Government-led performance standard and high-tech innovation in China : a case study of Zhongguancun high-tech development zone

Abstract

The object of the thesis is to gain an understanding of the role that Chinese government has played in promoting high-tech industries through performance standards and the output the policy generates. As a latecomer in the high-tech industries, Chinese government has made great efforts to catch up, and the performance standards for High and New Technology Enterprises (HNTEs) are essential to understand the government's strategy. The government sets up concrete, measurable and monitorable performance standards in high-tech development zones, obliges those enterprises to meet these requirement, and grant qualified enterprises a special legal status "HNTEs". This legal status is closely linked to preferential policies such as tax concession, and import substitution to "get the price wrong" and directly allocate resources to the HNTEs. I will use the high-tech development zone (HTDZ) as a basis for my research for two reasons. First, the HNTEs exist in the form of residence in the HTDZ. Second, the central government has viewed the HTDZ as core carrier for the strategic development of high and new technology industry, and will keep encourage industrial cluster towards the HTDZ1. My research question is simple, expressed in one sentence: Does the Chinese government succeed in promoting high-tech innovation by imposing the performance standard? Or more specific, does different performance standards lead to significant change of innovation output in HTDZ? Two methodologies- case study and regression analysis- are applied. I choose Zhongguancun (ZGC) HTDZ as my case study, review implemented laws on performance standard in ZGC and conduct a detailed comparison of two performance standards. Then regression model is used to test my hypothesis that the new performance standard has led to significant increase of the innovation output in ZGC. A brief summary Decision of the State Council on Cultivating and developing strategic high and new industry, of the regression analysis is that the performance standard is closely correlated with the intermediate innovation output, such as patent application and authorization, and its correlation with commercialized output is more complicated. Based on the result, I conduct two further hypothesis tests. First, I use the intermediate innovation output in Beijing excluding ZGC as a control group and it shows no evidence against the hypothesis that there is casual relationship between performance standard and significant growth of the intermediary innovation output. Second, I check the input level in ZGC, and it implies that the efficiency of high-tech innovation has been improved after the new performance standards.