Global recession and the national system of innovation in China: ‘A Blessing in Disguise’?

Liu, Ju and Baskaran, Angathevar and Muchie, Mammo (2010) Global recession and the national system of innovation in China: ‘A Blessing in Disguise’? Working Paper. DIR & Department of Culture and Global Studies, Aalborg, Denmark.

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Since the early 1990s China’s economy has emerged one of the leading economies in the world due to factors such as judicial mix of policies of economic liberalisation and protection, and the process of globalisation driven
by the information and communication technologies (ICT) revolution, which brought closer the national economies across the globe as never before. China’s national system of innovation (NSI) has been evolving and has been adapting to the challenges posed particularly by the phenomenon of globalisation. China has benefitted significantly from the global economic boom driven by the globalisation and its economy has registered consistently GDP growth of over
10% since 2002 until the onset of global recession in 2008. The recession has slowed down the economy in every country in the world including China, triggered by the global credit crunch and slow down of trade. Major economies
across the world have introduced a series of measures in response to recession and to stem the tide of its negative impacts. These measures included: bank bailouts, rescue packages, fiscal stimuli, and, most crucially, monetary easing. Even with all these measures, we would argue that, some countries are likely to be affected more severely than others due to the differences in individual characteristics of their NSIs. That is, the recession is likely to have varying impacts in varying degrees on different economies in the world due to the differences among their NSIs.

In the case of China, to reduce the negative impacts of the global recession, it announced a fiscal stimulus package of $586b (14 per cent of GDP) in November 2008. This measure aimed to stimulate during 2009-10 the domestic demand by reducing taxes, investing in public infrastructure, and promoting activities in the areas such as health care and education, agriculture, low-income housing, water, electricity, transportation, environment, and technological
innovation. It is also designed to boost the income of the poor. In this context, we wish to investigate the following research questions: 1. How did the strengths and weakness of NSI help or hinder in coping with the adverse effects
of the recession in China? and conversely 2. What are the impacts of recession on the NSI in China? By employing secondary and descriptive data we attempt to investigate these questions.

It appears that China is the least affected emerging market by the global recession mainly due to the inherent strength of its NSI. Also, it appears that China has decided to use the global recession as an opportunity rather than an obstacle and as ‘blessing in disguise’ to introduce changes and re-engineer its economy and NSI.

Item Type: Monograph (Working Paper)
Additional Information: DIR Research Series, Working Paper No. 145 ISSN: 0904-8154
Research Areas: A. > Business School > Accounting and Finance
Item ID: 8598
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Depositing User: Dr Angathevar Baskaran
Date Deposited: 15 Mar 2012 16:16
Last Modified: 13 Oct 2016 14:24

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