China's Investment in Science and Technology Increases and the Growth of R&D Investment Accelerates

2019-01-14 15:17:00 | Source:National Bureau of Statistics

     Recently, the National Bureau of Statistics, the Ministry of Science and Technology and the Ministry of Finance jointly issued the Statistical Bulletin of National Science and Technology Funding in 2017. Zhang Peng, a senior statistician from the Department of Social, Science and Technology, and Cultural Statitics of the National Bureau of Statistics, interpreted the Bulletin.

     I. R&D investment maintains rapid growth and investment hits a record high once again

 According to the data of the Bulletin, China's total R&D investment in 2017 was RMB 1,760.61 billion and increased by RMB 192.94 billion over last year, which grew by 12.3%, 1.7% higher than last year; the intensity of R&D investment (ratio of R&D investment and GDP) hit a record high of 2.13% once again, increased by 0.02% over 2016.

 Compared with developed countries[1], China's R&D investment presents four features. Firstly, the gap between China and the United States in total investment is narrowing year by year. In 2013, China's total R&D investment ranked second in the world for the first time. In that year, the total R&D investment was about 40% of that of the United States, which ranked first in the world. The proportion is expected to approach 60% in 2017. Secondly, the annual net increase has exceeded the total increase of OECD members. In 2016, the net increase of China's R&D investment was RMB 150.69 billion, exceeding the sum[2] (RMB 97.37 billion) of OECD members over the same period. Thirdly, the growth rate stayed ahead of the world. From 2013 to 2016, the annual increase of China's R&D investment was 11.1%, while that of the United States, European Union and Japan over the same period was 2.7%, 2.3% and 0.6%, respectively. Fourthly, the investment has reached the level of moderately developed countries. From the perspective of R&D investment of 35 OECD members in 2016, the proportion of China's R&D investment in that year was 2.11%, falling in between France (2.25%) in the 12th place and Iceland (2.10%) in the 13th place.

     II. The structure of R&D investment is improved and the allocation of resources is further optimized

     (I) The proportion of basic research funds has been further increased. In 2017, China's basic research funds amounted to RMB 97.55 billion and grew by RMB 15.26 billion over last year, with an increase of 18.5% over last year; the growth rate increased by 3.6% over last year, hitting the peak in the past five years; the proportion of basic research funds in R&D funds was 5.5%, increased by 0.3% over last year, which continued the steady upward trend since 2014 and reached the highest level since 2005. Specifically, the funds for the institution of higher learning, government-affiliated  research institutions and enterprises were RMB 53.11 billion, RMB 38.44 billion and RMB 2.89 billion, increased by 22.8%, 13.9% and 11% over last year, respectively. Institutions of higher learning contributed 64.6% to the growth of basic research in the whole society, with an increase of 25.8% over last year, which played a positive role in promoting the steady rise in the proportion of basic research in the whole society.

     (II) The role is still strong in boosting enterprises. With the deep implementation of the innovation-driven development strategy and the continuous promotion of the construction of an innovative country, the R&D investment in enterprises, government-affiliated research institutions, and institutions of higher learning has been further increased, and the growth rate has been improved. In 2017, the growth rate of R&D investment in enterprises, government-affiliated research institutions and institutions of higher learning in China increased by 0.9%, 2% and 10.7%, contributing 78.6%, 9.1% and 10% to the growth of R&D investment in the whole society, respectively. Although the contribution of enterprises dropped 5.2% compared to last year, it is still the main force of driving the growth of R&D funds in the whole society.

     (III) The industry agglomeration effect is strengthened. In 2017, there were 8 industry categories among industrial enterprises above designated size in China with R&D investment of over RMB 50 billion. The R&D investment totaled RMB 782.89 billion, increased by 10.7% over last year, and the growth rate was 0.9% higher than that the industrial enterprises above designated size. The R&D investment in these 8 industry categories accounted for 65.2% of that of industrial enterprises above designated size, 0.6% up compared to last year. The proportion of R&D investment in high-tech manufacturing industry and equipment manufacturing industry was 2% and 1.65%, increased by 0.1% and 0.14% compared to last year and 0.86% and 0.51% compared to the average of the manufacturing industry, respectively.

      (IV) The eastern region continues to stay ahead. In 2017, the R&D investment in eastern, central, western and northeastern regions of China was RMB 1,188.48 billion, RMB 282.02 billion, RMB 219.66 billion and RMB 70.45 billion and grew by RMB 119.54 billion, RMB 44.21 billion, RMB 25.23 billion and RMB 3.96 billion, with an increase of 11.2%, 18.6%, 13% and 6% over last year and a contribution of 61.9%, 22.9%, 13.1% and 2.1% to the growth of R&D investment in the whole society, respectively. The total R&D investment in eastern region continues to main a dominant position, and the growth rate of R&D investment in central region has significantly increased.

 III. Government investment is increased and policy environment is further improved

 According to the data of the Bulletin, the state financial expenditure on science and technology in 2017 was RMB 838.36 billion, which increased by RMB 62.29 billion over last year and gained a growth rate of 8%; the financial expenditure on science and technology accounted for 4.13% of the state's financial expenditure in that year, which maintained the level of last year.

 In 2017, the whole society's R&D investment increased rapidly, benefiting from the significant promotion of the implementation effect of science and technology activity policies encouraged and supported by the government and the further improvement of the policy environment. Taking industrial enterprises above designated size for example, the R&D investment of enterprises and high-tech industries in 2017 was RMB 56.99 billion and RMB 106.23 billion with tax deducted or exempted, increased by 16.5% and 26% over last year, respectively, and the growth rate was increased by 7.6% and 6% over last year, respectively.

 The total R&D investment in China has increased year by year, and the structure has been constantly optimized, which has effectively promoted the implementation of the innovation-driven development strategy in China and consolidated the foundation of building China into an innovative country. Compared with developed countries, however, China's overall R&D level is big in size but weak in strength and large in amount but poor in quality. For example, the proportion of basic research in China is far behind that in developed countries (15-20%); China's R&D investment is far behind that of innovative countries (above 2.5%); the industry distribution of enterprises' R&D investment is unreasonable compared with that of the United States, and the R&D investment in non-manufacturing enterprises accounted for 14.9% only, far below 33.1%, the level of the United States. In the next few years, China shall further guide the whole society to increase R&D investment, especially in the forward-looking and applied basic research fields; further optimize the allocation of R&D resources in China, highlighting the enterprise-led and market-oriented in-depth integration of industry, university and research; further develop the government's management advantages in R&D, strengthen the construction of the national innovation system and deepen the reform of science and technology system.

  Note:

   [1] International statistics come from the database on the official website of Organisation for Economic Co-operation and Development (OECD) at https://data.oecd.org.

  [2] In 2016, the net increase of R&D investment of OECD members totaled USD 14.04 billion, equivalent to RMB 97.37 billion at the exchange rate by the end of 2016.