Australia's innovative future could get a boost from China's Five-Year Plan

Technology-enabled innovation is set to become a core goal of China’s 13th Five-Year Plan (due to be released in 2016). This comes as Australian Prime Minister Malcolm Turnbull increases the rhetoric promoting an innovation policy agenda.

Quality growth that lends itself to long-term sustainability is the aim of both China and Australia. But can this be achieved?

China’s performance under its current plan encourages a sense of optimism. Its annual R&D spend of US$200 billion has grown four times in just two decades to 2.1% of GDP. This provides hope for the next plan’s success, and should generate interest from an Australian government set on technologically creative development.

Is China’s trajectory Australia’s opportunity?

In the first nine months of 2015, 3.16 million companies were established in China – an increase of about 20% from last year. The result of progress of this calibre is that China’s technology-centred innovation is embracing new business models.

However, one of China’s innovation aspirations is to see itself strategically placed across the globe – look at President Xi Jinping’s One Belt, One Road initiative. Beyond the geopolitics of this approach, China is aiming to achieve networks of interconnectivity and co-operation through trade, investment and people flow.

So where does Australia find itself in the developments that continue to emerge from China?

For one, Australia is still caught up in selling its wares to China – whether iron ore, agricultural products or education services. This approach may be useful, but it can no longer sustain long-term growth.

Turnbull noted during the recent Australia-China Business Week that China’s upcoming Five-Year Plan would challenge Australia’s innovation policy. Improvements to China’s development approach would cause Australia to adjust the nation’s dependency on commodities trade. An increasing focus on innovation will require Australia to transform the partnership with China.

China has transformed itself to not only consume but to have an appetite for designing and producing new and innovative products, services and technologies. Australia must construct policy around innovation to fit these changes – it has always had the capability to design, deliver and service new markets. However, its age-old sales and marketing approach needs to be refreshed.

Australia needs to approach its innovation mantra differently when working with China. Not only must it innovate its services for China, but it must also work with China to tackle alternative markets.

At the political level, the Turnbull government needs to work towards developing a bipartisan innovation statement – one that isn’t hostage to election cycles. Australia needs a steady trajectory for the foreseeable future, and political leadership is paramount to making this journey.

Using the same old approaches and expecting a different result is a mark of Australia’s complacency. The federal government must embrace different forms of engagement from the outset. By doing so, it will create its niche as an integral partner to China, while becoming far more aggressive where competition is concerned.

It is uncertain whether the results of such an approach are guaranteed – but it’s a step in the right direction.

Enablers of innovation

Australia does not have to emulate the “chutzpah” of Israel, or India’s “jugaad” – these nations needed a powerful catch-cry to embrace risk-taking and change. But the “Make in India” campaign has encouraged companies to manufacture in India. Such characteristics must become the backbone of Australia’s innovation.

The good news is that this doesn’t need to be achieved single-handedly. Turnbull has an opportunity to create a collaborative partnership with new players, such as China, and jointly shape the future.

The role of Australia’s government in an innovative future is the enabler. Mobilisation towards a different and better future is needed. While the rhetoric around innovation and growth has received a much-needed boost, the proof of change is always in action. The pace at which the public service can walk the talk will be interesting to watch – we are already starting to hear about “skunkworks” to generate fresh thinking in the public service.

The Turnbull government has to change the policy settings. Risk-takers need incentives, and the creators of new jobs should be rewarded. Singapore’s Productivity and Innovation Credit scheme is a setting Australia can draw upon.

But will Turnbull’s rhetoric become stale words or active change? We will only know it is the latter if we see an open and creative partnership develop between two countries with innovation-led ambitions.

This article is part of our series Why innovation matters. You can read more articles on the topic here.

Christopher Vas has received research funding in the past from the Australian Government and the Singapore Manufacturing Federation.