A new book, co-written by Max von Zedtwitz and Georges Haour, says China is on its way to become a major power in innovation. Provided to China Daily

"Outside of China, all the focus is on the big companies like Huawei and Alibaba that are global leaders, but what is not always seen is the role smaller companies are now playing in innovation."

The book points out that China is to increase fivefold the proportion of GDP it devotes to innovation from 0.5 percent in 1995 to 2.5 percent by 2020. This will involve the need for 3.7 million scientists working in research and development.

Currently, the figure is the same as Europe, 2 percent－despite the European Union setting a target of 3 percent in 2007. This has resulted in a 17 percent annual increase in patents in China since 2005 with applications reaching 2 million in 2014－three times as many as that of the United States, although importantly, a smaller proportion is of higher-quality invention patents.

Currently, 31 percent of undergraduate degrees in China are in engineering compared with 5 percent in the US, and by 2030 the country aims to have 200 million college graduates.

"There is definitely a race going on, and I don't think the West has actually caught up with the severity of that race. China is opening up a new international front in the area of innovation. Because people matter so much in the race, the more people you have, the better you are at it."

Von Zedtwitz believes one of the cutting-edge areas could be in finding a cure for cancer.

"Cancer is a big issue in China because of fears of the impact of the environment on people's health. Because of the size of the country's population, many more people are going to be dying of cancer in China than anywhere else.