The Interplay of ICT, Innovation, Per capita GDP and Chinese Tech Policy

China’s unprecedented growth rate in the last decade is driven by its role as the global manufacturing powerhouse, but trade tensions with the U.S will affect economic growth for both superpowers. Meanwhile, several papers have sought to understand the impact of trade on innovation. Several studies emphasize the role of technology and knowledge spillovers into the real economy, driven by trade activity. Although increases in innovation stemming from R&D activities are palpable, the extent of economic growth is contingent on the market size (IMF 2004). This paper investigates the relationship between exogenously driven growth, proxied by ICT imports, and Chinese innovation. The study verifies the hypothesis by constructing an algorithm that investigates the nature and extent of the relationship, while the Augmented Dickey Fuller test is used to test for multicollinearity. The study postulates evidence-based policy recommendations that will at once facilitate the transition of the Chinese economy towards an innovation-driven and consumer-centric growth model.