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December 4, 2006
China R&D Passes Japan, Second Only to U.S.
According to OECD figures (in .xls format), China R&D spending will have passed Japan in 2006, making that country second only to the U.S. worldwide in such expenditures.
Remarkable stuff.
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Does this chart include purchased R&D expenditure, such as the one from IBM to Lenovo? If so, then no wonder the growth can be higher: Chinese companies will be able to buy functioning labs instead of having to create them from scratch.
And, of course, one could easily argue that the graph significantly understates China's current R&D spending. 1) The yuan is not reliably valued (even using PPP), and 2) a significant part of R&D costs are labour, which is of course much cheaper in China.
Although the quality of that workforce may be lower than US/Japan/EU equivalents, it isn't THAT much lower, and what gap there is seems to be narrowing rapidly.
Based on what I have heard anecdotally about Chinese R&D (fully loaded, adjusting for lack of experience and lower quality) I would say that the CURRENT effective Chinese R&D spend is actually more or less in line with US spending, certainly ahead of the EU-15, and therefore neck and neck for first place.