The economics of science

The economics of science

science and technology ( s & t ) reforms in China have neatly dovetailed into a dramatic transformation of the country's economy. A good case in point is the Fugou county in central China's Henan province, once a dusty landscape, where 70 per cent of the land area comprises sand and saline-alkali soil.

Today, the county is famous for its efficient intensive agriculture and is called the agricultural 'Red Banner' in the province. The production mode has changed from the unitary wheat-cotton interplanting to about 10 types of intercropping and interplanting. There are other changes too in Fugou county. In the early ' 80s, agricultural scientists were regarded as 'gods of wealth' by local people who vied for their competencies. Today, many Fugou farmers have the same expertise.

Scientific reform (formally launched in 1985) was preceded by economic reform in 1978 when the central committee of the Communist Party of China decided to open the floodgates to foreign investment. "Without solid backing from s & t , there is no socialist modernisation," declared the Chinese President Jiang Zemin at the third national s & t conference held at Beijing in May 1995, a view that was echoed by Deng Xiaoping, the architect of China's reforms ( Down To Earth , Vol 4, No 6).

In the s & t sector, the reforms cover management, fund allocations, the legal system and the national defence s & t policy. The research institutes now concentrate on turning their findings into real productive forces and assume autonomous responsibility for profits, losses and expansion. Research units with better economic results are encouraged while those with poor working efficiency are closed or merged with the better performers.

Rural technical education and service organisations now charge a fee for what used to be free technical services earlier; from being units subordinate to the government, they are today independent technical and economic entities. By the end of 1991, when the fund-allocating system reform was completed, the operational fund allocations for development-oriented research institutes, both at the central and at the provincial and municipal levels, were cut by half.

The reform of the national defence s & t system involves the transfer of military industry technology to civilian industries. Among the more successful of such transfers has been at China's Southwest Weapons Industry Bureau, with 57 affiliates, 200,000 employees and fixed assets of us $500 million. The firm, which has made some headway in changing over to peaceful uses, has had an output value of non-military products reaching nearly us $1.5 billion accounting for 96 per cent of the bureau's total, according to a recent press report. Similarly, China's Aerospace Industry Corporation set up a committee at the end of 1995 for the purpose of accelerating the utilisation of aerospace technology for civilian purposes.
Lucre leaps The new emphasis on s & t in the country is paying off. China's scientific research institutes have for the first time exceeded their total allocated operational funds ( us $500 million) for science at various levels. There are other signs too of the integration of s & t with the economy having yielded rich dividends; for instance, the past five years have seen the development of 30,000 new products, over 80 per cent of which have been put into production.

In Shanghai, one of China's major scientific bases, over 11,000 research achievements were reported during the Eighth Five-Year Plan (1991-95). In 1991, only 30.8 per cent of these were used in commercial production; in 1995, this figure rose to over 90 per cent. Statistics also reveal that 7,864 scientific findings were applied in varying degrees over the past five years in the city, adding around us $5.4 billion to output value, 50 per cent more than that of the Seventh Five Year Plan (1986-1990).

With such massive changes sweeping the Chinese s & t establishment, it is not surprising that the profile of scientific workers has changed. According to many in the Chinese s & t circles, scientific workers, once "worms in a cage", have transformed themselves into "dragons" since realising their true potential. As statistics show, over the past decade, more than half of the 17 million scientific workers in China were mobilised into the forefront of economic reconstruction moves. Many of them have changed their status of working for bosses to becoming their own bosses. And those who work in the field earn much more than those working in scientific research units.

The town of Zhou Koudian in north-west of Beijing, also known as China's Silicon Valley, comes to mind in this context. All the 148 hi-tech companies set up here in this year are owned by scientific workers who used to work earlier in higher educational institutions and research units belonging to the Chinese Academy of Science. Sixty per cent of the employees in these hi-tech units are scientific workers who gave up official jobs. The overlying trend observed is that more and more scientists and technicians are leaving the cities for towns and rural areas, moving from state enterprises to collectively-owned or non-governmental enterprises.

The Chinese government's high profile efforts to give a boost to s & t seems to have caught the people's imagination. According to a sample survey conducted by the China s & t Association in mid-1985, a majority of the Chinese population are enthusiastic and optimistic about s & t and trust scientific workers and institutions. The survey showed that 76.3 per cent of the respondents held that s & t benefits society, and the majority agreed that "development of the s & t sector has made our lives more convenient, comfortable and healthy, and the task of scientific workers is to make life better."

s & t has also topped as a choice for the most satisfying profession. When respondents were asked to select the 10 most prestigious professions, scientific work was put at the top of the list by 60.8 per cent, followed by a career in medicine. Most respondents said that they wanted their children to become scientific workers. This represents a dramatic reversal from the past when a scientific career was held in very low esteem by the Chinese as it consigned them to eternal poverty.

By the end of 1994, large and medium- sized enterprises had 12,500 development institutes, an increase of 54 per cent over the figure at the end of the Seventh Five Year Plan. The beneficial impact of these institutes is that the pace of turning s & t findings into productive forces can be quickened as the enterprises develop new ideas to meet their needs. Another significant factor is that the relatively new credit cooperatives and investment firms, numbering about 90, issued us $700 million in loans for s & t in 1994. The government's 'vitalising city' strategy embracing the cause of s & t had, by the end of 1994, been adopted by 400 cities or over two-thirds of China's 570 cities.

Obstacles en route
However, there are several glitches that need to be ironed out before s&t can be completely integrated with the economy. Although the national economy has developed steadily, it has faced an overall imbalance of the total volume of supply and demand, irrational industrial structures and inflation. As a result, the reform of the science management system is caught in a tight environment of economic development. Another obstacle is that the theory of s & t being the primary productive force has not fully percolated to the grassroots level; s & t bodies at the basic level are also weak. The need to further hone the s & t input into the economy is evident from statistics. In 1993, the country's total research and development expenditure was just 0.62 per cent of its gross national product, less than a third of that in developed countries and considerably lower even in comparison to other developing countries.

According to s & t development schemes for the Ninth Five-Year Plan (1996-2000) and through the year 2010, s & t development in agriculture has been given top priority. Major industries listed in the plan are information, bio-engineering, new materials, new energy and ocean-related businesses. Another change on the anvil is that research into new branches of science, frontier science and applied basic science as well as soft science will be strengthened in order to provide a scientific and technological driving force for future economic development.

As the integration of s & t with the economy gets underway, there are many in scientific circles who believe that China has made a correct choice by encouraging scientists and technicians to work in factories and rural areas for improving the national economy. Zhou Guangzhao, president, Chinese Academy of Science, said, "I believe that a golden age for China's scientific development is coming and great developments will take place as the country continuously improves its scientific and technological conditions."