As the U.S. Cuts R&D Spending, China Is Raising Its Stake

China is increasing its investment and may overtake the U.S.
Photograph by Corbis Images

As a percentage of total federal spending, research and development is at its lowest levels since 1956, the year before the Soviets launched Sputnik. The past five years have seen a particularly sharp drop: Federal funding for R&D in areas such as medicine, defense, energy, and agriculture has dropped 10 percent since 2009, adjusted for inflation, according to a new analysis from the Congressional Budget Office. There’s no sign that will be reversed in the next congressional session. The most recent proposal by Budget Committee Chairman Paul Ryan (R-Wis.) suggests government should be “paring back applied and commercial research and development” and leaving it to the private sector.

As chair of the House subcommittee responsible for the National Institutes of Health, former Illinois Representative John Porter, a Republican, led a successful effort to double the NIH budget between 1998 and 2004, a period when federally funded researchers completed mapping the human genome. “What’s really different now is that people don’t work together like they used to” in Congress, says Porter, now chairman of Research!America, a nonprofit that lobbies for increased public funding for medical research.

“We have competition that we didn’t have for a long, long time, from China, from India, from Singapore,” says Porter. China doubled its R&D spending between 2008 and 2012, even as its economy slowed. Its national plan calls for boosting R&D to 2.5 percent of gross national product by 2020, from 1.98 percent in 2012, according to a November report from the Organisation for Economic Co-operation and Development. This year, China is expected to overtake the European Union in total public and private R&D spending, and the OECD projects it will outspend the U.S. within five years.

The rise of U.S. public spending on R&D coincided with President Kennedy’s 1961 commitment to put a man on the moon. President Obama hasn’t articulated any similarly ambitious goals during his time in the White House. In some cases, private industry, which covers about two-thirds of American R&D investment, has stepped in: Billionaires Elon Musk and Richard Branson have poured millions into developing commercial space travel as NASA mothballed its space shuttle program.

The CBO argues the federal government could do more to clear a path for private-sector research. Devoting additional public resources to easing the transfer of government technology, it says in its report, “would help private innovators better utilize the specialized equipment and expertise available at federal laboratories.” That cooperation has yielded innovations such as GPS, voice-recognition software, and the Internet, all of which began as projects of the Defense Advanced Research Projects Agency.

“There are very few high-technology sectors that don’t benefit in some way from the foundation that’s laid by federal research,” says Matt Hourihan, director of R&D budget and policy at the American Association for the Advancement of Science. “It’s impossible to say what we’re not getting.”

    BOTTOM LINE -

    The bottom line: American belt-tightening may mean the next big leaps of innovation happen somewhere else.

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