National innovation policies currently attract intense interest throughout the international community, particularly so in the aftermath of the global financial crisis. China is among those countries now relying heavily on government resources to drive innovation-a policy that directly challenges the prevalent theory that government powers have limited effects on a nation's innovation systems. Indeed, China's new indigenous innovation strategy has transformed the country's innovation systems. China's current indigenous innovation strategy is both constructive and efficient for an economy with clear targets for industrial innovation and working to catch up to international standards. For China to succeed as an innovative country it needs to provide more opportunity for market competition to incubate and generate radical innovations.

Today's hearing of the U.S.-China Commission focuses on two broad areas in the U.S.-China relationship: the treatment of intellectual property rights, including business software, computers, Internet streaming, recent WTO actions brought by the U.S. against China in this area; and second, the Chinese policy of indigenous innovation, so-called ININ, and its wide-ranging implications for our economic and strategic relationship. The question is, where do we stand on these matters ten years after China's accession to the WTO and assumptions of obligations in WTO, and the U.S. granting China Permanent Most Favored Nation treatment?

Strategic government decisions concerning how an economy can transition from traditional trade specialization and reliance on imitation of imported knowledge to domestic technological innovation are known to influence countries' prospects for avoiding the middle-income trap and successfully catching up with industrial leaders. The successful strategies of several latecomers in East Asia compared with the failures of those of many latecomers from elsewhere highlight the importance of smart state-led choices to facilitate this process of economic transition. Within the last several years, mainland China, a middle-income economy, has embarked on its own state-led approach to catch up via a complex indigenous innovation (zizhu chuangxin) and intellectual property (IP) development strategy. Building on existing studies of technological catch-up, this Thesis focuses on how critical aspects of China's IP and innovation strategies deal with the significant challenges that China faces in its next stage of development. It focuses on how China is dealing with challenges such as moving from imitation to innovation, and enhancing competitiveness of indigenous firms in increasingly global value chains, while incumbents heavily use IP as barriers to entry. It also addresses threats to environmental and socio-economic sustainability, and the challenge of acquiring useful foreign technology in an environment where incumbents are reluctant to transfer frontier technology. The Thesis investigates the following questions in particular: (1) How can state-led IP strategy enable latecomers to catch up with advanced players? (2) How can state-led IP strategy support indigenous latecomers' catch-up efforts in increasingly globalized value chains (3) How can state-led strategy encourage innovations that address social and environmental challenges and foster economic catch-up? and (4) How can the state strategically acquire foreign technology that is useful for catch-up? Given China's size and impact on the rest of the world, how China responds to these challenges is of greatscholarly interest.

The relation between China and the United States is arguably the most important bilateral relation in the world today. The U.S. and China are respectively the largest and the second largest economies in the world. They are also respectively the largest and the second largest trading nations in the world as well as each other’s most important trading partner. If China and the U.S. work together as partners towards a common goal, many things are possible. However, there exist significant friction and potential conflict in their economic relations. The large and persistent U.S.-China bilateral trade deficit is one of the problems. It is essential to know the true state of the China-U.S. trade balance before effective solutions can be devised to narrow the trade surplus or deficit. The impacts and potential impacts of the 2018 trade war between China and the U.S. on the two economies are analysed and discussed. The longterm forces that underlie the economic relations between the two countries beyond the 2018 trade war are examined. In this connection, how a “new type of major-power relation” between the two countries can help to keep the competition friendly and avert a war between them is explored. ~~~~~~~~ Lawrence J. Lau’s timely The China-U.S. Trade War and Future Economic Relations is full of careful analysis, penetrating insight and helpful suggestions from the world’s preeminent economist on this relationship. —Michael J. Boskin Tully M. Friedman Professor of Economics, Stanford University Former Chair, U.S. President’s Council of Economic Advisers This sober and systematic study of U.S.-China trade relations and of technological development in the two countries is particularly timely. Lawrence Lau is one of the world’s foremost economists working on these issues. —Dwight H. Perkins Harold Hitchings Burbank Professor of Political Economy, Emeritus Former Chair, Department of Economics, Harvard University This is a timely and penetrating analysis of the China-U.S. trade and economic relations, from its origins to its impacts and to a way forward. —Yingyi Qian Chairman of the Council, Westlake University Former Dean, School of Economics and Management, Tsinghua University Counsellor of the State Council, People’s Republic of China Lawrence Lau’s book on the current U.S.-China trade war is insightful, balanced and comprehensive; rich in data on trade, investment, science and technology. It is essential reading for anyone who wants to get past the headlines. —A. Michael Spence Nobel Laureate in Economic Sciences (2001) Senior Fellow, The Hoover Institution, Stanford University Lawrence Lau brings light in the form of rigorous honest fact-based economic analysis to a subject where most of the discussion has been heated bluster, false claims, and political rhetoric. —Lawrence H. Summers Former U.S. Secretary of the Treasury; Former President, Harvard University There is no topic more important, or more timely, or more urgent, than the China-U.S. trade war. Professor Lau is the ideal person to write about the implications of the China-U.S. trade war and the proposed resolution. —Tung Chee-Hwa Vice-Chairman, Chinese People’s Political Consultative Conference National Committee Chairman, China-U.S. Exchange Foundation The history of Sino-American relations, to a great extent, has been a shared history. Lawrence Lau’s timely and penetrating study will tell us it is still in best interest for both countries if they continue to pursue a shared journey and destination instead of parting ways. —Xu Guoqi Kerry Group Professor in Globalization History, The University of Hong Kong Author of Chinese and Americans: A Shared History This beautifully composed book uses nontechnical language to unravel the intricacies of the 2018 U.S.-China trade war, together with its long-term impact. I learned a lot from reading it. —Chen-Ning Yang Nobel Laureate in Physics (1957)

The study examines defining characteristics of the evolving Chinese innovation and standards system and explores possible impacts for China as well as the global economy. China considers standardization to be an essential tool for improving its innovative capacity, yet very little is known about this critical building block of China's innovation system. At the center of the analysis is a fundamental challenge for China's standardization strategy: How can China reconcile its primary objective of strengthening indigenous innovation with its leading role in international trade and deep integration into global corporate networks of production and innovation? This is a joint publication of the University of California Institute on Global Conflict and Cooperation (IGCC) and the East-West Center.