Chapter III Technological Progress of Enterprises

Article 30 The State shall establish a market-oriented system for technological innovation, in which enterprises play the leading role and which combines the efforts of enterprises with the efforts of scientific research and technological development institutions and of the institutions of higher education, guide and support enterprises in their technological innovation, and bring into play the leading role of enterprises in technological innovation.

Article 31 Scientific and technological plans related to industrial development formulated by people’s governments at or above the county level and the relevant departments under them shall embody the need of industrial development.

When deciding on projects to be covered by scientific and technological plans, people’s governments at or above the county level and the relevant departments under them shall encourage enterprises to participate in competition on an equal footing and to launch such projects into practice; and with respect to projects with definite prospects of market application, they shall encourage enterprises to join efforts with scientific research and technological development institutions and institutions of higher education in launching such projects.

Article 32 The State shall encourage enterprises to do the following:

(1) setting up internal scientific research and technological development institutions;

(2) establishing scientific research and technological development institutions together with other enterprises or with scientific research and technological development institutions or institutions of higher education, or entrusting institutions with such research and development, or by other means;

(3) training, recruiting, or employing scientists and technicians;

(4) jointing efforts with scientific research and technological development institutions, institutions of higher education, occupational colleges and schools or training centers in providing training to people so that they become specialized technicians or highly skilled persons, and recruiting graduates of institutions of higher education to work in the enterprises;

(5) setting up post-doctoral working stations according to law; and

(6) conducting popularization of science and technology in combination with technological innovation and training in skills among workers, and setting up centers or providing facilities for popularizing science and technology and keeping them open to the general public.

Article 33 The State shall encourage enterprises to increase their input in research and development and in technological innovation, to determine the subjects of research and development independently and to carry out activities for technological innovation.

The State shall encourage enterprises to digest, absorb and recreate the technologies introduced.

The enterprises’ expenses for research and development arising from their development of new technologies, products and techniques shall, in accordance with the relevant regulations of the State, be listed before tax and be deducted accumulatively, and the depreciation of the instruments and equipment of enterprises used for scientific research and technological development may be accelerated.

Article 34 The fund that the State establishes with government funds shall provide discount interest and guaranty to the loans received by enterprises for independent innovation and for application of the achievements in production.

Policy-oriented financial institutions shall, within the scope of their business, offer special aid to enterprises’ projects of independent innovation encouraged by the State.

Article 35 The State shall improve the capital market, establish a sound mechanism for promoting independent innovation and support the high and new technology enterprises that meet the conditions to push forward their own development by taking advantage of the capital market.

The State shall encourage the establishment of the fund for guiding investment in pioneering projects to guide the flow of non-government funds towards the enterprises undertaking pioneering projects by way of supporting their development in that direction.

Article 36 The following enterprises shall, in accordance with the relevant regulations of the State, enjoy preferential tax policies:

(1) enterprises engaged in research, development and manufacture of high and new technology products;

(2) enterprises investing in pioneering projects undertaken by small and medium-sized high and new technology enterprises; and

(3) other enterprises related to progress of science and technology, as provided for by laws or administrative regulations.

Article 37 The State shall offer support to the erection of public platforms for research and development and the development of intermediaries for science and technology.

The public platforms for research and development and the intermediaries for science and technology shall offer services to small and medium-sized enterprises for their technological innovation.

Article 38 The State shall protect the intellectual property rights obtained by enterprises from research and development.

Enterprises shall ceaselessly increase their ability to apply, protect and manage their intellectual property rights and their ability to make independent innovation and take part in market competition.

Article 39 State-owned enterprises shall establish a sound allocation system conducive to technological innovation and improve their mechanisms of stimulation and restraint.

Leading persons of State-owned enterprises shall be responsible for technological progress of the enterprises. The input of State-owned enterprises into renovation, the increase of their ability to innovate and the achievements of their innovation shall be included in the performance appraisal of the leading persons of the enterprises.

Article 40 Local people’s governments at or above the county level and the relevant departments under them shall create a market environment for fair competition, in order to help promote technological progress of enterprises.

The relevant departments under the State Council and the people’s governments of provinces, autonomous regions and municipalities under the Central Government shall, by adopting such policies as the industrial, financial, energy and environmental protection policies, give guidance to enterprises and urge them to make researches and develop new technologies, products and techniques, to conduct technological transformation and equipment updating, to eliminate outdated equipment and techniques, and to stop manufacturing products with outdated techniques.

Chapter IV Scientific Research and Technological Development Institutions

Article 41 The State shall make overall plans for the geographical distribution of scientific research and technological development institutions, and establish and improve the system for scientific research and technological development. Article 42 Citizens, legal persons or other organizations shall have the right to establish scientific research and technological development institutions according to law. Overseas organizations or individuals may independently establish scientific research and technological development institutions within the territory of China according to law, and they may establish such institutions jointly with organizations or individuals within the territory of China according to law.

Scientific research and technological development institutions engaged in basic research, in research of frontier technology, or technological research for public welfare may be established with government funds. The establishment of scientific research and technological development institutions with government funds shall be arranged in an optimized manner to avoid redundancy; and redundant scientific research and technological development institutions shall be reorganized.

Scientific research and technological development institutions and institutions of higher education may, according to law, set up post-doctoral working stations. Scientific research and technological development institutions may set up their branches abroad according to law. Article 43 Scientific research and technological development institutions shall enjoy the following rights:

(1) organizing or participating in academic activities according to law;

(2) independently determining the orientations and projects of their scientific research and technological development in accordance with the relevant regulations of the State, and independently deciding on the management of their internal affairs, such as the use of their funds, structural setup, and personnel recruitment and rational flow;

(3) conducting scientific research and technological development jointly with other scientific research and technological development institutions, institutions of higher education and enterprises;

(4) obtaining public donations and financial aid; and

(5) other rights as provided for in laws or administrative regulations.

Article 44 scientific researches and technological development institutions shall, in accordance with the provisions of their articles of association, conduct activities of scientific research and technological development; they shall not practice fraud in scientific and technological activities or participate in or support superstition.

Scientific research and technological development conducted by scientific research and technological development institutions set up with government funds shall serve to attain the goals of the State and serve public interests; and where conditions permit, the centers or facilities for popularization of science and technology shall be open to the public by way of popularizing science and technology.

Article 45 Scientific research and technological development institutions set up with government funds shall establish a system for modern institutes characterized by defined duties, scientific appraisal, openness and orderliness and standardized management, apply the system under which the presidents or heads of the institutes assume responsibility, establish the system under which scientific and technological commissions offer advice and the system under which the congresses of the workers and staff exercise supervision, and they shall invite experts of other institutions to participate in management as a means of accepting public supervision; and the competitive mechanism shall be introduced for recruitment of presidents or heads of institutes.

Article 46 Scientific research and technological development institutions established with government funds shall set up a mechanism conducive to sharing of scientific and technological resources in order to facilitate effective use of such resources.

Article 47 The State shall encourage non-government entities to set up scientific research and technological development institutions independently and shall guarantee inviolability of their legitimate rights and interests.

The scientific research and technological development institutions established by non-government entities shall, in accordance with the relevant regulations of the State, have the right to participate in launching the projects supported by the scientific and technological fund set up with government funds and the projects covered by scientific and technological plans and to compete in this respect on an equal footing.

Nonprofit scientific research and technological development institutions established by non-government entities shall enjoy preferential tax policies in accordance with the relevant regulations of the State.