This article reveals the role of research and development (R&D) policies in the development of the technology-intensive industries of China. Since economic reform began in 1978, the Chinese government has transformed the R&D system from one that was wholly centrally planned into a more market-orientated system, making it more efficient and productive. At the same time, the state, its incentives and its investment remain significant. The government has increased the R&D expenditure rapidly, while trying to develop indigenous technologies. It has actively utilised foreign direct investment inflows as the means to introduce advanced technology from developed countries. It has also provided systematic guidelines and established the economic technology development zones and high technology industrial development zones, in order to channel foreign investment inflows into technology-intensive industries. China has placed emphasis on the development of human resources in science and technology as well. Finally, the implications of the role of government in developing technology-intensive industries are considered.