State-owned enterprises in China’s transition to an innovation-driven economy

Introduction China’s economic reform and opening-up to the outside world over the past three decades have given rise to the spectacular economic growth, often dubbed the China Miracle. The mode of export-led and low cost manufacturing-based growth, however, has been severely tested in the last few years, particularly since the global financial crisis occurred in 2008, and is widely regarded as unsustainable. Facing the stagnating export markets in the US, Japan and Europe externally and rising labor costs and growing environmental constraints internally, China has experienced more than ever an urgent need to overhaul its growth model. At the core of this effort has been a new campaign to transform China into an innovation-driven economy.