China: A Rising R&D Power

By the end of 2006, China will be the second-highest investor in research and development, according to OECD figures

By the end of 2006, China will be the second-highest investor in research and development, according to figures from the Organisation for Economic Co-operation and Development.

The burgeoning economic powerhouse has rapidly increased the money and manpower being invested in R &D, and spending by government and businesses will reach more than US$136 billion in 2006, the OECD said Monday.

For comparison, Japan, formerly the nation with the second-highest investment in research and development, will dole out US$130 billion this year, and the EU nations (including France, Germany and the U.K.) together will allocate US$230 billion.

"The rapid rise of China in both money spent and researchers employed is stunning. To keep up, OECD countries need to make their research and innovation systems more efficient and find new ways to stimulate innovation in today's increasingly competitive global economy," Dirk Pilat, the head of the OECD's Science and Technology Policy division, said in a statement.

The U.S. maintains a strong lead as the No. 1 spender on innovation at US$330 billion, but not as large a lead when it comes to personnel. China saw an increase in the number of researchers of 77 percent between 1995 and 2004. The country now has 926,000 researchers, compared with 1.3 million in the U.S., according to the OECD report, "Science, Technology and Industry Outlook 2006."

As China has grown in leaps and bounds economically, it has also been gaining in outsourcing, patent portfolio evaluation, chip manufacturing, and even Internet usage, the report noted.

The calculations on R&D were based on spending trends observed between 2000 and 2005, the OECD said.

What is most notable, according to the report's authors, is the rate at which China's numbers are growing. Its R&D went from 0.6 percent of its GDP (gross domestic product) in 1995 to more than 1.2 percent in 2004. That doubling growth rate is faster than the rate of growth for China's entire economy.

The OECD includes members from 30 democratic nations, including the U.S.