DECISION OF THE STATE COUNCIL CONCERNING THE DEEPENING OF THE REFORM OF THE SCIENCE AND TECHNOLOGY MANAGEMENT SYSTEM DURING THE "NINTH FIVE-YEAR PLAN" PERIOD

Decision of the State Council Concerning the Deepening of the Reform of the Science and Technology Management System During the "Ninth Five-year Plan" Period

Since the issuance of the "Decision on the Reform of the Science and
Technology Management System" by the Central Committee of the Communist Party
of China in 1985, the scientific and technological circles have, after over
ten years of exploration and successful practice, pioneered and created a new
situation of vigorous development of science and technology as primary
productive forces, breaking the erstwhile single and closed planned
management system, effecting a change in the dislocated status of science and
technology and economy, and gradually enhancing the role of the socialist
market economy system in the operations of science and technology. Majority
of the scientific research institutions of the technological development type
have embarked on the road of independent development with their operations
based on market mechanisms and oriented toward economic construction. Most
scientific and technological forces have entered into the main battlefield of
economic construction in diverse forms. The spirit of patriotism of the broad
masses of scientific and technological workers has been fully reflected in
the reform of the science and technology management system in their conscious
and active participation in the reform with a view to achieving the goals of
the national development strategy. However, owing to various reasons, a
fuller play has not been given yet to the key role of science and technology
as primary productive forces in economic construction and social development.
The general layout of the science and technology management system has yet to
be perfected. Total scientific and technological input is inadequate.
Disposition of scientific and technological resources is not sufficiently
rational. Repetition in the establishment of scientific research
institutions, dispersion of scientific and technological forces and
irrational structures in specialties and qualified personnel have not been
resolved satisfactorily. The overall superiority of science and technology
and scientific and technological reserve have to be enhanced. The "Ninth
Five-Year Plan" period is a key period in our country for the all-round
completion of the second step of the strategic disposition in modernization.
To realize the two basic transformations in the economic system and in the
mode of economic growth, and to implement the strategy of reinvigorating our
country through science and education and the sustainable development
strategy, the work of science and technology should serve economic
construction and social development in a better way, and make contributions
to the resolution of hot and difficult problems in economic construction and
social development and to the improvement in quality in economic growth. In
pursuance of the spirit of "deepening the reform of the science and
technology management system" as prescribed in the "Decision of the Central
Committee of the Communist Party of China and the State Council Concerning
the Acceleration of Advancement of Science and Technology", the following
decision is hereby made concerning the question of deepening the reform of
the science and technology management system during the "Ninth Five-Year
Plan" period.

The main goals of the deepening of the reform of the science and
ethnology management system during the "Ninth Five-Year Plan" period are as
follows: all-round implementation of the thought of science and technology as
primary productive forces, further implementation of the policy of reliance
on science and technology in economic construction, orientation toward
economic construction in the work of science and technology and exertion in
mounting the peak of science and technology. Persevere in the strategic
disposition of the reform of the science and technology management system in
the three tiers of orienting toward the main battlefield of economic
construction and social development, developing high technology and
establishing new and high technology industries, and strengthening basic
research, step up basic research, applied research, high-technology research
and joint tackling of key scientific and technological projects, increase the
reserve of science and technology, solve major, integrated, key and urgent
technical questions in national economic construction and social development
in line with the principle of "stabilizing one end and decontrolling the
majority" so as to close the gap with the advanced international level as
soon as possible. Majority of the research and development institutions shall
go directly into the market, accelerate the commercialization of the
scientific and technological results, drastically upgrade social productivity
and improve economic efficiency, and raise the scientific and technological
standards of industry, agriculture and the tertiary industry.

During the "Ninth Five-Year Plan" period, the science and technology
management system compatible with the socialist market economy system and the
laws of development of science and technology themselves should be primarily
established. A closely integrated mechanism of scientific research,
development, production and the market should be formed and a technology
development system with the enterprises as the main body and combination of
production, education and research, a scientific research system with
scientific research institutions and the institutions of higher learning as
its main body and a socialized scientific and technological services system
should be established to raise the rate of contribution of science and
technology in the national economy. The priority of the reform of the science
and technology management system should be the independent scientific
research institutions especially those under the department of the Central
Government. Scientific research institutions under the institutions of higher
learning which have their own characteristics are an organic component of the
reform of the entire science and technology management system. Optimal
disposition of scientific and technological resources should be promoted and
rational layout of scientific research institutions should be completed
through the deepening of the reform of the science and technology management
system; the enthusiasm of the scientific and technological personnel to
participate in the reform should be fully motivated and qualified personnel
dispersed rationally to let each make full use of his strengths, taking the
requirements of goals of national development strategy as the guidance.
Reform of the science and technology management system should be carried out
synchronously matching the reform of the economic system and reform in other
areas, correctly handling the relations between reform, development and
stability, providing guidance according to different types of scientific
research institutions in the light of local conditions and pressing ahead in
a positive and steady way with no rigid uniformity.

(1) Pushing scientific research institutions to the main battlefield of
economic construction.

a. Vast majority of the scientific research institutions should take
economic construction as the main battlefield, adjust their structures in
specialties and make contributions to the transformation of traditional
industries, upgrading the quality of products, the development of national
industries, enhancing capabilities in international competition and the
strengthening of comprehensive national power.

Those scientific research institutions with necessary qualifications may
directly join enterprises and become the technology development institutions
of the enterprises. A number of scientific research institutions serving the
sectors may become the technology development institutions of respective
sectors by introducing such forms as the membership system and shareholding
system.

Majority of the technology development and technological services
institutions should create conditions to practice enterprise-style
management, enter into the market in various forms and seek development in
market competition.

Those scientific research institutions with an edge in research and
development and self-development capabilities or industrial development
strengths may establish enterprises or turn directly into enterprises. This
category of enterprises may become integrated companies of research,
development, engineering design, production and marketing, or may turn into
enterprise groups through merger, contracting other enterprises or scientific
research institutions, go in for independent operations and seek self-
development by way of compensatory transfer of technological achievements,
acceptance of technology development projects and providing the society with
specific technology services.

Those scientific research institutions with systematic and matching
engineering development capabilities may integrate themselves closely with
enterprises and turn themselves into engineering centers, or establish
engineering centers on their own.

Scientific research institutions with strong integrated services
capabilities may be turned into such technical services centers as
productivity promotion centers and technological innovation extension
centers, conduct enterprise-style operations and provide society-oriented
technical services.

Scientific research institutions under the central departments should
actively render services in local economic construction and social
development. A number of those scientific research institutions may, with the
support of the departments concerned and the localities, become regional
science and technology research and development centers by adopting the mode
of joining hands of the departments concerned and the localities, joint
operation and joint establishment. Scientific and technological forces of
scientific research institutions and institutions of higher learning engaging
in long-term, integrated sectorial research should enhance cooperation, step
up research and development of common key technologies of the sectors and
continue to provide services for the development of the sectors.

b. To accelerate the process of modernization of agriculture, building of
agricultural research and development system and technical extension services
system must be stepped up. Structures of disciplines, specialties and
personnel of agricultural scientific research institutions should be
optimized and attention be paid to the joint tackling of key multi-
disciplinary and trans-departmental projects to promote commercialization of
scientific and technological achievements. A number of state, sectorial and
regional research and development centers shall be set up to form step by
step a key agricultural scientific research system at the central and local
levels. State agricultural scientific research institutions and key
agricultural universities should concentrate their main forces on basic
research and the research and development of major national applications,
exerting themselves in the resolution of major scientific and technological
issues of national, basic, key and orientational nature which provincial and
prefectural agricultural scientific research institutions find unsuitable to
undertake. Provincial and prefectural agricultural scientific research
institutions should, according to natural and economic zoning, grow, step by
step, into regional agricultural scientific research centers with focuses on
applied technical research and secondary development and commercialization
of scientific and technological achievements. While "stabilizing one end",
agricultural scientific research institutions of all levels should organize
in a big way scientific and technological personnel in participating in the
work of science and technology demonstration areas, integrated development of
agriculture, construction of bases for pillar industries, supporting poverty-
eradication programs with science and technology and all kinds of
scientific and technical services. Close integration of agriculture, science
and education should be promoted, standards of scientific and cultural
knowledge of farmers and capabilities in applying agricultural scientific
technologies should be raised, and great efforts should be made to train and
stabilize agricultural technical extension personnel with diverse skills so
as to improve overall agricultural labor productivity. The agro-technology
extension system should be perfected and strengthened in real earnest,
grassroots agro-technology extension institutions should be stabilized and
perfected and their strength of self-development enhanced. Agro-technology
extension institutions should cooperate with all types of rural service
organizations to form an integrated scientific and technological service
network embracing technology, agriculture and trade and production, supply
and marketing. Agro-technology extension institutions engaging in operational
activities close to their business in the mode of self-operations or joint
operations with seed companies and departments of means of agricultural
production may use the revenue from their business operations to mainly
subsidize agro-technology extension work and the income of the technical
personnel.

c. Enterprises should become the main body of technological development.
State-owned large- and medium-size enterprises should take the establishment
of enterprise technological innovation mechanism and the upgrading of
technological innovation capabilities as important contents in the
establishment of modern enterprise system. Large- and medium-size enterprises
and enterprise groups should be guided by the market and set up step by step
various types of technological development institutions by joining hands with
scientific research institutions and institutions of higher learning. Mass
technological innovation activities should be encouraged. Input for
technological development shall be increased, speed of commercialization and
extension of scientific and technological achievements accelerated and efforts
be made to develop new products. Support shall be given to the establishment
of long-term and stable relations of coordination between medium- and small-
size enterprises, rural enterprises and scientific research institutions and
institutions of higher learning. Continuous encouragement shall be given to
the development of scientific and technological enterprises operated by local
people.

(2) Developing high technology and promoting industrialization of new and
high technology.

Research and development of high technology is the forerunner for the
development of modern economy and the source of the development of high
technology industries. A number of major projects which will have a major
leading role in the development of the national economy, have considerable
foundation and advantages and will enhance the comprehensive national
strength of our country should be selected for the joint tackling of key
issues by adopting the mode of competitive bidding of tender, organizing and
promoting scientific research institutions, institutions of higher learning
and enterprises to concentrate their forces. A cohort(An army) of high-
standard scientific research personnel should be stabilized for the
development of high-tech results and industrialization and especially for the
readjustment of industrial structures and technological transformation of
large- and medium-size enterprises.

Further push shall be given to the development of national development
zones for new and high technology industries. The reform should be deepened
to create a better environment to attract scientific research institutions,
institutions of higher learning and large- and medium-size enterprises to
develop high-technology industries, and the pace of reform shall be expedited
in accordance with the requirements for the establishment of modern
enterprise system. Institutions of higher learning should be encouraged to
found school-run high-technology enterprises in keeping with the orientation
of the reform of higher education.

(3) Optimizing the structure and distribution of basic scientific
research institutions.

Scientific research institutions under central departments and key
institutions of higher learning shall be the main body in basic research and
their integration shall be strengthened. A number of key basic research
institutions should be stabilized and well managed in real earnest, and basic
research bases and the infrastructure strengthened to enable an elite,
excellent scientific and technological personnel to engage in basic research
work and do a good job of fostering and training young personnel. The
structure of these institutions should also be optimized, with their
personnel rationally dispersed and efficiency raised.

Support shall be given to the two-way movement of scientific research
personnel and taking up concurrent positions in each other's institutions
between the basic scientific research institutions and institutions of high
learning. Emphatic measures shall be taken to promote joint setting up and
sharing of large instruments and equipment to achieve full sharing of
materials and information. Organic integration among scientific research,
teaching and personnel training shall be adhered to so as to complement each
other and be mutually promotive.

(4) Qualified non-profit social research institutions may practice open
management and provide socialized services.

Non-profit social scientific research institutions should overcome the
demerits in the repetition of establishments and dispersion of manpower,
retrench and optimize combination in planned steps, practice open management
to realize socialization in functions and industrialization in services. The
State shall give key support to the non-profit social research institutions
engaging in projects involving overall national interest and long-term
interest, and in the meantime encourage those non-profit scientific research
institutions with qualifications to engage in enterprise-style operations and
set up regional or sectorial scientific and technological service and
consultancy institutions with self-development capabilities.

(1) Practice scientific management. Strengthen macro-regulation, macro-
control and planning and layout management, and promote integration and
corpora of scientific and technological manpower. Optimize investment
structure, continue to develop the system of science foundations, carry out
value evaluation and specialist evaluation of the same profession to enhance
efficiency in capital utilization. Planned science and technology projects
shall mainly adopt tender offering system with open tender notices in
society, and ensure that listing of projects is done scientifically and
openness and fairness in bidding. Under the preconditions that fulfillment of
tasks issued by the State and departments in charge is ensured, scientific
research institutions shall enjoy independence in internal administration and
other areas and become an independent legal entity in society. Different
types of scientific research institutions should explore the reform of
president(director) responsibility system and the system of decision-making
by board of directors and explore ways in experimenting the specialist
responsibility system of projects. Follow-up evaluation should be conducted
on the implementation of projects.

Step up construction of pilot plants, industrial experiment bases and
engineering technology development centers. Further develop technology
markets, establish fair, open and just order in the technology markets, and
build up intermediate institutions of technologies and the ranks of brokers.

(3) Upgrade technological innovation capabilities. Actively create
conditions and promote in a big way integration and coordination among
scientific research institutions, institutions of higher learning and
enterprises so as to upgrade the systematic and matching capabilities of
engineering technology development.

(4) Establish mechanism of personnel evaluation, training and employment
under which each will give full play to his talent and excellent talents will
be able to emerge. Complete and perfect the system of employment of technical
positions of all specialties. Fully promote the role of scientific research
institutions and institutions of high learning in personnel training,
accelerate the training of young and middle-aged academic and technical
leaders and assign more young and middle-aged scientific and technical
personnel to positions of heavy responsibilities in the front line of
research and development. Both old, middle-aged and young scientific and
technical personnel shall give full play to their respective roles to make
the work of scientific research more vigorous and creative in the process of
opening up, mobility, competition and coordination. A number of key
scientific research institutions and scientific research bases may set aside
some flexible staffing quota and establish the mechanism of personnel
mobility and open competition for important positions.

(5) Further reform the income distribution system of scientific and
technical personnel. The income of scientific and technical personnel and
science and technology management staff engaging in scientific research,
technological development and commercialization of scientific and technological
achievements should be linked with their scientific research standards and
contributions. Reform science and technology reward system, found national
award for the extension of scientific and technological achievements and
establish evaluation system of science and technology work and management
system of intellectual property rights to form new incentive mechanism for
science and technology work. Strive to improve the living conditions and
working conditions of scientific and technological personnel with the
solution of the housing problem of young scientific and technological staff
as the priority.

(6)Persevere in opening up to the outside world and actively participate
in international exchange and cooperation. Continue to encourage the
induction of sophisticated technologies and advanced management experience
from abroad, step up digestion and absorption on that basis, and work hard
for technological innovation to form a vast amount of technological
achievements and products with China's own intellectual property rights.
Expand international academic and personnel exchanges. Continue to encourage
all categories of scientific and technological personnel and especially young
and middle-aged scientific and technological personnel to participate in
international scientific and technological cooperation and exchange in
diverse forms. Seriously implement the policy of "supporting study overseas,
encouraging return to the country and ensuring freedom of return to the
country and departure from the country," actively create conditions and
encourage and guide overseas students and scientific and technological
personnel residing overseas to return to the country for work on engagement
basis or render service for the motherland's construction in various forms.

During the "Ninth Five-Year Plan" period, the central finance shall
gradually increase input into science and technology in accordance with the
requirements as prescribed in the "Decision of the Central Committee of the
Communist Party of China and the State Council Concerning the Acceleration of
Scientific and Technological Advancement". With economic growth, local
finance at all levels should strive to increase input into science and
technology. Increase in funding for science and technology should be higher
than the growth of regular financial revenue. All departments and localities
should upgrade the equipment level and scientific research capabilities of
key scientific research institutions and scientific research bases.

(1) Enterprises and enterprise groups should strive to increase
technology development funding which may be listed in and as part of cost in
accordance with relevant provisions. Departments in charge of the sectors may
raise funds for the research and development of science and technology of the
sectors through various channels. Actively explore the establishment of the
input mechanism for the positive circle of agro-science and technology. A
certain amount of funds should be arranged for relevant technological
innovation in capital construction, technological transformation and
technological induction.

(2) Increase the percentage of loans for science and technology in
national credit plan and expand the scale of commercial loans for science and
technology. State policy banks shall establish the item of special loans for
the support of commercialization of major scientific and technological
achievements to support the development of new and high technology
industries.

(3) Actively explore venture capital mechanism for the development of
science and technology to promote commercialization of scientific and
technological achievements.

(4) During the "Ninth Five-Year Plan" period, to encourage and support
scientific research institutions to go into the market, those scientific
research institutions which have been turned into enterprise legal entities
may continue to keep their original names upon verification in the light of
different circumstances and enjoy the policies bestowed by the State to
scientific research institutions.

(5) In addition to the preferential policy on taxation bestowed by the
State to enterprises, those scientific research institutions which have been
turned into enterprises may include various expenses arising from development
of new products, new technologies and new techniques in management
expenditure according to relevant provisions. For technical training,
technical consultancy and technical services arising in the process of
technology transfer, the localities should formulate preferential policies on
taxation in the light of the actual conditions prevailing in each locality.

(6) To foster and support the development of new and high technology
industries, encouragement shall be given to government departments at all
levels and institutions supported by government finance to make priority
purchases under same conditions of high technology products with Chinese
intellectual property rights.

(7) For scientific research institutions whose reform are basically in
place, the department in charge of science and technology administration
should still render support in such areas as project funding, institutional
expenditure and equipment renewal so as to enable those scientific research
institutions and scientific research bases to reach step by step advanced
international standards.

(8) In accordance with the relevant provisions of the State and unified
plan, scientific research institutions shall establish social security system
according to the principle of burden-sharing by the State, unit and
individual and establish the system with the integration of unified social
fund-raising and individual account in endowment and medical insurance. Part
of the institutional expenditure of scientific research institutions can be
turned over to the social security fund. Those scientific research
institutions which practice enterprise-style management or which have turned
into enterprises shall, step by step, implement the social security system.
Policies related to social security should be further perfected and improve
the conditions in endowment, medicare and housing of scientists and
engineering technological personnel who have made outstanding contributions.

In pursuance of the basic orientation of the reform of national economic
system and science and technology management system and the guidelines of the
military strategy in the new period, the new science and technology
management system compatible with the requirements of the socialist market
economy and the laws of development of defense science and technology
themselves with the integration of military and civilian applications and the
integration of peacetime and wartime requirements. Resources should be
concentrated to support a number of scientific research institutions and
institutions of high learning with good foundation, high quality and strong
technology innovation capability to form a defense scientific research system
with "smaller establishments and higher standards" to enhance overall
capability and systems integration capability and effect a change in the
repetitive and dispersed status of scientific research institutions, taking
the missions assigned by the State and investment put in as the guidance.
Scientific and technological personnel should be diverted rationally and
measures taken to stabilize the ranks of highly-qualified scientific and
technological personnel and backbone personnel in defense scientific research
in conjunction with the readjustments in defense scientific research
capabilities and structures. Deepen the reform of the system of
appropriations for defense scientific research, strengthen fund management,
improve efficiency in fund utilization, further perfect defense scientific
research contract system, actively introduce the competitive mechanism and
give full play to market regulating functions. Promote the integration of
defense scientific research and production and expedite the industrialization
of defense scientific and technological achievements in diverse forms and
through different channels. Develop military civilian dual-purpose
technologies in a big way, accelerate the pace of defense conversion for
civilian applications, develop products for civilian use by exploiting new
and high technology achievements and new and high technology industries. In
the meantime, actively learn and absorb advanced civilian technology and
enhance the extent of military-civilian compatibility and conversion
capability from peace time to war time.

The reform of the science and technology management system is a long-term
task. All departments and localities must strengthen leadership in good
earnest and work out practical and workable proposals for implementation in
pursuance of the spirit of this "Decision" and organize the implementation
work in a serious manner. Timely study of the new situation and new problems
emerging from the process of reform should be made and experiences
continuously summed up through experiment. The broad masses of scientific and
technological personnel should actively dedicate themselves to the cause of
the reform of the science and technology management system and work hard for
the realization of the goal of establishing the new-type science and
technology management system.

Category	SCIENCE AND TECHNOLOGY	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1996-09-15	Effective Date	1996-09-15

Laws of the People's Republic of China

DECISION OF THE STATE COUNCIL CONCERNING THE DEEPENING OF THE REFORM OF THE SCIENCE AND TECHNOLOGY MANAGEMENT SYSTEM DURING THE "NINTH FIVE-YEAR PLAN" PERIOD