As indicated by recent government documents and policy guidelines, alongside urbanization, innovation is seen as becoming a main driving force for China's sustainable economic growth in the years ahead.

As early as 2006, the Communist Party of China (CPC) Central Committee proposed the transformation to an innovation-driven growth model by 2020, in order to guarantee the sustainability of its long-term economic growth.

Due to its export-oriented economic structure, the technological progress of China's enterprises over the past decades has been realized mainly through introducing advanced technologies from abroad, and then digesting and absorbing them. In this process, foreign direct investment (FDI) has played a very important role.

In their cooperation with foreign ventures and multinationals, domestic enterprises have managed to position themselves in the global manufacturing chain, mastering new technologies and production methods, then developing products and services. This process has been dominated by multinationals with foreign markets as the main target.

As China becomes a middle-income society and the expansion of the domestic market becomes the main driving force of future economic growth, we should strengthen our ability to imitate the advanced technologies owned by foreign conglomerates and encourage more domestic enterprises to create innovative new products and services.

Such an innovation model does not necessarily require the creation of original or exclusive innovations. At its current development stage, China has still to develop the necessary conditions for the large-scale creation of original innovations, which are based on a long-term and large-scale input into elementary and applied research. In developing countries, many technological innovations are produced through creating an innovative production mode and flow. Products and services are made at a lower cost than in developed countries, which makes them more suitable for local consumers and foreign markets with similar income levels. This is a "frugal innovation" model.