Innovation boosts Chinese economic dynamism

China ranked third in this year's Grant Thornton Global Dynamism Index (GDI). an annual research project designed by the Economist Intelligence Unit to assess the development of one economy's business growth environment.

China's significantly improved GDT, which has risen 17 places from last year, was largely attributed to its commitment to innovation in technology, systems and mechanism.

Reforms and innovation provide an inexhaustible driving force for a country's development, Chinese Premier Li Keqiang has said when meeting with World Bank Group President Jim Yong Kim.

According to Li, since the beginning of the year, China has been successful in coordinating efforts in seeking steady growth, conducting structural readjustment and deepening reforms mainly thanks to "innovation in macro-management."

To promote innovation in technology, China has spent a record 1 trillion yuan (about 162.4 billion U.S. dollars) on research and development in 2012, of which 74 percent came from companies, official data showed.

Ed Nusbaum, global CEO at Grant Thornton, has said "the GDI shows increasing science and technology activity (in China). which will help sustain economic growth potential by boosting quality, productivity, and efficiency of outputs."

Meanwhile, China has been promoting the use of renewable energy and set a target of 15 percent of total energy consumption coming from renewable sources by 2020.

China has also accelerated investment in railway and infrastructure, and reduced taxes for small businesses to spur growth while pushing forward reforms.

"We are implementing the innovation-driven development strategy at a faster pace, aggressively promoting technological innovation and deep integration of science and technology with the economy, and are building a social environment friendly to innovation and business start-up activities," Premier Li has said at the opening ceremony of the World Economic Forum's Annual Meeting of the New Champions.

China also pushes forward financial innovation. The underlying A-stocks available for refinance in margin trade and short selling will rise to 287 stocks from 87 with a total market value of 12.9 trillion yuan, which would improve the two-way trade mechanism of margin trade business and keep the balance between margin trade and short selling business.

China's regulators have also given green light to global hedge funds to raise capital in China, and has opened applications for private companies to establish banks.

"There is more of a push on financial reform and we'll see more tangible progress in the coming months," said Wang Tao, an economist with UBS, quoted by Financial Times.