The results of a survey conducted by the National Bureau of Statistics found that the cities with the best environment for innovation are Shanghai, Hangzhou, Qingdao, Shenzhen, Suzhou, Beijing, Changzhou, Yantai, Guangzhou and Shaoxing. Shanghai is regarded as the most ideal place in China to open a business.

The survey found that that the majority of research and development funding is spent on improving existing products and technology; only one third is spent on developing new products and basic research programs.

According to the survey, 33 percent of funds are used to improve efficiency and reduce the costs of production; 31 percent is spent perfecting current technology, and doing research to widen the uses of products; 24 percent is spent on the development of new products and technology; 9 percent is used in basic research; the remaining 3 percent is spent elsewhere.

The survey also found that internal revenue-raising is the major source of funds for innovation. Over 75 percent of funds come from the enterprises themselves, 12 percent from loans, and less than 5 percent from the government, partners and capital market.

"As the majority of funds for research and development are raised by the enterprises themselves, the capital support mechanism is expected to be perfected and reinforced," said Yao Jingyuan, a general economist at the National Bureau of Statistics.

By People's Daily Online