The government should include foreign-funded research institutions in the national science and technology plan

There are conflicting views about foreign-funded research institutions' influence on domestic innovation. But generally speaking, foreign-funded research institutions are playing a key role in improving the overall effectiveness of the national innovation system.

China has become an important base for foreign research institutions over the years, and industrial clusters have gradually formed, mainly concentrated on technology-intensive industries such as electronics, communications, biological medicine, transportation, chemicals, and software design. Through cooperation with foreign-funded research institutions, the openness of the national innovation system has been improved and Chinese enterprises and research institutions have absorbed and used global innovation resources, and the connections between the domestic research network and the global research network have been strengthened.

Statistics show that in 2012 there were 10,146 research institutions affiliated to overseas-funded enterprises in China, accounting for 22.1 percent of China's total. And at the end of 2010 there were more than 1,400 foreign-funded independent research institutions in China. In 2006, there were around 140,000 research staff working in foreign-funded enterprises in China. In 2012, the number had increased to 770,000, and they accounted for 25.3 percent of all research staff in China's large and medium-sized industrial enterprises. In 2000, the R&D expenditure in China of foreign-funded industrial enterprises above a designated size was about 10.02 billion yuan ($1.6 billion), while in 2012 the amount had grown to 176.4 billion yuan. Foreign companies' R&D cooperation with domestic enterprises has also been enhanced. For instance, 3M company has established joint laboratories with a series of Chinese enterprises such as Chery and Haier; while GE has jointly established a civilian avionics system company with the Aviation Industry Corporation of China.

The rapid growth of foreign-funded research institutions in China has not only expanded the sources of research funds, it has also increased the ratio of domestic enterprises' research investment and improved the domestic structure of research investment. It has also prompted domestic companies and research institutions to focus on research and innovation activities with more commercial value.

To some extent, foreign-funded research institutions have also slowed the domestic brain drain and attracted many overseas Chinese and Chinese students studying aboard to return to work in China.

The increasing number of foreign-funded research institutions has also improved the environment for domestic innovation. Foreign-funded research institutions in China have researched, designed and industrialized high-tech products in China, and have brought new management ideas that provide a higher platform for domestic enterprises and research institutions' innovation activities. Meanwhile, the regional clustering of foreign-funded research institutions has helped propel the clustering development of China's high-tech enterprises and improved the regional innovation environment.