Abstract: Along with the booming development of open innovation concept and practice, innovation policy has been adjusted accordingly. This paper traces back the concept formation of open innovation as well as introduces worldwide practices to build up a theoretical base for the purpose of understanding Chinese innovation system. With the sprout of open innovation practices, Chinese innovation system starts the process of an innovation paradigm transformation from the systematic innovation system to open innovation. Yet, concurrent policy instruments could not effectively support this transformation. Policy design and policy framework are discussed in the paper with two major conclusions: firstly, introduce the concept of open innovation into the concurrent innovation policy system, and encourage the usage of financial policy, taxation policy to reward innovative entities; secondly, guide public R&D investment to build up public knowledge database, which could leverage private innovation from the bottom up.