National Academies Press: OpenBook

Biotechnology in China (1989)

Chapter: 3. Research Priorities and Funding Mechanisms

« Previous: 2. China's Long History of Biotechnology
Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Suggested Citation:"3. Research Priorities and Funding Mechanisms." National Academy of Sciences. 1989. Biotechnology in China. Washington, DC: The National Academies Press. doi: 10.17226/2074.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

3Research Priorities and Funding Mechanisms Within China's overall goal to quadruple total industrial and agricultural output by the end of the century, the main role of biotechnology is to improve human health through advances in agriculture and medicine. Chinese leaders have frequently emphasized that they want to pursue "those scientific and technological results that can yield the best and fastest results." They have also promoted the concept that "economic construction must rely upon science and technology and the latter must cater to the needs of the former." In 1988, an informal 6-month survey was conducted of the People's Daily, a Chinese newspaper acknowledged as a reliable indicator of government thinking and policy priorities, in which every article and editorial concerning science and technology also gave prominent attention to China's economy. Given this ideological framework, it is not surprising that current research priorities are strongly biased toward applied rather than basic research. At present, research priorities are reflected in two major grant programs, the High Technology Program and the Seventh 5-Year Plan, and in the four grant programs administered by NSFC. The resources and allocations of these programs are summarized in Table 1A, and the distribution of funds between various types of research institutions is described in Table 2. It should be noted that these grants cover only research expenses and minimal (typically 10 percent) overhead. Salaries are paid by the government administrative agencies (known as work organizations or danwei) responsible for the institutions where the research is carried out, for example, the State Education Commission (SEDC) for major universities, CAS for its research institutes, the Ministry of Agriculture, and the Ministry of Public Health. In comparison, note that salaries and overhead typically consume nearly RESEARCH PRIORITIES AND FUNDING MECHANISMS 6

TABLE 2 Distribution of Research Funds by Type of Research Institution (in percent) Program Agricultural and Universities Medical Colleges Academies Other High Technology Program 22 20 38 20 Seventh 5-Year Plan 60a 40 NSFC 63a 37 a Values are for universities and agricultural institutes and medical colleges combined. RESEARCH PRIORITIES AND FUNDING MECHANISMS 7

80 percent of allocated grant funds in the United States. In short, a much higher percentage of Chinese grant funds are spent on research. The amount of funds that can be converted to hard currency is variable from grant to grant, and it is dependent on complex arrangements with the granting agency and institute administrators. HIGH TECHNOLOGY PROGRAM AND THE CHINA NATIONAL CENTER FOR BIOTECHNOLOGY DEVELOPMENT Funds for the High Technology Program are allocated directly by SSTC. They are administered through CNCBD, a purely administrative body that was founded in 1983 at the suggestion of a group of eight visiting Chinese- American scientists headed by Ray Wu and Shain-dow Kung. In 1986, the "8 6 3 Plan" mandated CNCBD to spend approximately 30 million yuan* per year on highly applied projects in the areas of agriculture, medicine, and protein engineering. Grant proposals are peer reviewed by a separate subcommittee in each area and approved by an 11-member panel whose members are selected directly by SSTC. Grants are awarded for 3 to 5 years and are reviewed annually. Because of the highly focused nature of this program, the individual grants are by far the largest in China, typically in the range of 500,000 to 2 million yuan for 4 years. In 1987, 100 grants were awarded out of a pool of 500 applications. The distribution of grants according to subject area was 40 percent for agriculture, 40 percent for medicine, and 20 percent for protein engineering. These grants were approximately equally distributed between CAS, universities, and medical and agricultural institutes. The center is headed by Chief Engineer Liu Yonghui, who is assisted by Deputy Chief Engineer Xu Chengman. Scientific leadership is provided by Hou Yunde, chief scientist of the China National Expert Committee for Biotechnology Development and director of the Beijing Institute of Virology. The original concept was for CNCBD to coordinate all of China's biotechnology activities and to establish research centers in Beijing, Shanghai, and Jiangmen (Guangdong Province). As it now stands, however, CNCBD is primarily responsible only for the High Technology Program. The idea of a research center in Beijing has been abandoned, the Shanghai center is still under construction, and the Jiangmen base has been left to its own devices (see Chapter 4). Additional responsibilities include consultation and promotion activities, management of experimental animals and equipment, and supply procurement. The CNCBD is staffed by 45 people and has an annual operating budget of 300,000 yuan. Part of these funds are supplied by import-export companies that * The official rate of exchange is 3.71 yuan to US$1. RESEARCH PRIORITIES AND FUNDING MECHANISMS 8

CNCBD operates in Beijing, Hong Kong, and New York. Their primary export is experimental monkeys. Although the High Technology Program grants are peer reviewed, they are, in fact, more like contracts than Western-style investigator-initiated grants. This difference stems from the fact that essentially all of the grants support projects that are preselected through a complex negotiation process involving the SSTC, CNCBD administrators, and members of the China National Expert Committee for Biotechnology Development. While most Chinese scientists feel that the High Technology Program grants are fairly reviewed, there are those who signal their reservations by quoting a Chinese proverb, "Pavilions near the water receive the most moonlight." SEVENTH 5-YEAR PLAN (1986-1990) In the Seventh 5-Year Plan, total investment in biotechnology and closely related fields is approximately 100 million yuan, or 20 million yuan per year. These monies are provided through CAS, SEDC, and the Ministries of Agriculture, Public Health, Medicine, and Light Industry. The Seventh 5-Year Plan solicits and funds research in the areas of basic genetic engineering, plant genetic engineering, chromosome engineering, cell engineering, enzyme engineering, downstream processing, and bioengineering products. In 1987, 108 projects were approved and supported from a pool of 150 applications. The average grant was 200,000 yuan, although certain key projects were funded up to 2 million yuan. Thus, the Seventh 5-Year Plan grants generally have been smaller than High Technology Program grants but substantially greater than NSFC grants (see below). The Seventh 5-Year Plan grants are administered by CAS. Scientific direction is provided by Mang Keqiang, director of the CAS Expert Committee for Biotechnology and a professor at the Beijing Institute of Microbiology. Grants are reviewed by a single committee of 24 scientists and administrators. The high percentage of accepted applications would indicate a review process that is less rigorous than the one applied at CNCBD or NSFC, to the extent that it reflects primary concern about an application's conformity to goals set by the expert committee. NATIONAL NATURAL SCIENCE FOUNDATION OF CHINA The NSFC was founded in 1986 expressly to support basic research in China. It is somewhat similar to the U.S. National Science Foundation (NSF) in that it funds, in addition to biology, research in a wide variety of disciplines such as math, physics, and geology. In 1987, the Department of Biological Sciences received 3,507 applications, of which 979 were funded following the peer review RESEARCH PRIORITIES AND FUNDING MECHANISMS 9

process described below. The grants were distributed among four types of awards, as shown in Table 3, and are summarized here. General Awards In 1987, the standard general award was 30,000 yuan for 3 years, with little variation between individual grants. Universities and colleges received 63 percent of these grants. Notably, 67 percent of the awards were to investigators between 36 and 55 years of age. Key Projects This program, initiated in 1987, supports the ongoing projects of reputable investigators that are judged to have a high probability of success and benefit. In the first year, average funding was 40,000 yuan annually, or four times higher than that for the general awards, and 61 percent of the investigators were from academic institutions. Frontiers of High Technology This program, also initiated in 1987, is designed to support high technology fields such as biotechnology, information sciences, and aerospace sciences. Although these areas represent more applied science, this program constitutes only 8 percent of the NSFC grant budget. The average grant is only slightly higher than that for general awards. Young Scientist Awards This program is designed to support young scientists (under 35 years of age) who are starting their first independent projects. It is hoped that the program will entice scientists who have received their Ph.D.'s abroad to return to China. To this end, an applicant is allowed to apply for this award while he or she is living in another country. In 1987, 29 percent of the recipients had received training outside of China. The concept for NSFC grew out of the CAS Science Foundation, which was created in 1982 in order to award CAS research grants selectively. The NSFC adopted a peer review system directly modeled on that of NSF in the United States. As China's first peer review granting system, it represented an important step in modernizing and improving funding mechanisms that has come to be widely regarded by Chinese scientists as a fair and unbiased method for allocating the scarce funds available for basic research. RESEARCH PRIORITIES AND FUNDING MECHANISMS 10

TABLE 3 Biology Grants of the National Natural Science Foundation of China Percentage of Total Type of Award Funds (1987)a Median Granta Biology Funding NSFC Awardsb General awards 24.5 0.03 (3)c 83 30.6 Key projects 2.0 0.04 (1) 7 3.4 Frontiers of high technology 2.14 0.045 (3) 7 21.9 Young scientists 0.75 0.035 (3) 3 21.9 a In millions of yuan. b The remaining percentage of awards were given for non-biology-related research. c Values in parentheses are grant durations (in years). After 4 years of provisional operation, NSFC was institutionalized as a national organization administered directly by the State Council. The governing body of NSFC is an executive council consisting of 25 members appointed by the State Council. Administrative leadership is provided by Chairman Tang Aoqing, Executive Vice Chairman Hu Zhaosen, and four vice chairmen. The total 1988 budget for NSFC was 120 million yuan, representing a 20 percent increase from 1987 and a 300 percent incremental increase compared with average funding levels from 1982 to 1985. The NSFC publishes an annual list of research goals that are prioritized on a sliding scale. However, most of the goals, especially in biology, are broadly stated, providing ample room for initiative by individual investigators. Grant applications are evaluated using a year-long, five-step process: 1. Approval by the sponsoring institution. 2. Preliminary evaluation by the appropriate department of NSFC. Reasons for immediate rejection include concurrent funding by another agency, lack of appropriate laboratory facilities, unqualified principal investigator, lack of progress from the previous grant period, or inappropriate subject matter. 3. Solicited peer reviews by three to seven experts in the specialty area of the application. The reviews may include recommendations for modification of the proposal. (More than 10,000 scientists helped to review grants last year.) 4. Review by a panel of approximately 10 members for each program area. (In 1987, there were 41 panels comprising 488 scientists selected by NSFC from universities [51 percent], CAS [22 percent], and other research institutions [27 percent]). The panel members evaluate the peer reviews and suggest a funding priority. 5. Approval by the executive council. RESEARCH PRIORITIES AND FUNDING MECHANISMS 11

The NSFC also administers the National Science Awards, which were established in 1956 to recognize outstanding achievements by Chinese scientists. Although they were given only twice between 1965 and 1987, the awards are now being presented biannually. In 1988, there were 777 nominees, of whom 180 were selected for awards: 11 first prizes of 20,000 yuan, 39 second prizes of 10,000 yuan, 89 third prizes of 5,000 yuan, and 41 fourth prizes of 2,000 yuan, for a total expenditure of 1.13 million yuan. EVOLUTION AND CONSEQUENCES OF THE NEW FUNDING MECHANISMS The three programs just summarized represent a radical alteration in both the levels and methods of funding biological research in China. Just 5 years ago, total expenditures on biotechnology and related fields were less than 5 million yuan per year and were spent almost exclusively by CAS through a noncompetitive allocation system. Now expenditures are greater than 100 million yuan per year and are more evenly distributed among various types of research institutions through competitive grants. In the evolution of the new funding policies, three trends have become clear: the declining role of CAS, decentralization of the granting process, and strongly increased emphasis on applied research. The declining role of CAS, the first major trend, is signalled by its decreasing direct funding. In the past, CAS was primarily responsible for all of China's basic biological research and much of the applied research as well. However, concomitant with the greatly increased funding for the three new grant programs, the State Council and State Planning Commission decided to decrease direct funding for CAS according to the following formula: for basic research, a 6 percent decrease per year over 5 years to a final level of 70 percent; and for applied research, a 20 percent decrease per year over 5 years to a final level of zero. The only area that will be increased is research on China's natural resources. At present, CAS's total expenditures on biological research are 7 million yuan per year, of which 1 million yuan is earmarked for biotechnology. When seen in comparison with the figures presented in Table 1A, this represents only 1.7 percent of total biotechnology research expenditures. After the planned 5-year cuts and inflation have taken their toll, CAS direct expenditures will account for an even smaller proportion of total biology and biotechnology funding. In addition to these decreases in research funds, CAS is also under strong pressure to reduce the size of its administrative staff and to freeze the number of research workers. In order to achieve the latter aim, students and staff members studying abroad are counted as still occupying a CAS position, even in cases where researchers have already long overstayed their originally planned visits. Not surprisingly, CAS administrators have bitterly opposed the new funding policies. In some cases, such as the idea of establishing a biotechnology center RESEARCH PRIORITIES AND FUNDING MECHANISMS 12

under CNCBD, their arguments have been successful. In other cases, such as the formation of key laboratories at universities, their protests have been ignored. While many of the CAS arguments can simply be attributed to fear of competition, others are well founded. In particular, basic research is being short- changed both in this reorganization and by underfunding NSFC's mandate to support this type of research. As pointed out by Wang Yinglai, director emeritus of the Shanghai Institute of Biochemistry, it would have been difficult or impossible under current policies to have carried out one of China's greatest scientific achievements: the total synthesis of insulin. A second major trend has been the effect of the new granting process on the decentralization of research units. Previously, each research organization was funded exclusively by allocations from its danwei which, in turn, were set by the State Planning Commission. In the past, academic institutions received virtually no funds from their danwei (SEDC) for research. Now each organization, be they research institutes or university-based science departments, is expected to compete openly for funds from the three major granting organizations and other sources such as provincial governments and companies. As indicated in Table 2, the big winners in this game have been the universities and colleges, which now receive roughly half of all funding. The new policies have resulted in a hitherto unprecedented degree of autonomy both for research institute administrators and for individual researchers. The one constant is that the amount of funds allocated to each major program is still determined by the State Planning Commission through its Department of Science and Technology Planning, which is headed by Cai Dalie. The third major trend concerns the effects of the stated aim of both the High Technology Program and the Seventh 5-Year Plan to promote highly applied research that will become self-supporting within a short period of time. As elaborated in Chapters 6 and 8, this, for the most part, has involved the direct copying of Western research results with little attention to innovation, long-term development, or technology that is suited to China's unique circumstances. The only formal support mechanisms for basic research are grants from CAS, which as noted above are rapidly diminishing, and from NSFC. While NSFC controls a substantial amount of money, it is spread out among a large number of grants so that the usual grant of 30,000 yuan for 3 years is insufficient to equip or run a laboratory. The practical result is that only those investigators who already hold a High Technology Program or Seventh 5- Year Plan grant can effectively use their NSFC money to carry out basic research. In fact, many of China's top researchers do just that by diverting funds from goal-oriented grants to more basic research. In many other instances, however, poor applied research by unqualified investigators is being supported at the expense of good basic research by more qualified investigators simply because it is considered to be practical in terms of addressing the pressure to generate revenue-producing results. Clearly, this trend RESEARCH PRIORITIES AND FUNDING MECHANISMS 13

toward applied research is motivated by political policy considerations at higher levels. In contrast, the scientists interviewed during the evaluation trip were almost universally in favor of increased funding for basic research. Given the previous paucity of any research support, it is not surprising that many scientists have set aside this disagreement and have acquiesced to the new policies because they increase total funding. RESEARCH PRIORITIES AND FUNDING MECHANISMS 14

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