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The Chinese cities with the best environment for innovation are Shanghai, Hangzhou, Qingdao, Shenzhen, Suzhou, Beijing, Changzhou, Yantai, Guangzhou and Shaoxing, according to a survey conducted by the National Bureau of Statistics and reported in today's People's Daily. Shanghai came out stops as the ideal location to start a business.

The survey found that the majority of research and development funding was spent on improving existing products and technology while one third went on developing new ideas and basic research programs.

According to the survey 33 percent of funds were used to improve efficiency and reduce the costs of production; 31 percent was spent perfecting current technology and doing research to widen the current use of products; 24 percent went on the development of new products and technology; 9 percent was used in basic research and the remaining 3 percent was spent in other areas. 

The survey showed that internal fund-raising was the major source of finance for innovation. Over 75 percent of funding came from enterprises themselves, 12 percent from loans and less than 5 percent from the government, partners and capital market sources. 

"As the majority of funds for research and development are raised by the enterprises themselves the capital support mechanism is expected to be perfected and reinforced," said Yao Jingyuan, a chief economist at the National Bureau of Statistics.

(People's Daily October 25, 2006)