Hybrid rice, cloned monkeys and mythical dragons

In addition, scientific exploration and market needs both involve great uncertainties that require the market mechanism to play a role in allocating social and human capital, Xu said. For example, China lacks reliable, high-quality appraisal institutions to assess technology companies, so a lot of social resources are being invested ineffectively.

Insufficient protection of intellectual property rights and a weak innovation service industry also hinder small and medium-sized companies' ability to create innovative products and services, he said. "The innovation service industry is a highly professionalized sector that takes a long time to mature, and it cannot succeed without government policy support," Xu said.