Despite the fact that cheap labor is one of the greatest advantages of the Chinese economy, mechanization is becoming increasingly prevalent. And, given the national campaign to make China an innovative country by 2020, this process is likely to accelerate.

This is certainly the case at Decision, a chemical company in Southwest China's Sichuan Province that, following the introduction of an automated production line last year, notched up impressive financial results.

"It's magic, as only two technicians can finish the work which used to be done by about 30 workers," said Decision President Peng Xiancheng, whose company has grown into a leading private business in Deyang, the province's economic hub.

As part of measures to promote innovation, this country has been offering tax breaks in order to encourage the purchase of domestically manufactured production lines. That may help boost profits, but it will also mean a loss of jobs.

In this new round of reform which started at the beginning of last year, companies, instead of the government, are being encouraged to play a more central role in the country's research and development (R&D) activities with increased fiscal investment, tax breaks and even governmental procurement being put in place.

However, less attention is paid in the policy package announced in March 2006 to helping farmers and the poor improve their scientific literacy and ability to cope with technological changes. And during the implementation of this package in recent months, farmers and needy people have enjoyed far less benefits than the corporations.

If the government doesn't sense the urgency of this situation and adjust this policy imbalance, farmers and the poor will be far too unskilled to find jobs in upgraded or new workplaces, their income will not increase rapidly enough and the growing social divide will be further widened.

Already alerted by current economic and social inequality which may result in social unrest, China's leadership is unwilling to see this scenario materialize. As a result, it has put social harmony high on its agenda as we head toward 2020.

In its science policy, China has learnt two important lessons over the past 30 years. One is that its market, no matter how huge its potential, cannot lead developed countries to sell core technologies to a country with such poor scientific literacy. The other lies in the inefficiency of its R&D and its inability to efficiently put the results of its research into production due to too much government involvement in these activities.

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