China’s Great Leap Forward in Research and Development

According to a report released by the U.S. National Science Board (NSB), the United States is still leading in the world in gross domestic expenditure on Research and Development (R&D). However, the nation’s global share of R&D has been decreasing over the last 15 years, whereas China’s share has been increasing steadily over the last 25 years.

According to the NBS report, China’s R&D spending skyrocketed by approximately 20.3% per annum between 1992 and 2017, with the nation’s expenditure amount for 2017 reaching a whopping $254 billion (about 1.76 trillion Yuan).

The figure marks a year on year increase of 12.3%, as the nation pursues a development strategy through technological and scientific progress. That figure is also 123 times the amount China spent on R&D in 1991.

“The year-to-year growth in R&D spending indicates firm governmental and social support for making China a scientific power,” said Xie Xuemei, a specialist in innovation economics at Shanghai University in China.

One of the main reasons China’s R&D spending is surging so rapidly is that the nation is trying to gain a competitive advantage over other nations in emerging industries.

According to a different report by the Organization for Economic Cooperation and Development, the biggest source of China’s R&D funding is its business sector; which mirrors the financing trend of advanced economies.

The nation’s business enterprise sector coughed up approximately 76% of the total R&D expenditure in 2017, up from 2000’s 57% contribution. In the United States, the business sector contributed 62% of the total R&D expenditure in 2017, while Japan businesses funded 78%.

That said, the business sector is not the only factor contributing to the nation’s surge in R&D expenditure. The figures were also partly propelled by set government measures. According to the 13th Five Year Plan (2015-2020), China set a goal of hitting an R&D spending –to–GDP ratio of 2.5 percent by 2020.

It also vowed to implement strategies and build up core technologies that push for innovation-driven developments. If everything goes as planned, that will bring China in a head-to-head competition against the United States, which is the current main exporter of technology-intensive products.

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