Charts of the Day: China’s Fast-Growing R&D Budget

China’s spending on research and development (R&D) has been increasing significantly, with its share of GDP rising steadily and nearing levels seen in the world’s most developed nations [para. 1]. In 2024, China’s R&D expenditures reached 3.61 trillion yuan ($497.1 billion), representing an 8.3% year-on-year growth and an 84% increase since 2018. This growth has outpaced the country’s GDP expansion, reflecting China’s prioritization of R&D despite challenges [para. 2]. Globally, China ranks as the second-largest R&D spender, outstripped only by the United States, which spends nearly double [para. 3]. However, its absolute spending continues to surpass major economies like Japan and Germany, which hold the third and fourth positions, respectively [para. 3].

China’s R&D intensity, or the ratio of R&D spending to GDP, has consistently exceeded 2.5% annually since 2022, reaching 2.68% in 2024 [para. 4]. Although this lags behind the U.S.’s 2022 figure of 3.59%, it is comparable to levels in G7 economies [para. 5]. However, disparities remain evident in other metrics. For instance, China’s 2022 per capita R&D spending was $128,000, only a third of U.S. levels and below Italy’s $135,000, which was the lowest among G7 nations—including available comparisons—with Canada excluded [para. 6].

Another key challenge lies in the allocation of R&D spending. Less than 18% of China’s funds in 2021 were directed toward basic and applied research, compared to nearly one-third in the U.S. and Japan and around 60% in France and Italy [para. 7]. Experts, like Sun Yutao from the Dalian University of Technology (DUT), suggest expanding government investments in basic research, which could bring broader economic and technological benefits [para. 8]. Data for the report was drawn from sources including domestic yearbooks and international databases like the OECD and World Bank [para. 8].

China also faces notable regional disparities in R&D investments, with the heavily industrialized southern regions accounting for nearly 67% of total expenditures in 2023. Of the top ten provincial-level regions for spending, Guangdong and Shanghai dominate, while only two regions from northern China—Beijing and Shandong—made the list [para. 9]. Zhejiang province, home to major enterprises such as Alibaba, ranked fourth in R&D spending, underscoring the connection between economic development and R&D investment trends [para. 10]. Sun advocates crafting policies to enable the commercialization of scientific results in less developed regions rather than prioritizing R&D investments where inadequate support exists [para. 11].

Corporate spending has emerged as the dominant driver of R&D funding in China. From 1995 to 2022, enterprise contributions to R&D expenditures grew from 30 billion yuan to around 2.4 trillion yuan, increasing their share from 32% to 79% [para. 12]. By 2022, enterprises fueled 88.9% of R&D growth, with key contributions from electronics and telecommunications sectors [para. 13]. Huawei alone accounted for more than half of the R&D spending of China’s top ten publicly listed companies, while Tencent and Huawei ranked 19th and 5th, respectively, in global corporate R&D expenditures [para. 14]. Government contributions remain far smaller, constituting around 18% of total R&D spending in 2022, with local governments exceeding the central government in allocations [para. 15].

In summary, China’s R&D landscape continues to grow rapidly, with its spending nearing levels of global leaders. Nonetheless, the country faces challenges in its regional and sectoral disparities, per capita spending, and relatively limited focus on basic research. Stronger strategies to boost government investment and better distribute resources could amplify the overall impact of China’s R&D efforts [para. 6][para. 7][para. 9][para. 13].