Chart of the Day: Another Record Year for China R&D Spending

China’s research and development (R&D) expenditures reached a new high in 2017, hitting 2.1% of gross domestic product, as the country continues its drive to become a technology powerhouse.

China spent 1.76 trillion yuan ($254 billion) on research and development in 2017, a year-on-year increase of 12.3%, according to the National Bureau of Statistics (link in Chinese). China’s R&D spending has increased rapidly over the last decade or so as the country has tried to gain a competitive edge in emerging industries.

The largest source of China’s research and development funding is its “business enterprise” sector, according to the Organization for Economic Cooperation and Development, mirroring the financing trend of developed economies. Chinese business coughed up 76% of the country’s R&D expenditure in 2017, up from just 57% in 2000, the organization said. In Japan, businesses contributed 78% of R&D expenditure in 2017, and U.S. businesses funded 62%.

However, the country’s surge in R&D expenditure was propelled partly by government measures. In its 13th Five-Year Plan (2015-20) (link in Chinese), Beijing set the goal of reaching a R&D expenditure-to-GDP ratio of 2.5% by 2020. It also vowed to build up core technologies and implement strategies that push for innovation-driven development.