China’s (R&D) Rise

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China’s moves to climb up the value chain is a well-known story by now (see here on growth in patent filings and here on exports of value-added goods), but the scale of the endeavor may surprise. iTWire notes a new report from OECD that predicts China will be second only to the US in terms of R&D investment, by the end of this year. Details include:

    • China is projected to spend just over US$136 billion on R&D in 2006 (compared to Japan’s $US130 billion, the US’s US$330 billion and the the EU-15’s US$230 billion.
    • China’s spending on R&D as a percentage of GDP has grown from 0.6 percent 1995 to over 1.2 percent in 2004, and is growing at a faster rate than the economy as a whole.
    • The number of researchers in China increased by 77 percent from 1995 to 2004 with the total now standing at 926 000 (the United States has over 1.3 million).

Dirk Pilat, head of the OECD’s science and technology policy division is quoted as saying:

    “To keep up, OECD countries need to make their research and innovation systems more efficient and find new ways to stimulate innovation in today’s increasingly competitive global economy.”

Of course, one of the ways that companies are getting more efficiency is by moving their R&D to China so, as with China’s exports, a lot of this activity may already include “foreign” inputs. However, it is certainly right that foreign firms need to focus on where they can add value – especially at the top of the market where innovation will remain critical (and closer to home).

See news source:

China now number 2 in R&D spend: “Stunning” says OECD
iTWire – Australia
By Stuart Corner. The OECD expects China to become world’s second highest investor, after the USA, in R&D by end of 2006, according to the OECD. …

OECD Report Link

4 Responses to “China’s (R&D) Rise”

  1. Jeremy Gordon Says:

    From Engaging China – Lies, damn lies and Chinese research:

    “Bruce Einhorn, BW’s veteran Asian technology correspondent, has discovered that the OECD inflated China’s figures by a factor of four to take account of the “real purchasing power” of the yuan.”

    Yet again the figures should be taken with a pinch of salt. At least.

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