According to a recent report by Swiss financial firm UBS, China is being transformed, from being the world’s factory to an innovation-driven nation. China’s “demographic dividend” will be replaced by a thriving “engineer dividend”, said Hou Yankun, chief China strategist at UBS China.

This significant evolution was made possible by the increasingly strong government support for research and development, growing investments from venture capital, and the rising level of people’s education, said Hou. Also, China has created a flexible market ecosystem in which consumers have a higher tolerance for products at preliminary stages.

According to the report, China’s expenditure on research and development registered an 18-percent annual compound growth rate in the last decade, substantially higher than increases in its GDP. Meanwhile, China strongly supported development in information technology, new industries, and household appliances.

Chinese enterprises will exert a paradigm-shifting impact on the global industrial competition landscape in more realms, said Hou.