Li Zheng: Enhancing the Innovation Capability of State-Owned Enterprises
State-owned enterprises (SOEs) are the important material and political foundations of socialism with Chinese characteristics. General Secretary Xi Jinping attaches great importance to the reform and development of SOEs and has provided profound expositions in multiple works within the first volume of the Selected Economic Writings of Xi Jinping. For instance, the "Explanation of the 'Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform'" points out: "State-owned enterprises are an important force for advancing national modernization and safeguarding the common interests of the people." Furthermore, "Unswervingly Making State-Owned Enterprises Stronger, Quality-Oriented, and Larger" notes: "Our country's SOEs have made historic contributions and performed illustrious service for our national economic and social development, scientific and technological progress, national defense construction, and the improvement of people's livelihoods! Their contributions cannot be overlooked." Recently, General Secretary Xi Jinping issued important instructions on the work of central enterprises, emphasizing that they must "base themselves on the real economy, strengthen breakthroughs in key core technologies, and promote the deep integration of scientific and technological innovation with industrial innovation." To implement the spirit of General Secretary Xi Jinping's important speeches and the decision-making deployments of the Party Central Committee, it is necessary to push SOEs to further strengthen their sense of mission and responsibility, continue to enhance their innovation capabilities, and play a greater role in achieving high-level scientific and technological self-reliance.
The Rich Connotations and Significant Meaning of Enhancing SOE Innovation Capabilities
In "Grasp the New Development Stage, Implement the New Development Philosophy, and Build a New Development Pattern," General Secretary Xi Jinping pointed out: "Central enterprises and other SOEs must courageously shoulder heavy burdens, dare to lead the charge, and strive to be the 'source' [1] of original technologies and the 'chain leaders' [2] of modern industrial chains." In his important instructions on the work of central enterprises, he emphasized: "On the new journey, central enterprises must fully recognize the duties and missions they shoulder, better serve the overall work of the Party and the state, serve the high-quality development of the economy and society, serve the protection and improvement of people's livelihoods, bravely shoulder social responsibilities, and contribute greater strength to the construction of Chinese-path modernization." These important expositions clarify the functional positioning of SOEs in the New Era and point the way forward for enhancing their innovation capabilities.
Enterprises are the main subjects of innovation. Generally speaking, enterprise innovation capability refers to the ability and level of an enterprise to systematically complete innovation activities. It covers the efficacy and efficiency manifested in every link and stage of innovation, including the guidance of innovation strategy, the possession and command of innovation resources, the allocation and utilization of those resources, and the acquisition of innovation results. In a broad sense, enterprise innovation capability includes not only technical innovation but also non-technical innovation, such as innovation in products, branding, organization, and business models. In a narrow sense, it refers specifically to an enterprise's scientific and technological (S&T) innovation capability—the ability to move from knowledge production to knowledge management, application, and innovation; from scientific innovation to technical innovation and then to the transformation of S&T achievements; and the ability to promote product and industrial innovation through S&T innovation while effectively absorbing, mastering, and improving existing technologies to create new ones. China's SOEs are the enterprises of the state and the people. Their innovation capability includes both narrow S&T innovation and a comprehensive innovation capacity that encompasses broad institutional, managerial, and market innovation. It is a multi-dimensional, complex systemic capacity that enables SOEs to realize their innovation strategies.
From an international comparative perspective, Western capitalist countries also have SOEs, but these mostly function only to compensate for market failures and are generally not an important component of national innovation systems. In contrast, China's SOEs are an important pillar and relying force for our Party’s governance and national rejuvenation. They are the "ballast" of the national economy, the "national team" of S&T innovation, the "bellwether" of industrial development, and the "main force" for maintaining security. They play a skeletal and supportive role in China's economic and social development. Innovation in China’s SOEs is an inherent requirement for strengthening core functions, enhancing core competitiveness, and building world-class enterprises. It is also an internal requirement for increasing the overall efficiency of the national innovation system and promoting high-quality development. It directly relates to whether the superiorities of the basic socialist economic system can be fully realized and demonstrated, and it concerns the vitality of our socialist system and the smooth advancement of Chinese-path modernization.
From a macroscopic perspective, the world is undergoing profound changes unseen in a century at an accelerated pace; a new round of S&T revolution and industrial transformation is developing in depth, and competition among major powers is becoming increasingly fierce. To comprehensively advance the great cause of building a strong country and national rejuvenation through Chinese-path modernization, we urgently need to seize opportunities, accelerate the achievement of high-level S&T self-reliance, develop new quality productive forces, and firmly grasp the initiative in international competition. As important subjects of S&T innovation and a vital component of the national strategic S&T force, SOE innovation is of great significance for improving the overall efficiency of the national innovation system and comprehensively strengthening independent innovation. It is also a strategic necessity for coordinating development and security and building a new development pattern. Particularly in key areas and crucial links, SOEs' improvement of independent innovation and their efforts to tackle key core technologies and "chokehold" [3] technologies can enhance the resilience and security levels of industrial and supply chains while opening up greater space and providing security guarantees for national economic development.
From a mesoscopic perspective, SOEs account for a high proportion of China’s manufacturing and real economy, holding important positions in fields such as equipment manufacturing, energy, and chemicals. To a certain extent, the innovation capability of SOEs determines the foundation and level of manufacturing and real economy development. Currently, China is accelerating the construction of a modern industrial system supported by the real economy. We must go against the current to achieve rapid breakthroughs in areas of weakness, while also going with the flow to become stronger and larger in areas of strength. Enhancing SOE innovation capability can drive the common development of upstream and downstream enterprises by breaking through common industrial technologies, thereby improving basic industrial capabilities and the modernization level of industrial chains. It can also help promote the transformation of industries toward high-end, intelligent, and green development, accelerating the construction of a modern industrial system and consolidating the foundation of the real economy.
From a microscopic perspective, innovation is the core driving force of enterprise development, capable of enhancing an enterprise's market competitiveness and adaptability. Most world-class enterprises possess strong innovation capabilities and high innovation levels. On the new journey in the New Era, innovation is an important prerequisite for SOEs to better fulfill their duties and missions; it also provides key support for enhancing their competitiveness, control, influence, and risk-resistance capacity. Only by persisting in promoting innovation through reform and focusing on solving deep-seated problems that restrict enterprise development can we strengthen the core functions of SOEs, enhance their core competitiveness, accelerate the building of world-class enterprises, and truly realize a transformation in quality, efficiency, and momentum, thereby making SOEs and state-owned capital stronger, quality-oriented, and larger.
Significant Improvement in SOE Innovation During the 14th Five-Year Plan Period
In "Unswervingly Making State-Owned Enterprises Stronger, Quality-Oriented, and Larger," General Secretary Xi Jinping required that we "build SOEs well." In "Accelerate the Construction of a New Development Pattern and Strive to Promote High-Quality Development," he pointed out the need to "deepen the reform of state-owned capital and SOEs, accelerate the optimization of the layout and structural adjustment of the state-owned economy, promote state-owned capital and SOEs to become stronger, quality-oriented, and larger, and enhance the core competitiveness of enterprises." During the 14th Five-Year Plan [4] period, China has deepened the reform of state-owned capital and SOEs, implementing the Action to Deepen and Enhance SOE Reform. State-owned assets and enterprises have solidly advanced S&T innovation with the "spirit of driving nails" [5], increasing R&D investment, optimizing strategic layouts, and building a sound innovation ecosystem. Through efforts to create "sources" of original technology, form innovation consortiums, deepen the reform of research institutes undergoing transformation into enterprises, and explore pilot reforms for granting rights to job-related S&T achievements [6], they have significantly enhanced their own innovation and creative vitality, leading to a marked improvement in innovation capabilities.
Regarding the scale of R&D investment, SOEs have seen continuous growth during the 14th Five-Year Plan period, providing a stable resource guarantee for S&T innovation. R&D investment by central enterprises has exceeded the trillion-yuan mark for several consecutive years, reaching 1.1 trillion yuan in 2025. Local SOEs have also increased their R&D investment, forming an innovation investment pattern of "central leadership and local coordination." It is worth noting that despite significant downward pressure on the economy, SOE R&D investment has maintained steady growth. In terms of R&D resource allocation, SOEs have consistently aligned with national strategic needs, with resources tilting toward key core technologies and strategic emerging industries. During the 14th Five-Year Plan period, the layout of SOEs in emerging industries moved from point-based exploration to large-scale advancement, laying an important foundation for China to cultivate new quality productive forces and promote industrial structure transformation and upgrading. In 2025, central enterprises completed investments of 2.5 trillion yuan in strategic emerging industries, accounting for 41.8% of total investment.
In terms of outcomes, SOEs have not only developed a batch of original achievements and broken through a selection of "chokehold" technologies, but they have also created a series of "great powers' heavy equipment" [7] and landmark achievements in major engineering projects. This further demonstrates their role as "pillars" and "ballast" in national economic and social development. In high-end equipment manufacturing, China’s high-speed rail has not only achieved world-leading operating speeds but has also formed a comprehensive advantage in safety, comfort, and reliability. In aviation, the commercial operation of domestically produced large aircraft marks a breakthrough in the strategic technical field of independent large passenger aircraft development. In energy and strategic resources, the successful development of heavy-duty gas turbines broke foreign technical monopolies, providing key equipment support for energy structure transformation. In information technology and quantum science, significant progress has been made in quantum computer research, accumulating core competitiveness for frontier technical breakthroughs.
The continuous improvement of China's SOE innovation capabilities exhibits distinct characteristics and advantages. For example, SOE innovation primarily manifests as independent innovation, especially in major S&T breakthroughs, overcoming "chokehold" technologies, large-scale and high-investment engineering innovation, and systemic innovation. Additionally, SOE innovation is characterized by its strategic and public-interest nature. They undertake major S&T innovation missions in areas involving national strategic security, such as defense technology, major infrastructure, and key core technologies, acting as the primary carriers of the national strategic S&T force. Many basic R&D projects with long cycles and high risks, as well as major projects in the national defense science and technology industry, are carried out by SOEs. Furthermore, SOEs in different industries, of different scales, and at different levels have formed differentiated innovation capabilities based on their positioning and functions. SOEs in high-end manufacturing, new energy, semiconductors, and aerospace have strong capabilities for breaking through key core technologies, while those in energy, petroleum and petrochemicals, mining, and infrastructure engineering demonstrate powerful engineering innovation capabilities. This means that the evaluation of SOEs' innovation capabilities should be categorized and layered according to actual conditions. We cannot rely solely on quantitative indicators like patent data and new product sales revenue, nor can we speak in generalities that conflate the innovation performance of different types and levels of SOEs.
At the same time, it must be recognized that private enterprises also play an important role in S&T innovation. In recent years, the Party and the state have paid close attention to S&T innovation in private enterprises, issuing a series of policies and measures to promote their healthy and high-quality development. This has created a favorable environment for private enterprises to make continuous breakthroughs in key core technology fields and play an important role in cultivating new quality productive forces and promoting industrial upgrading. In practice, private enterprise innovation is more focused on market demand, with significant advantages in industrialization efficiency and market response speed. Promoting the complementary advantages and mutual improvement of SOEs and private enterprises in S&T innovation will help form a synergy to jointly enhance the overall efficiency of the national innovation system.
Taking Multiple Measures to Continuously Enhance SOE Innovation Capabilities During the 15th Five-Year Plan Period
In "Chinese-path Modernization Must Be Supported by Scientific and Technological Modernization," General Secretary Xi Jinping pointed out that to promote the deep integration of S&T innovation and industrial innovation...
"The key lies in strengthening the dominant position of enterprises in technological innovation." The "Suggestions" of the Fourth Plenary Session of the 20th CPC Central Committee [8] proposed to "accelerate high-level self-reliance and strength in science and technology, and lead the development of new quality productive forces," making important deployments and requiring the "enhancement of the core functions and core competitiveness of state-owned enterprises (SOEs)." Elevating the innovation capacity of SOEs is an inevitable requirement for consolidating and expanding advantages, breaking through bottleneck constraints, and shoring up weak links. At present, compared with the requirements for achieving high-level technological self-reliance and high-quality development, and compared with world-class enterprises, the innovation capacity of China's SOEs still exhibits certain deficiencies. For example, original innovation capacity is relatively weak, the capacity for "zero-to-one" disruptive technological innovation, key core technologies, and breakthroughs in common industry technologies needs further improvement, and the degree of integration between technological innovation and industrial innovation needs further deepening. To resolve these issues, we must implement the decisions and deployments of the "Suggestions" of the Fourth Plenary Session of the 20th CPC Central Committee, further deepen the reform of state-owned capital and SOEs, enhance the innovation capacity of SOEs, and better enable them to play their vital roles in technological innovation, industrial leadership, and security support, while continuously strengthening their core functions and core competitiveness.
Continuously strengthen the sense of mission and responsibility. There are now fewer than ten years remaining to reach the goal of becoming a scientific and technological power by 2035. We must further enhance our sense of responsibility, mission, and urgency, adhere to the "four orientations," [9] persist in following the path of independent innovation with Chinese characteristics, and accelerate the realization of high-level technological self-reliance and strength. Only by continuously strengthening their dominant position in technological innovation and their mission-driven role as a national strategic scientific and technological force, and by constantly bolstering their confidence in innovation, can SOEs pursue excellence while overcoming difficulties and make greater contributions to advancing Chinese-path modernization. To this end, we must better utilize market mechanisms, create a fairer and more dynamic market environment, encourage enterprises of different ownership types to participate fairly in market competition, and encourage SOEs to better "go global" [10] to enhance their strength through competition on the same stage as global multinational corporations. We must focus on deepening the reform of state-owned capital and SOEs, breaking through institutional and mechanistic obstacles, improving the supervision and management systems for state-owned capital and SOEs—especially the selection, appointment, assessment, and incentive mechanisms for enterprise managers—and constructing a scientific and rational institutional framework for enterprise-led innovation incentives. We must vigorously carry forward the "Two Bombs, One Satellite" spirit [11] and the manned spaceflight spirit, promote the spirit of scientists and entrepreneurs in the New Era, and strive for self-reliance while scaling new heights.
Further optimize the innovation ecosystem. Strengthening the dominant position of enterprises in technological innovation is inseparable from further optimizing the innovation ecosystem, providing comprehensive supporting facilities and service guarantees, and more effectively transforming the advantages and characteristics of SOEs into innovation outcomes. To this end, we should encourage large SOEs to take the initiative in playing a supporting and leading role, and strengthen the in-depth integration of industry, academia, and research (產學研) led by enterprises. We must improve mechanisms for joint investment in factors, benefit-sharing, and risk-sharing, promote collaborative innovation among upstream, midstream, and downstream enterprises in the industrial chain, and continuously stimulate the vitality and momentum of technological innovation. We should improve the modern corporate governance of SOEs with Chinese characteristics, accelerate the transformation of organizational forms, improve scientific management levels, and enhance enterprise decision-making and operational efficiency. We must accelerate the construction of common technology platforms, increase resource input, optimize the open innovation ecosystem, and deepen international innovation cooperation. We should foster a culture of innovation and entrepreneurship, establish innovation fault-tolerance mechanisms, and improve the talent evaluation system.
Increase investment in basic research and development. Basic research is the "source water" [12] of technological innovation. As an important component of the national strategic scientific and technological force, SOEs should vigorously arrange and carry out strategic basic research, demand-driven basic research, and curiosity-driven basic research. To this end, we must improve the diversified investment mechanism for basic research, increase the proportion of basic research investment, strengthen original innovation and breakthroughs in key core technologies, build high-quality national key laboratories, keep a close watch on future strategic fields, and deeply advance the construction of "source-of-origin" sites for original technologies (原創技術策源地). At the same time, we should encourage SOEs to jointly establish basic research laboratories with universities and research institutes, clarifying the attribution of achievements and the distribution of benefits to effectively stimulate the enthusiasm of all parties. This will allow for the concentration of forces to tackle a batch of radiant, overall, and strategic technologies, producing a batch of original and leading major scientific and technological achievements. This will not only solve the problem of high-end achievements being "controlled by others" but also contribute more original technological results to meet the people's needs for a better life.
Leverage the advantages of the New Whole-of-Nation System. Overcoming challenges in key core technologies, "choke-hold" (卡脖子) technologies, [13] and common industry technologies is difficult, expensive, and time-consuming. It requires both the role of an effective market—allowing the market to play a decisive role in the allocation of innovation resources—and the role of a proactive government to integrate scattered innovation resources and significantly improve innovation efficiency. From an international comparative perspective, the reason why some countries, including China, have been able to lead global breakthroughs in technological innovation and the development of emerging industries is thanks to the provision of institutional and policy environments at the national level that conform to the laws of technological innovation and industrial development; among these, the whole-of-nation system (舉國體制) is an important model. Currently, we must further leverage the advantages of the New Whole-of-Nation System, supporting SOEs in integrating into the national innovation system on a broader scale, at a higher level, and to a deeper degree. They should actively undertake national key R&D plans and major technological projects, take the lead in or participate in national technological assault tasks, and strengthen the integrated allocation of projects, bases, talent, and funds. This will drive SOEs to truly become important subjects in original technology innovation decision-making, R&D input, scientific research organization, and the transformation of achievements. We should establish a diversified fund injection mechanism, increase the proportion of R&D investment in original technology, establish an enterprise R&D reserve fund system, and encourage SOEs to carry out high-risk, high-value basic research.
Promote the deep integration of technological innovation and industrial innovation. Technological innovation is the core driving force for industrial upgrading, while industrial innovation provides broad application scenarios and market space for technological innovation. The deep integration of the two can not only effectively enhance industrial competitiveness but also vigorously promote the optimization and upgrading of the economic structure, driving high-quality development. To this end, we must improve the policy system for the transformation of scientific and technological achievements, promote the establishment of a separate management system for the assets of service-related technological achievements (職務科技成果), and establish scientific and standardized mechanisms for the evaluation, protection, and management of technological achievements. We should accelerate the efficient transformation and application of major technological achievements, arrange the construction of concept verification and pilot-scale testing platforms, and accelerate the industrialization of technological achievements. We should further improve the efficiency of innovation resource allocation, promote the rational flow of innovation factors, give full play to advantages in scenarios and data, and increase the intensity of application scenario construction, development, and openness. We must establish and improve dynamic management measures for the primary responsibilities and core businesses of SOEs, ensuring that SOEs can deploy innovation chains around industrial chains and arrange industrial chains around innovation chains, vigorously developing new industries and business formats, and continuously strengthening new momentum for development.