China's National Innovation System

China abruptly became the second largest economy and, at the same time, the second largest R&Dspender in the world, aiming openly to become an innovation powerhouse that holds theedge in critical technologies. The significant consequences on global trade flows,international security, governance and economy are increasingly drawing theattention of policymakers, academics, and industry leaders worldwide. The studyhighlights the main characteristics and trends of the national innovation systemin China, as well as its strengths, challenges, and prospects. It examines in detailpublic policies, funding mechanisms for innovation, inbound and outbound FDI,IPR mechanisms, public perception towards technology, priority industries, andother factors. It thus identifies the main innovative actors of the system, includinggovernment, industry and research institutions, highlighting the patterns ofinteraction among them. The findings are showcased in a focused case study onthe AI industry and further serve to advance policy recommendations for the EU. Traditionally, China has made more effort and has achieved better results inunderstanding and learning from 'the West'. It is now vital for other countries tobetter understand China.