotechnology that are science based calls for

strong linkage with the producers of knowledge and product

development [58]. The locus of knowledge production is also

required to be in multiple setting. Knowledge transfer calls for

a strong academia-Industry linkage. It can be observed from

this study that China’s Science and technology strategy

attempts to create a similar environment. China is making

extensive investments in cutting edge science and technologies

i.e. in biotechnology, information technology and

nanotechnology. This is a paradigm shift in science based

development strategy in which it sees itself to catch up with

developed countries by investing in existing technologies

alone [59].

VIII. LESSONS TO BE LEARNT

China’s strategy is multifold to develop nanotechnology and

creating suitable mechanisms for transferring research from lab

to market. It has created a strong environment for nanotech

innovation with various stakeholders involved in the whole

process. Government policies are directed keeping in view

weak market signals as risk of early stage innovation is very

high due to nascent stage of technology, market uncertainty,

and capital intensive nature. It is actively involved in

strengthening various institutions and creating bridging

organizations for translation of scientific research to

commercialization. Inspite of many challenges ahead, initial

successes of these initiatives are already being seen, as shown

in this study.

Inspired by Silicon Valley many countries have tried to

emulate by creating similar types of knowledge cluster.

However, only a few countries have succeeded in emulating

the success of Silicon Valley [20]. In China co-location has

been activated into meaningful interaction and collaboration,

particularly between industry and academia. Tsinghua-Foxcon

nanotechnology center is a good example of this. These types

of functional interactions can make Chinese knowledge cluster

successful. Government is also playing as the central actor in

seed stage financing that makes attractive proposition for firms

to carry forward technologies developing from research labs

and universities; helping bridge the gap between pure research

and the product development stage.

Many emerging economies are faced with severe brain drain.

China has carefully fine tuned a policy that supports brain gain

and this is already bearing fruits. A growing number of

Chinese students are choosing to remain in China for their

graduate and post-graduate work, lured by excellent

universities and an increasingly first-class scientific

infrastructure, as well as the promise of fortune should their

research bear commercial fruit. State sponsored research

institutes are also reforming to help researchers think more like

entrepreneurs.

China is actively developing linkages with foreign players.

Foreign players are increasingly attracted towards China as it

has the needed infrastructure, strong research base and

production capability. This type of ‘win-win’ arrangement

makes successful linkages with foreign partners.

China has long term strategies for ‘high technology’

development as can be observed from its plan documents. It is

looking to future generations with plans to create awareness of

the importance of nanotechnology in primary and secondary

schools, as well as offer courses intended to prepare a new

generation of scientists and engineers for the field [60]. It has

taken a lead to develop nanotechnology standards that can in

future help China to control the market.

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