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China’s New Science And Technology Progress Law 2021 – Technology – China

Written by corres2


China:

China’s New Science And Technology Progress Law 2021


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This is the second revision from the previous version of 2007,
and will come into force shortly on 1 January 2022.

This second revision has many high level statements covering
various aspects of promoting the progress of science and technology
in China, including basic research, applied research
transformation, motivating scientific and technical personnel, and
so on. This second revision has 117 articles, and some interesting
ones, in my view, are as below:

Article 32 – For projects funded by the PRC government,
the PRC government could use the resulting achievements with no
compensation to the owner

The above no compensation clause is triggered by the
following:

  • The achievement is not practiced within a reasonable time limit
    without proper reason; OR

  • For national security, national interest, and major social
    public interest.

While the above seems reasonable (the project is funded by the
PRC government at the end of the day), companies may have to be
careful about the involvement of such projects funded by the PRC
government, including co-development, if they do not wish their
work products to be used by the PRC government for free, in
particular everything under the sun could be related to national
security in China.

Many policies to encourage scientific
research

These include the below:

  • Article 41 – Tax incentives, including tax deduction, and reach
    equipment can be depreciated at an accelerated rate (for greater
    tax reduction).

  • Article 46 – Motivating state-owned enterprises, including
    factoring in innovation-related parameters at evaluation of the
    person in charge of such enterprises.

  • Article 86 – Increasing science and technology funding.
    Specifically, the rate of increase in such funding for science and
    technology from the state should be higher than the rate of
    increase in regular revenues. Further, the proportion of such
    funding with respect to GDP should be gradually increased.

  • Article 91 – Preference to use domestic developed products at
    government procurement.

  • Article 92 – Encourage IP mortgage

It appears that the PRC government is planning to put a lot of
resources in science and technology research. My only concern is
that people will always want to, and could, game the system for
their own personal benefits without actual contribution.

For Article 91, I am not sure whether this is in accordance with
the WTO rules, and will be grateful for comments from experts in
this area.

For Article 92, China has been a pioneer (I have an article on
this. If you are interested please ask me for a copy), which
however could be gamed easily by personal connections.

In any event, it is clear that China will be spending much more
in scientific research in the near future, including on fundamental
researches. The issue is, whether such spending could be turned
into actual results.

Originally Published by
the China National People’s Congress on 24 December
2021

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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