R&D spending defies pandemic effect, new official figures show

China’s official research and development spending increased by more than 10% year-on-year in 2022 to more than CNY3.08 trillion (US$422 billion), according to figures released by China’s National Bureau of Statistics this week. Companies accounted for three-quarters of R&D spending.

While China’s overall research spending is double that of Japan, it is around 54% of the United States, according to the bureau.

China’s official media puts the country’s overall R&D spending at second in the world. However, some official year-on-year comparisons have been disputed by international organisations such as the OECD in Paris, making it more difficult to judge the real trajectory, experts outside of China said.

Official media was keen to point out that R&D spending has continued to rise despite the effects of the COVID-19 pandemic, which saw companies and universities in major technology hubs such as Shanghai closed for months in 2022, disrupting research.

In March 2021 China, as part of its work report from the National People’s Congress (NPC) session held that month, set a target of increasing annual R&D spending by “more than 7%” every year for the following five years, as part of its commitment to boosting technology and research.

This year’s report to the NPC, in March 2023, said China’s science and technology spending is being increased despite the overall tightening of spending due to the current economic downturn, reflecting the importance of the sector to the economy.

China’s R&D spending as a proportion of GDP reached 2.54% last year – an increase of 0.11% over 2021 – is considered a significant rise, though slower than the period before the pandemic

Zhang Qilong, a statistician with the National Bureau of Statistics, said it took China eight years to double its R&D spending from CNY1 trillion to CNY2 trillion. “But only half that much time to reach three trillion,” he wrote in an analysis for the bureau.

The government will continue to improve the diversified investment of R&D funds, expand other policies such as tax reductions and exemption for R&D expenditure, and improve financial support systems including direct financing, Zhang added.

China’s R&D spending as a percentage of GDP puts it 13th in the world, well behind South Korea, which is among the top at 4.2% of GDP, the United States at 3.45% or Japan at 3.3% – although Japan has seen declines in the past decade.

Basic research and role of universities

Investment in basic research grew to CNY200 billion, accounting for 6.57% of total R&D spending last year compared to 6.09% of R&D spending in 2021.

China ranks much lower internationally in spending on basic research, with some advanced countries such as the United States allocating 15% to 24% of R&D spending to basic research.

China’s National Development and Reform Commission, in its 14th Five-year Plan in 2021, set a target to reach 8% of R&D spending on basic research by 2025, which is unlikely to be on track given the current statistics.

Higher education accounted for 44.8% of spending on basic R&D, with government-owned research organisations accounting for 38.3%, according to the latest statistics issued by the statistics bureau, the Ministry of Science and Technology and the Ministry of Finance.

However, while spending by government research organisations has been rising by over 10% a year, university research has been rising more slowly, reflecting the much smaller proportion of spending dedicated to basic research.

OECD disputes some official figures

The year-on-year 10% increase in R&D spending follows a similar officially reported year-on-year increase in 2021 of 10.2%, although some of these official figures are disputed by the Paris-based Organisation for Economic Co-Operation and Development (OECD), which collates research spending data in advanced countries.

On 24 May, the OECD issued a statement on “anomalies in R&D data reported by China requiring comprehensive explanation and potential correction”, adding that it was reviewing data for several R&D indications since 2019.

The OECD said it was “suppressing the publication of several headline indicators until the coherence of R&D expenditure and personnel data have been effectively addressed”.

It said it sent questions on the ‘anomalies’ to the “relevant national authorities” in China in March this year, as China had not provided detailed data “unlike other countries reporting R&D data” to the OECD.

Among the data previously published, but now removed by the OECD, are data from 2019 onwards on R&D personnel in the higher education sector, which are mostly driven by increases in the number of researchers. For example, for 2019 China reported a massive 42% rise in the number of higher education researchers despite the budget for higher education R&D increasing by only 23%.

According to data reported by China to the OECD in February 2023, the number of researchers in higher education institutions increased from around 250,000 researchers (adjusted to full-time equivalent) in 2018 to 500,000 full-time equivalent researchers in higher education in 2021, during the years of the pandemic.

According to the figures submitted by China, the number of internal R&D personnel reported increased by 38% in the higher education sector in 2019, mostly driven by a higher number of researchers – the 42% increase, corresponding to 150,000 new researchers in a single year. “No adequate explanation for this change has been provided,” according to the OECD at the time.

The OECD indicated that R&D figures for 2021, not yet published in its data series, had also been suspended.

China’s latest official R&D figures make comparisons with its official 2021 data, experts said, adding that the latest data should be seen to be preliminary, until verified.

China has said it is in communication with the OECD on the questions raised.

* University World News Asia Editor Yojana Sharma contributed to this article.