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China moves into second place for R&D

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| Slowing Productivity Growth?

December 04, 2006

China moves into second place for R&D

Michael Mandel

A new report from the OECD says:

China will this year for the first time spend more on research and development (R&D) than Japan and so become the world’s second highest investor in R&D after the United States, according to OECD projections based on recent trends.

In China, the number of researchers increased by 77% between 1995 and 2004. China now ranks second worldwide with 926 000 researchers, just behind the United States (more than 1.3 million), and Russia ranks fourth.

01:47 PM


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This is good, of course. Any innovations over there will lead to products that would be marketed to US consumers.

But I doubt they can come up with as many good ideas as the US, as R&D required a nurturing of free thought, which ha to eventually accompany democratic reform.

China cannot expect to remain a single-party authoritarian state while expecting to get amazing new R&D innovations simultaneously.

Posted by: Kartik at December 4, 2006 03:20 PM

The flat earth is connected, they will do more heavy lifting on innovation and we 'the creative customers' will find a creative want and need. IBM invests there and in India for backend office services inside companies here and world wide. China does more r&d lifting, the world needs to do more creative consuming. Everyone has a part in the complex partnership, west and east are joined in filling and growing demand worldwide.

Posted by: Mike Reardon at December 5, 2006 06:01 PM

Okay, these are the optimistic there any reason to view this negatively?

Posted by: Mike Mandel at December 6, 2006 10:11 AM

The main negatives would be if this research could apply towards military technologies.

Posted by: Kartik at December 6, 2006 02:14 PM

I think there is a lot of arrogance in the suggestion that Chinese R&D won't be as good as American R&D. For whatever reason - nurture or nature - the Chinese excel in the sciences; and they're catching up quickly in capital resources. I'm not worried about the Chinese investing in military equipment R&D because future wars between any major powers will be fought with data, not bombs; attacks will be on digital infrastructure not physical infrastructure. But this is where the Chinese may well gain a "military" advantage in addition to an economic advantage. If the Chinese can match or beat us at the innovation game, what do we have left with to compete in a global economy?

Posted by: Brandon W at December 7, 2006 12:01 PM

A disadvantage for the US is that fewer Chinese scientists may want to immigrate here as their native country's R&D facilities improve. As we import such a high percentage of our scientists, the quality of our scientific talent pool might decrease.

Posted by: Lew at December 7, 2006 07:59 PM

The negative that we can't produce half the products in a midsize Wal-mart store has been coming at the nation over the last thirty years. From the rise of transnational corporate investment, to Japanese auto competition, to steel from Korean and Singapore, and for the last fifteen years Asian electronic dominance, to recent full product manufacturing from China to innovation in China and India and eastern Europe. The trade for lower cost products and services has been fully subscribed to by American business investors, all by fair trade for lower cost products and services that are a plus for our economy. The model we may now need to pattern our economy on may be closer to Australia or Denmark than the great engine of democracy. Economists and politicians now need to find and encourage tax and investment that better reflects the economic choices we have made along the way, and get out of subsidizing past economic structures that we have traded away.

Posted by: Mike Reardon at December 7, 2006 08:06 PM

Australia? What would have to be different about policy if the U.S. looked like Australia?

Posted by: Mike Mandel at December 8, 2006 10:40 AM

Australia does have a balance of trade deficit of 7% of GDP, but I picked Australia because it is a respectable western style nation that still has economic promise in its commodities, where something in the vain of Jamaica would be attacked as drawing in to many remittances and is only centered in tourism. The main idea comes from the passing of the industrial engine of democracy that America once clearly was, China and Asia are now taking a larger portion of that role for the whole world. Australia and Denmark do still carry on by trade. I see American consumers in a trade and finance economy, that probably needs a tax and fiscal structure that gives more employment support than excess profits. We need to rethink ourselves as a trading economy not the masters of production.

Posted by: Mike Reardon at December 8, 2006 08:42 PM

I remember a BW report talking about converting R&D into Actual products or ideas, etc.

May be that is where US scored in the past. . .

So even though China may be 2nd highest, Japan still leads in the conversion rate

Posted by: Tirath at December 10, 2006 06:27 AM

Firstly, I should show my nation is China. I read this news occasionally and get a view of the discussions about it.

I don’t know what the information of china has been expressed to the western people by the western medium. I oppugn why if china spend more on research and development that will make someone to imagine the money will just spend on the military technologies.

Though I agree there are so many problems in a single-party authoritarian state. Free speech, election, corruption wrap the development of China. But I don’t think it is just only china have to face to it. You should know China have enormous populations; the huge populations will enlarge any small case to a big problem. I think the democracy is a long way to China; everything also has its roles in the developing world. But if you come to china maybe you have a brand-new reflection of it.

At last, I should say the title of “China moves into second place for R&D” is for economic not for the politics. Why not regard it as a positive signal.

Posted by: Jacky So at December 10, 2006 10:10 PM

This is good, of course. Any innovations over there will lead to products that would be marketed to US consumers.

Posted by: John at December 27, 2006 06:28 PM

The speed at which China's economy is growing is relevant. In less than a decade China has caught up the U.S. The Chinese have higher savings and investment rates than Americans. Their higher savings rates lead to higher physical and human capital accumulation, which leads to higher growth rates. It's smart that they've expanded the definition of capital to include human as well as physical capital.

Posted by: Jill at January 1, 2007 11:43 AM

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