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China， once derided by many in the West as the “Great Imitator，” is set to become the world’s leading research and development （R&D） spender within about 10 years， according to a recent report by advisory firm KPMG.
This year， research firm Battelle and R&D Magazine predicted in their 2014 Global R&D Funding Forecast that China will spend $284 billion， a year-on-year increase of more than 20 percent， far eclipsing the U.S.’ same-period increase of just 1 percent.
China was estimated to commit $220 billion in R&D spending in 2013， second globally only to the United States， which is estimated to have spent $424 billion， according to KPMG.
China’s spending boom has been driven in large part by its 12th Five-Year Plan （2011-15）， which stipulates that the country should achieve R&D spending equal to 2.2 percent of its GDP by 2015 （it is now at 1.9 percent， compared to the U.S.’ 2.8 percent）. According to Battelle and R&D Magazine， China’s R&D investment is linked to national goals for “industrial growth， stable domestic evolution to an advanced economy， power projection and international prestige.” China’s three biggest R&D funding areas are agriculture and food production， military and aerospace technology and energy technology.
The over-riding goal of China’s R&D spending trend is to create an innovation-driven economy by 2020， one that can help the country transform from an economy heavily reliant on manufacturing and government investment to one fueled by innovation and high-tech industry. Already， KPMG notes， China graduates 900，000 engineering students per year， compared to just 80，000 in the United States. In addition， persistent policy initiatives boosting China’s IP protection laws and enforcement， paired with tax incentives for R&D centers， have made China one of the world’s “most attractive destinations” for R&D spending.
“China is investing heavily to create an innovation infrastructure that will allow it to develop， commercialize and market advanced technology-based products， moving beyond its established position as a low-cost location for manufacturing，” the Battelle and R&D Magazine study notes.
Despite the lofty rhetoric and sparkling investment figures， China faces daunting challenges in translating its policy goals into reality. Enterprises like Xiaomi and Alibaba， both massively successful， private technology companies lauded for their innovative streaks， are still rare. According to Austin Qie， Co-Founder and GM at Uplooking， a Beijingbased IT firm that trains students in web development skills， risk-taking and innovation is relatively uncommon in most facets of China’s economy， as the status quo and stable growth are valued more than shocking the system with new ways of thinking. “It goes back to the educational system，” Qie said， questioning whether more investment in R&D will result in China realizing actual results. “Maybe we do not teach our young to think creatively， or creatively enough.[More] Money is good， but maybe not enough.”
To help combat against this line of logic， China is doubling down on its efforts to establish an infrastructure that promotes scientific research and trains critically thinking scientists. Perhaps the biggest star in China’s burgeoning roster of scientific research institutions is Shenzhen’s BGI， the world’s largest genomics research firm that is home to up to 20 percent of the globe’s DNA sequencing capacity. It is currently China’s fifth-ranked publisher of peer-reviewed scientific articles behind only the Chinese Academy of Sciences （CAS） and three universities， according to the Nature Publishing Index. Its more than 5，000 scientists have become involved in ambitious projects - ranging from mapping the genome of individuals with autism to searching for a genetic link between genetics and IQ - worth billions of dollars in investment from public and private sources.
While BGI and other research facilities like it will presumably benefit from the influx of China’s R&D spending boom， ensuring that the billions of dollars earmarked for R&D actually find their way into the right pockets is another challenge. According to the China Economic Weekly， in 2012， of China’s $163 billion R&D budget， only 40 percent was actually used for research， while the rest went to cover business costs and “administrative affairs” like travel and food.
With stricter budget oversight and President Xi Jinping’s recent crackdown on extravagance， it is yet to be seen whether this ratio will improve， and China’s R&D investment can lead to a true renaissance of innovation. CA
This year， research firm Battelle and R&D Magazine predicted in their 2014 Global R&D Funding Forecast that China will spend $284 billion， a year-on-year increase of more than 20 percent， far eclipsing the U.S.’ same-period increase of just 1 percent.
China was estimated to commit $220 billion in R&D spending in 2013， second globally only to the United States， which is estimated to have spent $424 billion， according to KPMG.
China’s spending boom has been driven in large part by its 12th Five-Year Plan （2011-15）， which stipulates that the country should achieve R&D spending equal to 2.2 percent of its GDP by 2015 （it is now at 1.9 percent， compared to the U.S.’ 2.8 percent）. According to Battelle and R&D Magazine， China’s R&D investment is linked to national goals for “industrial growth， stable domestic evolution to an advanced economy， power projection and international prestige.” China’s three biggest R&D funding areas are agriculture and food production， military and aerospace technology and energy technology.
The over-riding goal of China’s R&D spending trend is to create an innovation-driven economy by 2020， one that can help the country transform from an economy heavily reliant on manufacturing and government investment to one fueled by innovation and high-tech industry. Already， KPMG notes， China graduates 900，000 engineering students per year， compared to just 80，000 in the United States. In addition， persistent policy initiatives boosting China’s IP protection laws and enforcement， paired with tax incentives for R&D centers， have made China one of the world’s “most attractive destinations” for R&D spending.
“China is investing heavily to create an innovation infrastructure that will allow it to develop， commercialize and market advanced technology-based products， moving beyond its established position as a low-cost location for manufacturing，” the Battelle and R&D Magazine study notes.
Despite the lofty rhetoric and sparkling investment figures， China faces daunting challenges in translating its policy goals into reality. Enterprises like Xiaomi and Alibaba， both massively successful， private technology companies lauded for their innovative streaks， are still rare. According to Austin Qie， Co-Founder and GM at Uplooking， a Beijingbased IT firm that trains students in web development skills， risk-taking and innovation is relatively uncommon in most facets of China’s economy， as the status quo and stable growth are valued more than shocking the system with new ways of thinking. “It goes back to the educational system，” Qie said， questioning whether more investment in R&D will result in China realizing actual results. “Maybe we do not teach our young to think creatively， or creatively enough.[More] Money is good， but maybe not enough.”
To help combat against this line of logic， China is doubling down on its efforts to establish an infrastructure that promotes scientific research and trains critically thinking scientists. Perhaps the biggest star in China’s burgeoning roster of scientific research institutions is Shenzhen’s BGI， the world’s largest genomics research firm that is home to up to 20 percent of the globe’s DNA sequencing capacity. It is currently China’s fifth-ranked publisher of peer-reviewed scientific articles behind only the Chinese Academy of Sciences （CAS） and three universities， according to the Nature Publishing Index. Its more than 5，000 scientists have become involved in ambitious projects - ranging from mapping the genome of individuals with autism to searching for a genetic link between genetics and IQ - worth billions of dollars in investment from public and private sources.
While BGI and other research facilities like it will presumably benefit from the influx of China’s R&D spending boom， ensuring that the billions of dollars earmarked for R&D actually find their way into the right pockets is another challenge. According to the China Economic Weekly， in 2012， of China’s $163 billion R&D budget， only 40 percent was actually used for research， while the rest went to cover business costs and “administrative affairs” like travel and food.
With stricter budget oversight and President Xi Jinping’s recent crackdown on extravagance， it is yet to be seen whether this ratio will improve， and China’s R&D investment can lead to a true renaissance of innovation. CA