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Special Report

Funding Fixes

While China has boosted investment in R&D, scientists warn that institutional barriers must be removed before the country can make significant breakthroughs in fundamental research

By Yu Xiaodong , Huo Siyi Updated Aug.1

A view of the experimental advanced superconducting fusion reactor Tokamak (EAST), or the Chinese “artificial sun” completed in Hefei, Anhui Province, December 4, 2020 (Photo by CNS)

China’s 500-meter Aperture Spherical Radio Telescope (FAST), Southwest China’s Guizhou Province (Photo by Xinhua)

Reducing reliance on foreign tech by achieving major scientific breakthroughs has been a top priority of China’s central leadership in recent years.  

China’s total R&D investment for 2022 amounted to 3.09 trillion yuan (US$434b), up by 10.4 percent from last year, second only to the US. But researchers and scientists have long argued that China invests too little in basic research, which lays the foundation of new technologies and innovation.  

In 2022, only 6.32 percent of China’s total R&D investment went to basic research. While an increase from 4.8 percent a decade ago, it remains far lower than the average 15-25 percent in major developed countries. “China’s basic research has developed rapidly and has achieved results with global impact, but overall it lags behind the international advanced level,” Wang Yifang, director of the Institute of High Energy Physics of the Chinese Academy of Sciences (CAS), told NewsChina.  

Chinese President Xi Jinping highlighted the problem at a study session of the Political Bureau of the Communist Party of China Central Committee in February, saying that it is “imperative” for China to strengthen and reform basic research. He said governments at all levels need to prioritize basic research.  

In March, China announced that it would establish a central commission to synchronize national strategies for scientific and technological development. Analysts believe the move will bring major changes to the country’s innovation system. 

Seeking Support 
According to Li Liang, a professor at the School of Physics and Astronomy at Shanghai Jiao Tong University, it is time to reform China’s funding structures for innovation, which he said excessively focuses on performance-oriented project funds.  

The current system was established in the 1980s and 1990s, as China transitioned from a planned to a market economy. Given the limited resources at the time, the system was designed to maximize research funds to fuel rapid economic development. Li explained this resulted in more applied research, which can generate short-term profits faster, and a performance-oriented funding system.  

Under the current system, basic research is mainly funded by the central government through agencies such as the Ministry of Science and Technology and the National Natural Science Foundation of China (NSFC).  

Researchers obtain their funding through competitive projects. Li said that such a mechanism has led to fierce internal competition among scientists, which has skewed the funding structure of the science community. “It led to a Matthew effect where a small number of top scientists have sufficient funding while young scientists struggle to get funded and are often marginalized over time,” Li said.  

His concerns are widely shared in the science community. Zhuang Ci, an assistant professor at the CAS Institute of Theoretical Physics, told NewsChina that a major problem is that scientists lack long-term stable funding. This particularly affects basic research, which she said requires long-term input to yield results.  

Zhuang worked on a CAS project in 2019 that compared China’s funding system to those in developed countries. She said that in Japan, the government provides universities and research institutes with funding to cover scientist and researcher salaries, but researchers can also secure funding exclusively for academic activities.  

By comparison, China’s project-centric funding system lacks stable funding for researcher salaries. Instead, their incomes come from project funding, which is particularly discouraging for young researchers and postgraduates.  

Zhuang also said that compared to Japan, South Korea and Canada, where 70-80 percent of funds research institutions receive from the government are stable funds, the ratio in China is only about 20 percent. For example, in 2022 the CAS Institute of High Energy Physics had a budget of 2.57 billion yuan (US$362m), mostly from the government. Only 17 percent are stable funds, while 81.8 percent came from competitive project-centric funds.  

“The nature of basic research is that it is fundamental but unpredictable and requires long-term investment, and a funding system that centers on competitive projects is not suited for basic research.” Zhuang said, “China needs to substantially increase the proportion of long-term and stable funding.”  

Zheng Xiaonian, a CAS researcher, told NewsChina that the lack of long-term funding has not only resulted in anxiety over future financing among researchers but has led to inefficient use of funds.  

Zheng said that as director of CAS’ Bureau of Conditions and Finance from 2018 to 2019, he found many researchers squirreled away large portions of their funding. “When I asked them why, they said that they needed to have some ‘reserve funds’ as they were unsure whether they would get funding the next year,” Zheng said.  

In response, authorities launched several initiatives to increase long-term support for basic research. In 2016, the NSFC launched the Basic Science Center project, focusing on frontier and cross-disciplinary researchers. The foundation pledged 200 million yuan (US$28m) for the first five years, and 60 million yuan for the next five.  

But the scale and scope of these initiatives are too small to make a significant impact, researchers said. Zhou Zhonghe, a scientist at the Institute of Vertebrate Paleontology and Paleo-anthropology at CAS who received funding from Basic Science Center in 2016, told NewsChina that although the project aims to provide stable long-term funds, the scarcity of such projects means that it ended up being highly competitive as well.  

According to CAS academic Wang Yifang, a major reason behind China’s stagnating reforms is that China’s research policy is overseen by several independent agencies, including the Ministry of Science and Technology, the NSFC and the National Development and Reform Commission. 
“They lack the motivation and ability to make systemic reforms,” Yang said, “The result is sporadic and fragmentary reforms.” Yang believed that the newly established Central Committee of Science Technology will address these issues. 

Strategy Tweaks 
While the scientific community agrees that China should increase stable financial support to basic research, how and to what extent remain contentious questions.  

Although most countries adopt a dual-track model of competitive project-based funding and stable institutional funding, many are moving toward competitive funding amid rising strategic concerns over technological security.  

Many experts point out that the US has adopted a model similar to China’s, although US researchers can receive competitive basic salaries through institutional and government support. 

“We must not blindly and universally increase stable support overnight,” said Mu Rongping, director-general of the Institute of Policy and Management, CAS. Mu argued that China should calibrate funding policy depending on the level of relevant subjects and research.  

For research considered “entry” level, Mu suggests that the government fund a sufficient number of small, high-risk exploratory projects. As progress is made, the projects should narrow in focus and get funding increases. When research has developed to the “exit” level and application becomes clearer, competitive funding should take over.  

Professor Li Liang agrees. “For some cutting-edge disciplines that require a longer-term commitment, such as high-energy physics, the proportion of stable support can be higher, but for some very mature disciplines with strong application prospects, a competitive funding model is better,” Li said. 

Research Autonomy 
Another issue of debate is the autonomy of research institutes. According to Wang Yifang, under China’s current project-centric system, all aspects of scientific research management are controlled by government departments, which monopolize the power to approve proposals, organize reviews and approve funding. This differs from the models of most countries. “In essence, central government departments directly manage research teams, completely bypassing research institutions,” Wang said.  

Zhang Xinmin, a researcher at CAS’s Institute of High Energy Physics, told NewsChina that even as project leaders, many chief scientists lack the power to make decisions such as hiring, job titles, salaries and performance, and these decisions are often subject to research institutes that are not involved in granting their funding.  

Under such arrangements, the responsibilities between government agencies, research institutions and scientists are often ambiguous and both research institutions and scientists are now calling for more autonomy in managing their projects.  

Wang Yifang argued that research institutions should be given full autonomy in the upcoming institutional reforms. “Only research institutions have professional expertise in developing relevant fields,” Wang said.  

To address the problem, China has already launched such a pilot program. Established in 2003, the National Institute of Biological Sciences (NICS) receives about 250 million yuan (US$35m) in research grants and retains full control over its research. According to the institute’s first director Wang Xiaodong, each laboratory director has “absolute autonomy” in research and talent recruitment. Unlike other research institutes, NICS laboratory directors do not need to apply for external projects.  

To address the absence of competition, Wang said that the NICS conducts strict internal evaluations every five years. While high-performing scientists and teams will receive additional funding, those who do not meet the performance standards will have to leave. 
Under this model, NICS has made several breakthroughs in biological areas such as programmed cell death, infection and innate immunity. But the model has yet to be replicated on a larger scale. 

Two Classes 
As the link between scientific research and national strategic needs becomes more pronounced in recent years, more countries are turning to “demand-driven” basic research. In an interview with the National Science Review in early 2019, NSFC director Li Jinghai said the foundation will strengthen its focus on demand-driven research to “adapt to the new situation.”  

Among the 294,300 project applications submitted to the NSFC in 2022, 45.1 percent are “demand-driven,” with 44.6 percent classified as “frontier sciences.” Only 5.05 percent of all applications are categorized as “free exploration,” down from 18 percent in 2019.  

For many scientists, this is a dangerous trend. Zhou Xiangyu, researcher at the CAS Academy of Mathematics and Systems Science, told NewsChina that classifying basic research as “free exploration” and “demand-driven” can easily lead to the misconception that the former is aimless.  

“In reality, the goal of exploratory basic research is to construct new paradigms of scientific knowledge, which requires a certain level of curiosity and audacity,” Zhou said, “and what we need to do is to create a research environment that encourages such curiosity and boldness.”  

Zhou added that Chinese researchers had made no major breakthroughs in basic research in recent years because of the absence of such an environment.  

In the February meeting of the Political Bureau of the CPC Central Committee, Xi called for pursuing both “goal-oriented” and “free exploration” research and to “combine the work in cutting-edge science and technology with the country’s major strategic needs and economic and social development goals.”  

Experts speculate that under the new Central Committee of Science Technology, the roles of the Ministry of Science and Technology and the NSFC will be more clearly defined. While the foundation will primarily focus on original or exploratory basic research, providing rolling funds for the long term, the ministry will support state laboratories and keynote projects related to national strategic needs.  

For former NSFC director Yang Wei, the reform of China’s innovation system should return to the driving force of scientific research, which is human curiosity and passion for exploring the unknown.  

“The overall goal should be to provide sufficient funding so that both scientists who like to explore the unknown and those who want to tackle the country’s strategic needs can contribute in their own fields and in their own ways,” Yang said.