Government R&D Subsidies And Enterprises’ Innovation In China

China has replaced the first place of manufacturing industry of the United State,however,the ability of innovation is one of the most obvious weakness compared to those strong innovating power countries,such as Switzerland and USA.Meanwhile,manufacturing industry contributes more than 30% of the whole economic added value,operating a obvious evidence that it can be a main industry to support the economic.So Chinese Manufacturing 2025 made a centurial goal that translating China to a strong country in manufacturing area in order to improve the level of independent innovation and achieve the translation of upgrading,and R&D innovation can play an important role of above goal.R&D innovation almost depends on the enterprises themselves.Those activities have contrary on the profit of enterprises because of their externality and high risks which result the firms are unwilling to invest more on innovation.Among the world,finance budget is the main resource of R&D activities in almost all countries especially the high innovating countries and the main method is direct subsidies in early stage.This article based on both international situation and domestic situation,analyzing government R&D subsidies,R&D expenditures in manufacturing enterprises.To be more specific,this paper uses R&D expenditures and R&D researchers to measure R&D producing ability and uses the number of patent application and sales of new products to measure R&D activities.The conclusion that government R&D subsidies have been increased year by year in quantity aspect rather than quality aspect has been made in this paper.Moreover,the effect of government R&D subsidies is less than the subsidies to whole industry,and more less than the worldwide level.There are also some problems in enterprises R&D expenditures such as lack of input intensity and guidance of investment though the scale has increased,causing the low growth speed of both the number of patent application and sales of new products.This paper collects the data mentioned in the second paragraph and applies GMM model and panel negative binomial model.In the followings,the results that government R&D subsidies have positive influence on R&D expenditures and producing,and improve the whole level of R&D activities.Furthermore,the positive effect is more obvious in non stated-owned enterprises.Meanwhile,government R&D subsidies can convey positive signal to venture capital which can increase the probability of getting venture capital in enterprises and this influence is also more obvious in non state-owned firms.This paper also made suggestions such as making the full use of government R&D subsidies,balancing the state-owned enterprises and non state-owned enterprises of getting R&D subsidies,guiding the investment,maturing the system of applying subsidies and improving the quality of researchers to make funds have high efficiency,comparing the conclusions of empirical test and reality in China.This paper combines empirical results and reality in China to conclude effective suggestions to government subsidies.These suggestions includes improving the extent of support of government subsidies in manufacturing industry and the efficiency of subsidies funds under the constraints of government finance,and dividing government subsidies into two balance part for stated-owned enterprises and private firms.Secondly,encouraging the government to complete the regulations of government subsidies to supervise the use of funds and expand influence of pioneering example of enterprises and finance.Thirdly,achieving a mature system of production,research and experiment and enhancing the role of government subsidies among private enterprises appropriately.Meanwhile,the adjustment of the contents of government subsidies which takes the cultivation of experts into consideration and the support to medium and small enterprises is also important to change the phenomenon.However,this article has not done further research on the balance of providing subsidies in the two kinds of firms,and how to balance government R&D subsidies and investment is also a main problems need to be solved.