China's transformation into a nation of innovation requires a comprehensive overhaul of its current research and development (R&D) systems. Among all necessary reforms, introduction of strong and effective incentives for innovative talents might be the single most important one.

The national conference on science and technology, which closed yesterday in Beijing, has driven home both the Chinese Government's resolution and the necessity to embark on a new road of innovation.

For a resource-hungry developing nation like China, innovation is crucial to raising the overall efficiency of the national economy, thus sustaining its economic and social progress.

As the world's most populous country, China can surely not be numerically lacking in talent.

Currently the country boasts an army of 32 million scientists and technicians.

Rapidly expanding enrolment for higher education in recent years also means that China has been projected to soon replace the United States as the largest producer of new PhDs in the world.

A large pool of talented persons is a precondition to building China into an innovative country. But it is not sufficient.

To significantly boost our overall scientific and technological strength, the country must make better use of its brainpower.

In other words, whether or not the country's scientific and technological talents are effectively motivated to work creatively decides how much they will contribute to the country.

China has achieved conspicuous technological breakthroughs in a number of key projects in recent years. It shows that concentration of talented people in government-supported research institutes does help speed up innovation in targeted areas.

As the country goes all out to enhance its technological competitiveness, more government-led R&D investment will be critical to advancement in key and frontier technologies.

However, as is true in Chinese and overseas markets, multinational companies with outstanding innovative capabilities have risen as an increasingly important part of developed countries' national strength.

In addition to huge government expenditure, innovation-driven economies like Japan and the United States are typified by hefty corporate investment in R&D.

Corporate-funded innovation can better meet market demand and will thus be promptly rewarded by the market.

Unfortunately, innovation is not so widely embraced as a lifeline by Chinese enterprises. Excessive reliance on low-cost labour has prevented many of them from investing in self-owned technologies, their real core competitive edges.

As the domestic market further opens and Chinese enterprises go global, innovation-powered competition will only intensify.

Hence, it is of far-reaching significance to encourage domestic enterprises to carry out systematic, commercialized and sustainable R&D activities.

To that end, policy-makers need to come up with a set of incentive measures as soon as possible.

For an innovator, no matter a person or an enterprise, strengthened protection of intellectual property rights is a must.

Preferential tax policies can also boost innovators' enthusiasm to think and work more productively.

If everyone in the country is inspired to be innovative, China will not be far away from achieving its new goal.

(China Daily January 12, 2006)