China passes Japan in R&D spending

With R&D spending totalling $136B, China now spends more than Japan ($129B), but still has some way to go before catching the U.S. ($338B), the OECD said.

China now spends more on research and development than Japan, but still only invests a little over a third as much as the U.S., according to the OECD.

Although China's economy is growing at between 9 percent and 10 percent a year, its R&D spending is growing even faster, the Organization for Economic Co-operation and Development said Monday. OECD member countries need to stimulate innovation in new ways, and make their research processes more efficient if they are to compete, the organization warned.

U.S. R&D spending this year will total US$338 billion, compared to China's $136 billion and Japan's US$129 billion, according to OECD estimates. The 15 original member states of the European Union will spend US$233 billion on R&D this year, the OECD said, assuming that the countries' spending continues to grow at the same rates as between 2000 and 2004.

The OECD's figures, drawn from its report "The Science, Technology and Industry Outlook 2006," show that 926,000 researchers are involved in China's R&D efforts, an increase of 77 percent between 1995 and 2004, while in the U.S. the figure is just over 1.3 million: China has two-thirds the number of researchers for only one-third the spending.

Although the OECD compares figures for national R&D spending, a growing proportion of that investment comes from other countries, thanks to multinational companies. More than 16 percent of business-funded R&D in the OECD was performed by foreign affiliates in 2004, the organization said, up from 12 percent in 1993. The share of inward R&D funding exceeded 40 percent in five countries: Australia, the Czech Republic, Hungary, Ireland and the U.K.

While countries compete with one another to attract this inward R&D investment, they are also competing for researchers, and the political issue of human resources is taking on greater urgency, the OECD said. The U.S. now has 9.3 researchers per 1,000 in the labor force, compared to 10.3 in Japan and only 5.8 in the 25 member states of the European Union.

Replacing those researchers, or increasing their numbers, will get harder: Fewer students are graduating in science and technology subjects in Denmark, Finland, Germany, Hungary, Italy, South Korea and the U.S., the OECD found, and in the U.S. the number of doctoral students enrolling is also falling. The European Union now produces more doctoral graduates in science and technology than the U.S. -- but it is the U.S. that offers them the most jobs: half of the 46,716 post-doctoral positions open in 2003 went to foreign graduates, the OECD noted.

The OECD has 30 members states "sharing a commitment to democratic government and the market economy." The members include Australia, Japan, Mexico, New Zealand, South Korea, Turkey, the U.S. and 18 European countries including France, Germany, Italy and the U.K.

The OECD Web site offers further details of the report.

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