Font size: 
This amount was the highest among countries with a similar level of economic development, though the percentage is still lower than that of most developed economies. This also put China fourth in the world, after the United States, Japan and Germany. In fact, using the purchasing power parity measure, in 2006 China already became the world’s second-largest spender on R&D (US$136 billion), ranking only behind the United States ($330 billion).
Of course, it should be noted that attempts to measure China’s economic output in PPP terms are subject to debate, as its GDP based on that was reduced by 40 percent in a recent recalibration. It also should be recognized that the gap in spending between China and the United States remains substantial; U.S. spending is more than three times that of China.
While overall statistics show that enterprises now account for close to three-quarters of China’s R&D expenditures, in reality, they have allocated few financial resources to carry out innovative R&D activities.
According to a comprehensive survey of the nation’s R&D resources in 2000 – the latest with detailed, micro-level information – firms within China’s high-tech parks spent an average 1.9 percent of their sales revenue on R&D, far below the 5 percent standard adopted by the Chinese to define a high-tech firm; those outside the parks spent merely 0.63 percent.
Chinese enterprises as a whole do not do better, as they seem unwilling to spend money on technological development. The 2007 statistics indicate that only one-quarter of large and medium-sized enterprises had set up science and technology institutes, with only 1.58 percent of sales revenue being used for S&T activities and 0.81 percent of revenue spent on R&D.
Companies that do spend heavily on R&D – such as Huawei and ZTE, telecommunication equipment makers, and BYD, a battery maker turned hybrid and electric automobile manufacturer – are the outliers, not the norm.
Moreover, it is frequently questionable whether the increasing sums of money provided by the Chinese government – central and increasingly local – have been well spent. Enterprises seem mainly interested in acquiring technology from foreign sources. It is no secret that a significant portion of the research carried out in China, even under the major national programs, is derivative of what has been done elsewhere, which surely has wasted increasing but still limited resources.
This explains why Chinese science has not yielded significant breakthroughs commensurate with rising investments in R&D. For example, citations to the increasing number of Chinese S&T papers have been quite disappointing.
Misuse of research funds also is commonplace. More seriously, corruption in scientific research has not only eaten up a not-so-small-part of funds, but also eroded the morale of the research community as cases of fraud and misappropriation of funds surface in the media and on the Internet.
For example, in 2006, Chen Jin at Shanghai Jiaotong University – who had secured hundreds of millions worth of funds from various government agencies including the Ministry of Science and Technology, the Ministry of Information Industry and the National Development and Reform Commission for semiconductor research – was discovered to be using a purchased chip as his innovation. Many members of the Chinese research community believe that the Chen Jin case is just the “tip of the iceberg” in research misconduct.
Therefore, with China’s Medium and Long-Term Plan for the Development of Science and Technology (2006-2020) supporting mega science and engineering programs, each of which will receive billions of yuan in investment, and with the revised Law on the Progress of Science and Technology promoting greater innovation and creativity by fostering a “tolerance for failure,” the question of financial integrity and accountability looms large as a fundamental issue of governance in scientific research.
Indeed, amid the influx of money to stimulate the economy, China has witnessed a rush to spend the money allocated to the mega science and engineering programs while a vigorous peer review process to guarantee the quality lags behind.
It is time to monitor how the research money is being spent – to be sure it is done wisely and not wasted – as this will determine whether or not China will achieve its ambitious goal of becoming an innovation-oriented nation.
--
(Cong Cao is a senior research associate with the Neil D. Levin Graduate Institute of International Relations and Commerce at the State University of New York. He received his PhD in sociology from Columbia University in 1997 and has worked at the University of Oregon and the National University of Singapore. Dr. Cao is interested in the social studies of science and technology with a focus on China. ©Copyright Cong Cao.)
