The pace of investment in China's innovation economy is quickly picking up

China's focus on modernization and high-quality development, along with its efforts to simplify fiscal and monetary policies for research and development, have yielded positive economic results, creating high-quality jobs. Earlier this year, the State Council, China's Cabinet, issued a circular directing relevant departments and regional authorities to support the establishment of cutting-edge R&D centers throughout the country. As a result, both domestic and foreign investors have shifted their attention from a "Made in China" to a "Created in China" approach, demonstrating their commitment through tangible actions. Alongside the development of modern manufacturing facilities, advanced R&D centers are being built nationwide, fostering innovative solutions.

According to data released by the National Bureau of Statistics on Sept 18, China's investment in R&D increased by 10.1 percent in 2022 to reach 3.08 trillion yuan ($421.97 billion), continuing the trend of accelerated growth. The threshold of 1 trillion yuan for R&D investment was surpassed in 2012 and 2 trillion yuan in 2019. It means that it only took three years to increase investment from 2 trillion yuan to 3 trillion yuan, demonstrating the effectiveness of China's innovation development strategy.

The positive trend in high-tech investment will continue as the country's 14th Five-Year Plan (2021-25) projects that the country should increase R&D spending by more than 7 percent annually during the period. A report by McKinsey showed that such a growth target would put the country on track to become the world's largest in terms of R&D spending.

Such measures are essential for creating new high-quality jobs, as the country prioritizes creating employment opportunities, especially for young people. For example, by the middle of this year, the unemployment rate for people aged 16 to 24 in urban areas reached 21.3 percent, the highest since 2018. To address this problem, the government has promised several initiatives to support private businesses, which typically employ a large proportion of the younger workforce.

According to the China Employment Research Institute and online recruitment platform Zhaopin, the CIER index, a key indicator of China's labor market, stood at 0.57 in Q3 of 2022, a decline from 1.24 in 2021 and 1.38 in 2020. A figure below 1 means there are more job applicants than market demand, suggesting challenging job competition and low job-seeker confidence.

Making significant strides in enhancing the investment environment and creating fresh employment opportunities is imperative to tackling the nation's major issues. To assess the current situation in these areas, it is essential to review the best practices that were recently implemented. Let us take a closer look at some of these examples.

The country's leading auto company, BYD, hired 31,800 new college graduates this year. But what is particularly noteworthy is the quality of new jobs. Of those new hires, 61.3 percent have master's or doctoral degrees, and 80.8 percent have been employed within the R&D field. Around 700 to 800 are from top Chinese universities such as Peking University and Tsinghua University.

The company planned to recruit new employees in 37 cities across 50 different job categories, including specialities like automation, mechanical engineering, electrical engineering and information technology. The initial monthly wage for these roles can go up to 50,000 yuan. Based on the official information, the company is collaborating on scientific projects and providing training for prospective employees in 14 different fields at 16 postdoctoral programs. These efforts involve partnerships with esteemed institutions like the Shenzhen Institute of Advanced Technology of the Chinese Academy of Sciences, China University of Science and Technology and Tsinghua University. In the last two decades, the company has set up 11 research institutes and allocated over 100 billion yuan for R&D.

China is renowned for its rapidly growing local high-tech companies. However, foreign investors also strive to keep up with their local counterparts. Toyota Motor Corporation announced on July 31 the plan to combine its R&D resources in China, focusing on creating the latest electric vehicles. Engineers from its three Chinese factories will be transferred to a new research institute in Changshu, Jiangsu province, where the main priority will be the development of battery, hybrid and plug-in hybrid models.

There are many other examples of global investments in the R&D industry in China. In February, LG Chem Ltd opened a technology center in Wuxi, Jiangsu province, which cost $30 million. The Volkswagen Group has established a technology firm in Hefei, Anhui province, for new energy innovation and intelligent connected vehicles. Unilever has opened an R&D facility in Tianjin, utilizing China's smart manufacturing technology to improve production speed and transportation efficiency. Danfoss, the global refrigeration giant, has opened its most advanced and largest research and testing center for scroll compressors in Tianjin. Other companies such as Xylem, Schneider Electric and Volvo have also established their R&D centers in China to leverage the country's innovative capabilities and diverse industrial talent.

These examples show that the digital and high-tech sectors of the economy are proliferating. They drive economic growth, create highly skilled jobs, and increase the country's budget revenues. It is becoming more evident that economic development in the country should focus on modernization and high-quality development. This approach must continue to expand and deepen for a better future.

The author is former prime minister of the Kyrgyz Republic and a distinguished professor at the Belt and Road School at Beijing Normal University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.