This report analyzes both positive and negative aspects of China's prospect of moving from imitation to innovation. The positive aspect is analyzed by Chinese innovation input/output index ratio and case studies of today's innovative companies of Korea and Japan. It is shown that China is on the right track toward innovation by following an Imovator strategy. However, three impediments to be overcome are also identified by analysis of government issues, corporation issues and leadership issues. Finally, a bright future toward innovation is projected for China with examples of successful innovation cases.