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Innovation in China's Energy Sector
Working Paper

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Program on Energy and Sustainable Development Working Paper #61

March 2007

The performance of China's national system of innovation has improved since reforms began in 1978, but reform impact by sector is not well characterized. This case study dentifies factors affecting patterns of technological innovation and adoption in eight industries in China's energy sector (coal, oil and non-conventional hydrocarbons, natural gas, nuclear power, electric power, renewable sources, automobiles, and motor systems).

Innovation performance is strongest in industries that have experienced institutional transformation and growing market competition, whereas in industries where the pre-reform legacy of central control, weak intellectual property protection, and low levels of corporate R&D persists, innovation is lagging. Government initiatives to mitigate urban air pollution by strengthening environmental regulations and reduce dependence on imported oil by funding alternatives are also influencing innovation patterns. Based on current performance of the innovation system and examples of collaboration in the energy sector, China's ability to be a productive partner in international collaborative R&D efforts depends on the participation of local developers, domestic policy support for collaboration, and the strength of China's own R&D enterprise.

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