China's expenditure on R&D hits new high of 2.44% of GDP

China’s spending on research and development (R&D) has hit a new high of 2.44% of gross domestic product (GDP) in 2021, up 0.03 percentage points year-on-year, as the country strives for stronger innovation capabilities to achieve more tech breakthroughs. The National Bureau of Statistics (NBS) said that the country’s total R&D expenditure hit about CNY2.79 trillion last year, a year-on-year increase of 14.2%. The percentage of R&D expenditure to GDP is also close to the average level of 2.47% for the Organization for Economic Cooperation and Development (OECD) economies before the outbreak of the Covid-19 pandemic. “The country’s R&D investment maintained rapid growth, as the domestic economy continued to recover steadily and drove more spending on technological innovations. Notably, investment in basic research continued to increase and returned to double-digit growth,” said NBS Statistician Zhang Qilong.

Last year, the country spent about CNY169.6 billion on basic research, a 15.6% year-on-year increase. The growth rate is also 5.8 percentage points higher than the previous year. “Accelerated efforts have also been made in the construction of key laboratories, driving breakthroughs in areas such as space exploration, nuclear physics, quantum science and biological engineering,” Zhang said. According to China’s 14th Five Year Plan (2021-25), the country will scale up spending on research and development by more than 7% annually during the period to drive more technological breakthroughs. Consulting firm McKinsey and Co said in a report that 7% growth would set the country on the path to become the world’s largest spender on R&D.

Peng Wensheng, Chief Economist at the China International Capital Corp (CICC), said: “As demographic dividends gradually decrease, China’s economy will rely more on technological innovations in the future. To achieve such technological progress, continuous R&D investment is a key.” Increased R&D has been reflected in the rising number of patent approvals. A recent report from IFI Claims, a U.S. patent service provider, said that patents granted to Chinese companies in the U.S. in 2021 increased by around 10% to 20,679, while approvals for U.S. patents declined about 7% from 2020 to 150,801 last year, the sharpest drop in the past decade. However, Peng said that China still has a long way to go to bridge the gap with developed countries like the U.S., both in R&D investment in basic research and the proportion of R&D investment to GDP, the China Daily reports.