All eyes are on China, which has experienced dramatic economic growth during the last three decades and has become the world’s third largest economy, right after the USA and Japan. The economic growth has benefited from many progresses that China has made during its transition from a planned economy to a market one, including its promotion of non-government-owned businesses, its success in attracting foreign investments and its efforts in promoting export, among many others. China has become ‘world’s factory’. Nevertheless, China’s economy still heavily relies on cheap factor inputs and such a growth model is not sustainable, as exhibited by the many environmental incidents, labour disputes and tensions with other countries on international trade, among numerous others. Despite its tremendous economic success, China has largely failed in capacity-building for indigenous innovation. The recent world financial crisis and the declining export have further demonstrated the weakness associated with such a model of economic growth. For sure China’s people and government are not complacent about its current ‘world’s factory’ status and have tried to make another transition from the current ‘made in China’ to the potential ‘created/invented in China’. Tremendous efforts have been made to reform its national innovation systems. In 2006, the central government once again initiated its middle and long term plan with a very ambitious goal for China to become an innovative nation by 2020. This plan has a few specific objectives including raising the R&D investment/GDP ratio to 2.5%, the contribution rate of 60% or more to economic growth by progress in science and technology (S&T) and reducing the degree. All eyes are on China, which has experienced dramatic economic growth during the last three decades and has become the world’s third largest economy, right after the USA and Japan. The economic growth has benefited from many progresses that China has made during its transition from a planned economy to a market one, including its promotion of non-government-owned businesses, its success in attracting foreign investments and its efforts in promoting export, among many others. China has become ‘world’s factory’. Nevertheless, China’s economy still heavily relies on cheap factor inputs and such a growth model is not sustainable, as exhibited by the many environmental incidents, labour disputes and tensions with other countries on international trade, among numerous others. Despite its tremendous economic success, China has largely failed in capacity-building for indigenous innovation. The recent world financial crisis and the declining export have further demonstrated the weakness associated with such a model of economic growth. For sure China’s people and government are not complacent about its current ‘world’s factory’ status and have tried to make another transition from the current ‘made in China’ to the potential ‘created/invented in China’. Tremendous efforts have been made to reform its national innovation systems. In 2006, the central government once again initiated its middle and long term plan with a very ambitious goal for China to become an innovative nation by 2020. This plan has a few specific objectives including raising the R&D investment/GDP ratio to 2.5%, the contribution rate of 60% or more to economic growth by progress in science and technology (S&T) and reducing the degree of dependence on foreign technologies to 30% or less. Thereafter, different agencies associated with the central government have announced a number of measures to implement the plan. It is not the purpose of this special issue to give a detailed review or assessment of the plan. Instead, the special issue will focus on the progress that China’s businesses and governments have made in innovation. We hope that these studies will shed new light on innovation in China. Studies in this special issue can be grouped into three categories, which examine issues from business innovation strategies, to foreign R&D, and national S&T policies. In the following sections, we will summarise the major findings of these papers
