Through international comparison and logical deduction, this book argues the following core propositions: to overcome the middle-income trap, China must achieve an innovation transformation, i.e., the pattern of economic growth must shift from being driven by imitative innovation to being driven by independent innovation. Based on the rigorously defined concepts of imitative innovation and independent innovation, the book focuses on the mainline model of the innovation process, and distinguishes different innovation groups corresponding to basic research and different innovation activities. Adopting a non-traditional research paradigm of necessary condition recourse, this book extracts the chain of necessary conditions of innovation performance – innovation action -- innovation capability -- innovation incentive. It can thus be proved that the construction of an inclusive innovation environment is a necessary condition for innovation transformation, and that the key to the cultivation of independent innovation capability lies in the provision of action incentives for innovation agents in long run.