« When China awakes, the whole world will tremble ». This is what Alain Peyrefetitte, the writer and French political figure, prophesized in 1973. His thesis was that, as soon as China managed to master enough technology, it would dominate trade and impose itself on the world. More than 40 years later, the reality of this is all too real, with China now being the world’s biggest trading nation and largest exporter.
China has been incentivizing its economy to move from a manufacturing powerbase to a nation of innovation. Over the last few decades, the government has been allocating both tax incentives and grants to encourage R&D in Chinese enterprises. In 2017, China was offering R&D tax relief on qualifying activities as broad reaching as Stock options and outsourcing of up to 50% for large businesses and 75% for SMEs.
Such incentives and many more have been stimulating the Chinese economy to produce technologically advanced products in all areas: mobile technology, domestic appliances medical equipment, automotive etc.
China has been incentivizing its economy to move from a manufacturing power-base to a nation of innovation.
Since the beginning of the year the US administration has imposed a series of tariffs on Imported Chinese products to create a ‘fairer’ playing field. They have threatened to impose even more tariffs on Chinese imports if China does not change its intellectual property policies and subsidies to Chinese companies. Meanwhile, other measures such as a major corporate tax reform are being put in place by the Trump Administration to boost domestic investment.
EU’s support to innovation is not only relevant, it is vital…
Against this backdrop of international trade, the EU is relying more and more on innovation and technological ownership and providing fiscal incentives to support R&D in European companies. 25 of the EU members are strengthening their R&D incentive plans this year to stimulate business innovation.
Today, for every Euro invested in R&D in the EU, member states give an average of 12 cents subsidy (OECD). Given the positive impact these incentives have had in China the EU needs to develop its own approach to become a major innovation hub.