BRIC - China

Mon, 12/17/2012 - 6:37pm
Martin Grueber, Research Leader, Battelle and Tim Studt, Editorial Director, Advantage Business Media
China Chart
2013 GDP, billion US$, PPP $13,344
2013 GERD, billion US$, PPP $220.20
R&D/GDP 1.65%
Population, million 1,343
GERD/Person $164
Published Research Papers
1999-2003, Physics 31,100
2004-2008, Physics 66,200
1999-2003, Chemistry 44,600
2004-2008, Chemistry 99,200
Basic Research Share 5%
Applied Research Share 13%
Development Research Share 82%
Source: Battelle/R&D Magazine, UNESCO, Thomson Reuters

GFF GlobeContinuing the trend it established more than a decade ago, China's commitment to R&D is expected to increase 11.6% in 2013, following an 11.3% increase in 2012. China's R&D is now 52% of that expected to be spent by the U.S. in 2013, compared to 43% just two years ago. China's R&D growth rate has slowed from the early 2000s when annual growth was in the 20% range, but this "slowdown" is more the result of a maturing role for R&D within the economy, rather than outright investment declines. China's economy surpassed that of Japan in 2010 and now is expected to surpass that of the U.S. in 2015, with its R&D investments not far behind. China's R&D could realistically match and quickly surpass that of the U.S. before the end of the decade.

China is investing in all aspects of R&D at record rates. It outproduces the U.S. in scientists and engineers (in part because it has a population that's more than four times larger). Its share of technical papers has steadily increased over the past 10 years, while the U.S. share has gone in the opposite direction every year. Peer-reviewed technical papers are a proxy for research activity. Indeed, the U.K.'s Royal Society estimates that China's total research paper output could surpass that of the U.S. in 2013. The report forecasts that this trend is likely to continue with China’s technical paper share increasing to 22% by 2020, while the U.S. share falls to less than 10%.

The normalized citation impact of technical papers calculated by Thomson Reuters has similarly steadily increased over the past 10 years, while that for the U.S. has stagnated such that China's citation impact value of 1.5 now exceeds that of the U.S. (less than 1.4). Ten years ago, China's citation impact value was 1.2, while the U.S.'s was still 1.4. Much has been said about the modest quality of China's technology paper output, but in many areas, such as materials science, chemistry, and engineering, China is now a global leader.

Political Changes
China recently announced its once-every-ten-years change in political leadership—Xi Jinping replaced Hu Jintao. The change saw a downsized central committee that should result in faster decision making. No dramatic changes in science and technology policy have been announced or are expected—the changes made were more conservative than most China analysts expected and did not include high-profile reformers.

While much has been noted about an aggressive attack on government corruption, analysts observe that the long-term effects of the conservative political changes are likely to result in smaller productivity increases and slower changes in actual social and political reforms.

This is somewhat disquieting for China's R&D supporters, noting that party insiders were quoted as saying that sector monopolies and bureaucratic interests were somewhat responsible for the collapse of the Soviet Union. There also might be short-term economic policy changes as senior Chinese economic policy leaders reach mandatory retirement ages over the next few years starting in 2013.

Numerous foreign and Chinese companies were anticipating the political changes to initiate changes in economic development, such as in construction and manufacturing to offset China's slowing economic growth. The political changes were announced in mid-November, so no new projects are expected in 2012, with any major new measures, such as those for railways and power grids, only starting to occur in 2013.

China's Industrial R&D
Company 2010 R&D mil. U.S. $ R&D, % Revenue
Huawei Technologies 2,302.7 8.60%
PetroChina 1,707.9 0.80%
China Railway Construction 1,354.9 2.10%
ZTE 1,143.7 11.30%
China Petroleum and Chemicals 697.5 0.30%
CSR China 352.5 3.80%
China Railway 301.2 0.50%
Metallurgical Corp. 258.8 0.90%
China Communications 227.2 0.60%
China Coal 216.4 2.10%
Source: Battelle/R&D Magazine, EU Industrial R&D Scoreboard

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