Pursuing Integrated Advancement in Technological and Industrial Innovation

Science and technology are foremost productive forces, while industry is the cornerstone of the national economy. The pursuit of integrated advancement in technological and industrial innovation is, therefore, critical to the development of new quality productive forces and the entire Chinese modernization agenda.

I. The significance of integrated advancement in technological and industrial innovation

The Central Committee of the Communist Party of China (CPC) has developed major strategic plans for pursuing integrated advancement in technological and industrial innovation based on China’s current development stage and priorities. 

Technological innovation is the linchpin driving industrial upgrading. Industrial innovation, meanwhile, opens up new scenarios and market opportunities for practically applying technological advances. By pursuing progress on both fronts, we cannot only make our industry more competitive but also make strong strides in structurally upgrading our economy, all of which will ultimately help drive high-quality development. With a new round of technological revolution and industrial transformation now in full swing, we have come to an unprecedented period of intensive technological innovation. Scientific research is undergoing a profound transformation. The lines separating basic research, applied research, technological research, and industrial application are blurring. Technological innovation is increasingly characterized by disciplinary intersection and integration, cross-sectoral penetration, and widespread diffusion. As a result, the chain leading from supply to application has become diversified. 

By firmly committing to pursuing integrated advancement in technological and industrial innovation, we will be able to generate new quality productive forces through revolutionary breakthroughs and open the doors to new fields and new arenas. This is of great significance for securing an advantageous position in technological competition, seizing the initiative in future development, and ensuring greater self-reliance and strength in science and technology.

Since the 18th CPC National Congress in 2012, the Central Committee with Xi Jinping at its core has placed technological innovation at the heart of national development. Thanks to the full implementation of the innovation-driven development strategy, China has been able to tap into a steady stream of innovative vitality. It has accelerated the shift from old to new growth drivers and steadily strengthened its position in global innovation and industrial chains. In 2024, China rose to the 11th place on the Global Innovation Index. It ranked second in the world for nationwide R&D investment, and China’s high-tech enterprises surpassed 463,000, with 169,000 of them being large industrial enterprises. China also continued to lead the world in terms of innovative sci-tech clusters, accounting for 26 of the world’s top 100. As more innovations moved from labs to production lines, the rate of industrial application for valid enterprise invention patents hit 53.3%.

China has maintained its position as the world’s largest manufacturer for the past 15 years. In fields such as alternative energy vehicles, photovoltaic products, rail transit equipment, shipbuilding, marine engineering equipment, and construction machinery, it has essentially put in place complete industrial chains. In sectors like rare earths and ultra-hard materials and products, it has built up distinctive resource and scale advantages. In other sectors, it has made major strides in enhancing its technological and manufacturing capabilities. All this has allowed it to develop multiple industries with competitive advantages across entire chains. By forging close alignment between industrial and innovation chains, China has turned technological and industrial innovation into twin engines propelling its strength in technology and manufacturing.

The Shenditake 1 ultra-deep well in the Tarim Basin in Xinjiang Uygur Autonomous Region. The Shenditake 1, China’s first ultra-deep scientific exploration well, was completed at a depth of 10,910 meters, February 20, 2025, making it the deepest vertical well in Asia and the second-deepest in the world. CHINA NATIONAL PETROLEUM CORPORATION

While acknowledging these achievements, we should also recognize that there are some bottlenecks and obstacles hindering China’s pursuit of integrated advancement in technological and industrial innovation. For example, we do not produce enough high-quality technological outputs. We are lacking “zero-to-one” breakthroughs that are truly disruptive and groundbreaking. The relative share of funding for basic research has also remained persistently low. In addition, we need to further consolidate the principal role of enterprises in technological innovation and enhance enterprise-led collaboration involving industries, universities, and research institutes. Enterprises have limited involvement in decision-making regarding sci-tech project initiation, resource allocation, and major sci-tech initiatives. The refinement mechanisms for national sci-tech projects targeting business needs also require further improvement. Another example is the relatively low rate of industrial application for technological advances, which stands at around 30%. The application rate for university invention patents is even lower, languishing below 10%. 

Overcoming these obstacles will require us to break the mental and institutional barriers that are hindering integrated advancement in industrial and technological innovation. It will call for efforts on multiple fronts—improving the environment for innovation, enhancing support systems, cultivating innovative personnel, and boosting industrial application—in order to enhance the overall performance of our country’s innovation system. 

II. Putting the focus on improving the modern industrial system

The modern industrial system serves as the material and technological bedrock of the modern nation. Improving this system should, therefore, be our focus when pursuing integrated advancement in technological and industrial innovation. We must make targeted efforts in key areas to rapidly translate our potential for innovation into momentum for industry. 

Accelerating the transformation and upgrading of traditional industries

Since 2012, China’s traditional industries have experienced an accelerated shift toward high-end, smart, and green development, thanks to the new development philosophy, which has driven profound changes across the board. In 2024, China accounted for 79 of 189 “Lighthouse Factories” worldwide designated by the World Economic Forum. Close to half of these Chinese facilities were operating in traditional sectors. That said, it is also worth noting that when judged against our requirements for high-quality development, China’s traditional industries still face various issues. These include a lack of high-end supply, overcapacity in low-end production, weak industrial foundations, and insufficient capacity for innovation. 

To address these issues, we need to accelerate industrial foundation reengineering projects, step up research projects on major technologies and equipment in industries such as oil and gas, shipbuilding, and machinery, and speed up the development of advanced and applicable technologies in sectors like coal, steel, chemicals, and building materials. With a focus on optimizing and upgrading product performance and quality, we should promote the research and application of advanced and applicable technologies that support the shift to digital, green, and low-carbon development. This will ensure we steadily enhance the competitiveness of our traditional industries and thus consolidate the underpinning for our modern industrial system.

Cultivating and strengthening strategic emerging industries

China’s strategic emerging industries have developed rapidly in recent years. This has opened the way for major achievements in areas such as manned spaceflight, lunar and Mars exploration, high speed rail, the BeiDou Navigation System, and large aircraft development. A number of highly competitive industries, exemplified by alternative energy vehicles, lithium batteries, and photovoltaic products, have emerged as impressive calling cards for Chinese manufacturing. However, China still faces many bottlenecks and gaps in key technologies and links within specific sub-sectors of its strategic emerging industries. There are many problems impeding technological integration across industries, including inconsistent technical standards and shortcomings in cooperation mechanisms. Such issues undermine the overall efficiency and innovative capacity of our industrial chains. 

It is vital that we intensify the push for breakthroughs in core technologies in key fields. We need to give full play to the leading role of innovation consortiums and industrial chain “chiefs,” to move faster in developing national advanced manufacturing clusters in sectors such as next-generation information and communication technologies, integrated circuits, new materials, biopharmaceuticals, high-end medical devices, and alternative energy and intelligent connected vehicles. Through these efforts, we will create new industrial chains and clusters and develop new advantages for high-quality development.

Forward planning for future industries

Future industries refer to forward-looking emerging industries that are strategically important, are of a pioneering and disruptive nature, and are defined by uncertainty. Vigorously developing future industries is a strategic choice that will help steer sci-tech progress, drive industrial upgrading, and cultivate new quality productive forces. It is vital that we make systematic and forward-looking plans with a focus on six areas of future industries: manufacturing, information technology, materials, energy, spaces, and health. We should promote the research, development, and application of cutting-edge technologies, including humanoid robots, the metaverse, quantum technology, and 6G, so as to accelerate the creation of new competitive advantages for future development. 

We must rely on the development of new sources of original innovation and endow such entities with enhanced functions to pursue original breakthroughs. We must work on refining key scientific questions in fundamental and frontier areas critical to national strategies and major engineering initiatives. We must enhance the supply of foundational generic technologies and encourage cross disciplinary and integrated innovation. All this will help us realize faster breakthroughs in disruptive technologies and promote their application in industry and engineering projects. 

III. Identifying pathways for integrated advancement in technological and industrial innovation

We must ensure that technological breakthroughs drive industrial innovation and that industrial advances, in turn, help spark new technological solutions. The key to achieving this lies in creating a virtuous, mutually reinforcing cycle between the two fields of industry and technology. Only by steadily refining our systems and mechanisms, optimizing resource allocation and support services, and removing bottlenecks and bridging gaps, can we create a development dynamic in which technological and industrial innovation are fully integrated and mutually empowering.

Optimizing systems and mechanisms to increase the supply of high-quality technological outputs

The quantity and quality of technological advances have a direct impact on industrial innovation, in terms of both level and performance. By increasing the supply of high-quality technological outputs, we will lay the foundation for integrated advancement in technological and industrial innovation. However, this hinges on the prerequisite of strengthening our capacity for basic research and original innovation. To boost China’s strength in strategic science and technology, we need to enhance the overall performance of our innovation system by improving the national laboratory system and better defining the roles and layout of national research institutes, advanced-level research universities, and leading high-tech enterprises. 

We must refine the system for mobilizing resources nationwide to secure new breakthroughs in core technologies in key fields. In areas that concern major national strategies, key projects, and public wellbeing, we need to create large-scale task forces, clearly define the leading entities with primary responsibility, and put in place management and command structures that feature both technical and administrative chains of command. In more market-driven sectors, we should adopt a competitive selection approach. We should give support and guidance to industry-leading players so they can organize collaborative research initiatives that bring together upstream and downstream stakeholders across both industrial and innovation chains. 

Investment mechanisms also need to be improved to include both competition-based support and stable funding. Local governments, sci-tech companies, and financial institutions should be encouraged to increase their research investments. We should also scale up government-enterprise joint funds and earmark a greater share of funding for basic research. These moves will ensure stable funding for major and forward-looking research projects over the long term.

Reinforcing the principal role of enterprises in innovation

Enterprises are both the main participants in economic activity and the main drivers of technological progress. With their ability to most directly respond to market demand and innovation needs, they are well-positioned to be the primary players in driving integrated advancement in technological and industrial innovation. 

We need to enhance the institutional frameworks for selecting, cultivating, and evaluating leading enterprises in the field of science and technology. We need to identify and cultivate a group of such enterprises capable of propelling technological innovation, steering their industries, and underpinning sector security. We should improve our mechanisms to enable greater participation by enterprises in decisions concerning national strategic sci-tech planning, flagship projects, and the formulation of important policies. Greater support should be provided to key enterprises spearheading or taking part in national sci-tech programs and the development of major innovation platforms. 

We should improve the mechanisms for developing small and medium sci-tech enterprises that use specialized and sophisticated technologies to produce novel and unique products and provide our backing for capable private enterprises to lead research projects in key areas such as industrial software and artificial intelligence. Support should also be offered to competitive enterprises to conduct trials on establishing and improving corporate R&D reserve funds, with governments at all levels formulating targeted preferential policies to facilitate the seeding of these funds and the cyclical reinvestment of returns.

Farmers carry out weed control operations using plant protection drones and self-propelled boom sprayers in Jiangzhuang Village, Chenbao Town, Jiangsu Province, March 13, 2025. XINHUA / PHOTO BY ZHOU SHEGEN

Building an efficient services system to facilitate the industrial application of technological advances

Industrial application is an important avenue for delivering integrated advancement in technological and industrial innovation. A sound and complete services system and institutional support are vital for ensuring technological advances that can be applied to industry more rapidly and efficiently. We need to enhance the national technology transfer system. We must move faster to build a number of proof-of-concept, pilot-scale testing, and application validation platforms in key industries and boost the supply of application-oriented services, including those for advancement identification, technology maturation, engineering scale-up, and reliability verification. 

We should carry out large-scale demonstrations on the application of new technologies, products, and scenarios and refine policies on the initial application of newly-developed equipment, materials, and software. We should also improve our failure tolerance mechanisms to better accommodate setbacks and failures caused by force majeure or unforeseen circumstances during the application of technological advances and domestically developed substitutes. We should encourage diverse approaches in the application of technological advances, including licensing transfers, equity contributions, share subscription agreements, and use-now-pay-later arrangements. Such steps will ensure that technological advances are transferred to and applied by enterprises at a faster pace. 

We should cultivate a group of leading sci-tech service enterprises and specialized, market-oriented, and platform-based technology transfer agencies to provide end-to-end support for the application of technological advances. We must also work to strengthen the organizational capacity of sci-tech intermediary agencies, expand the pool of technology managers, establish a national unified technology market, and put in place long-term mechanisms for the application of advanced and applicable technologies.

Cultivating patient capital

Patient capital is an important guarantee underpinning technological and industrial innovation. It has a vital role to play in promoting the research and application of core technologies in key fields and upgrading the industrial structure. 

We need to enhance full life-cycle financial services. We should encourage banks to increase credit loans to startups and provide support to angel and industrial investment funds. We should also look into the possibility of establishing special funds for proof-of-concept and pilot-scale testing initiatives. We need to expand the scope of collateral and pledge guarantees for growth-stage enterprises seeking financing and accelerate the development of intellectual property pledge financing, supply chain finance, and other services. We should support mature enterprises in raising capital through listings on capital markets such as the STAR market and the ChiNext market. 

We need to develop a full range of technological finance products and provide more comprehensive support through a variety of tools, including fiscal subsidies, tax incentives, and loan risk compensation. We should promote better linkages between financing from equity, loans, bonds, investments, and insurance and develop insurance products for expenses incurred during the application of technological advances and the process of starting businesses. We need to improve the performance evaluation system for the budgets of state capital operations, with a focus on the long-term benefits of technological innovation. Leveraging the functions of the national industry-finance cooperation platform, we should promote stronger cooperation with investment, securities, credit, insurance, and other institutions, to enhance the overall supply of services, such as those related to technical consulting, intellectual property, and technological finance.

Deepening institutional reforms for talent development

Talent is the primary resource and the most critical factor in technological and industrial innovation. It is vital that we place equal emphasis on education, science and technology, and talent development, and work faster to bolster our ability to nurture talent at home. We should promote alliances between universities and enterprises to facilitate the creation of joint research projects and, teaching models and drive the rollout of the modern apprenticeship system.

We need to improve the mechanisms for identifying, selecting, and training young innovators and ensure that young scientists and engineers are given strong support and important responsibilities. To further enhance talent evaluation and incentive mechanisms, we should establish a diversified evaluation system guided by innovation-related merit, capability, and contribution. We should also introduce a category-based talent evaluation system that combines academic assessments, market evaluations, and social appraisals so as to make evaluations more rigorous and targeted.

New income distribution methods should be explored for high-level talent, including negotiated salary systems and equity option incentives. We should develop various forms of medium and long term incentives, including corporate dividends, equity incentives, and employee stock ownership. These measures will ensure that talented personnel can enjoy a fair share of the returns of innovation in accordance with the law. Efforts should be made to remove barriers to talent mobility and establish smooth channels for talent exchanges between universities, research institutes, and enterprises. Furthermore, we should develop an internationally competitive system for attracting high-end talent and take proactive steps to recruit overseas professionals.

Li Xiaohong is President and Secretary of the CPC Leadership Group, Chinese Academy of Engineering.

(Originally appeared in Qiushi Journal, Chinese edition, No. 7, 2025)