This effort is aimed at increasing added value and moving China away from being the assembly shop of the world – and it’s doomed to fail miserably unless it is accompanied by sweeping political reform which, in itself, is extremely unlikely.
In order for innovation to thrive it is necessary to have a culture which allows open debate, which allows the challenge of pre-existing dogma & beliefs. It encourages the active participation of workers at all levels of the organization from the cleaner to the CEO. Innovation requires an open culture which values individualism.
All of this is impossible in a system which is strictly hierarchical, which jails political dissidents & artists & where the Party has the ultimate say in everything. Innovation is impossible in a culture of fear.
Unless the Chinese State Communist Party embraces democracy & undergoes serious reform any efforts to stimulate Innovation will fail miserably.