BOAO, Hainan - Economists and entrepreneurs attending a sub-forum of the 2013 Boao Forum for Asia Annual Conference have discussed how Chinese firms, faced with rising costs and shrinking returns, must innovate to survive the global economic slowdown.

But the country's longstanding weakness in innovation remains the most pressing issue facing Chinese society, they acknowledged, at a sub-forum ahead of the opening of the annual conference in South China's Hainan province.

The question is, why?

At this sub-forum, senior economists more accustomed to the role of instructors turned their ears to what enterprises have to say.

Edmund Phelps and Ronald Coase, both Nobel Prize winners for economics, and Chinese economist Zhang Weiying were among those taking part in the event on Friday.

Coase, who was not present at the scene, sent a question to the event, asking about Chinese entrepreneurs' views of the evaluation that China lagged behind its Western counterparts in technological innovation in both the 18th and 19th century's industrial revolution and what are the reasons behind the restricted innovation?

Chen Feng, chairman of Hainan Airlines, said the current situation in China is different from during the Industrial Revolution, when European countries and the United States rose to dominate the world by dint of technical and institutional innovation.

Yet three decades since the reform and opening-up policy rejuvenated China's innovation process, it is still impeded by the country's historical burdens, huge population and economic backwardness, Chen said.

"Over the past three decades we have made a remarkable progress in innovation, but don't forget the fact that we are still in the primary stage of socialism," Chen said.

Chen believes it will take time for innovation-friendly mechanism and culture and a group of talents capable of innovating to be nurtured in China, which will aid its rise to a heavyweight in innovation.

Although efforts by entrepreneurs like Chen have taken China far from its sweatshop image in recent decades, industrial giants are conscious of the uneven road ahead, with many such operations lacking pedigree in innovation as well as capital support.

The main results of China's industrialization were not breakthroughs in technology but environmental constraints and overcapacity brought by unlimited exploration, Xu Lejiang, CEO of Shanghai-based Baosteel Group, said at the forum.

Innovations have not been effectively encouraged in this environment, he added.

However, Hu Zuliu, CEO of investment firm Primavera Capital Group, said there is "no need to reinvent the wheel."

Considering China's current situation, according to Hu, it will be enough for its businesses to merely put twists on existing technology, rather than come up with independent innovations.

"Chinese enterprises can draw lessons from Western counterparts' experiences and technological advancement," he said.

Edmund Phelps seemed to disagree, saying innovation means to stand up to be different, to leave one's own mark, not to simply imitate to secure recognition.

The three-day Boao Forum for Asia Annual Conference started on Saturday in Boao, a scenic town in southernmost China's island province of Hainan. It adopted the theme of "Asia Seeking Development for All: Restructuring, Responsibility and Cooperation."

Special Coverage: Forum focuses on restructuring