On China's Tax Incentives For R & D Investment

Economic researches show that technology Progress is the source of long-run national economic growth. Whereas a new high is scored in China's economic aggregates, there comes the embarrassments of the economy structure and development quality .To come up with the opportunity and challenge that the technology innovation brings, our strategy choice in the transformation Period is to take great effort to develop science and technology and enhance independence innovation ability. Economists generally agree that the market will fail to provide sufficient quantities of R&D as it has some characteristics of a public good. Therefor, using the fiscal system to stimulate R&D has became a policy choice of the government. Among these fiscal tools, tax incentive is widely applied across countries including China, because of its high transparency clarity, universality and nondiscrimination. Under this history background, a study which evaluates the effectivity of the tax incentives overall and deeply will contribute to establishing the technology innovation tax policy and increasing the incentive effect of the tax incentive to R&D.We make the comparison of the framework of tax incentive to R&D and its latest development between China and OECD countries; and carry out the empirical analysis basing on R&D Price analysis-Model on the effects of China's tax incentive policies sourcing from the Data Base of Industry Enterprises Statistics. From the conclusions we get, positive effects of the incentive policies are confirmed, but the price elasticity of R&D investment is not notable. And in the end of this article, we cite some suggestions on the further improvement of China's tax incentive polices.