Opinion

China is the world’s new science and technology powerhouse

Chinese R&D investment has grown remarkably over the past two decades. It is now the second-largest performer in terms of R&D spending, on a country basis, and accounts for 20 percent of total world R&D expenditure, with the rate of R&D investment growth greatly exceeding that of the U.S. and the EU.

By: Date: August 30, 2017 Topic: Innovation & Competition Policy

This piece was originally published in BRINK Asia.

Scientific knowledge and its use in technology and economic and societal development has become increasingly global and multipolar. While Europe and the U.S. have traditionally led in scientific development, China in particular has emerged as a new science and technology (S&T) powerhouse.

A key indicator of the rise of China in S&T is its spending on research and development (R&D). Chinese R&D investment has grown remarkably over the past two decades, with the rate of growth greatly exceeding that of the U.S. and the EU.

China is now the second-largest performer in terms of R&D spending, on a country basis, and accounts for 20 percent of total world R&D expenditure. It is also increasingly prominent in industries that intensively use scientific and technological knowledge.

Exhibit 1: R&D spending in billions of dollars (current, in purchasing power parity terms)

While the U.S. has led the world in the production of scientific knowledge for decades, in terms of both quantity and quality, and the EU as a bloc (still including the UK) has outperformed the U.S. in numbers of scientific publications since 1994, China now publishes more than any other country apart from the U.S. China’s scientific priorities are shown by a particularly big increase in its share of published papers in the fields of computer sciences and engineering. While China—for now—is making modest inroads into the top-quality segment of publications, it is already on par with Japan.

This steep improvement in S&T performance has been underpinned by significant strides in science and engineering education. China is now the world’s number one producer of undergraduates with science and engineering degrees, delivering almost one quarter of first university degrees in science and engineering globally. Since 2007, the country has awarded more Ph.D. degrees in natural sciences and engineering than any other country globally.

Exhibit 2: The growing number of degrees awarded (in thousands)

Source: Bruegel, based on NSF (2016)
China’s rise in science and technology is not an accident. Successive Chinese leaderships have seen S&T as integral to economic growth and have consequently taken steps to develop the country’s S&T-related infrastructure.

Technology development and innovation figure prominently in the current thirteenth five-year plan (2016-20). China’s National Medium- and Long-Term Program for Science and Technology Development (MLP), introduced in 2006, is an ambitious plan to transform the Chinese economy into a major center of innovation by the year 2020 and to make it the global leader in science and innovation by 2050. One of the goals of the MLP is to boost R&D expenditure to 2.5 percent of gross domestic product (GDP)—a target that has largely already been reached.

Global Implications

The benefits from a global science world with China as an extra strong pole will accrue to many, but some will benefit more than others. In particular, the EU and the U.S. will likely respond in different ways to the rise of China as an S&T powerhouse.

The U.S. science system has traditionally benefited from foreigners. The dominant position of the U.S. in science is based on its openness to the brightest talent of all nationalities, and this top position keeps attracting the best talents from around the world, who contribute to U.S. science, technology and economic success. Foreign talent is thus vital for U.S. science and engineering capacity. This is why the U.S. could feel threatened about the fact that the power of its S&T machine will diminish if the pool of foreign talent entering the U.S. dries up. There is no clear evidence so far, however, to justify this fear.

For the moment, the rise of China’s own capacity to produce science and engineering degrees does not seem to disconnect the U.S. from the pool of potential Chinese candidates to recruit from. With continued high attrition rates in China and high stay rates in the U.S. for foreign scientists, this open model, at least for the moment, continues to bear fruit for the U.S., even if the most important source country, China, is rapidly developing its own scientific capability.

China’s growth model for science, although aspiring to be indigenous, still involves sending out its increasingly better locally trained scholars to the best institutes in the world and reaping the benefits upon their return in later stages of their careers when they have fully developed their capabilities. All this leaves a China-U.S. connection that is virtuous, mutually beneficial for both science systems, and so far robust.

Nevertheless, concerns are mounting in the U.S. about the sustainability of its capacity for innovation and international competitiveness, driven by the more recent trend to move to a more restrictive immigration policy. This comes in addition to a reluctance to allocate public funding to support the building of S&T infrastructure.

The EU science pole is largely holding its own, based on the intensifying process of intra-EU integration. However, this process of integration is bumpy, and with the Brexit vote outcome, it is facing a major challenge. Furthermore, the EU S&T pole does not have the same deep openness to foreign scientific talent from China that the U.S. has, resulting in the absence of similarly sized flows of students and researchers.

The EU must show a stronger commitment to joining the science globalization train and subsequently ensure that European economies will benefit from it. An integrated European area for science and technology, characterized by scientific and technological excellence, is a necessary condition for this. Excellence will ensure that talented people in European research institutes and firms will be better able to absorb the new knowledge generated abroad and will be more attractive hubs for the best talent from abroad and for partners for international S&T cooperation and networks. But while reinforcing the European pole by deeper integration, it should also be more open externally.

The intra-EU mobility agenda should avoid navel gazing and be seen more as a lever for global integration. European S&T policymakers should promote and remove barriers for scientific collaboration both intra-EU and with countries outside the bloc. It should do more to attract the best foreign talent, wherever it is located in the world.

Mutual Benefit

China’s ambition to be a global leader in science and innovation by 2050 seems well within reach. The U.S. remains the favored destination for Chinese students, which has led to the creation of U.S.-China science and technology networks and connections that are mutually beneficial, enabling China to catch up and helping the U.S. to keep its position at the science frontier. The EU has much less-developed scientific connections to China than the U.S. The EU should take steps to engage more with China if it is not to miss out in the future multipolar science and technology world.

A more detailed analysis can be found here. All data in the article is from the same policy paper.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to communication@bruegel.org.

View comments
Read article More on this topic More by this author

Blog Post

Inequality in China

After amply discussing income inequality in Europe and the US, economists are now looking at the magnitude, implications and possible remedies for this phenomenon in the context of the Chinese economy.

By: Silvia Merler Topic: Global Economics & Governance Date: September 24, 2018
Read article More on this topic More by this author

Opinion

Japan must boost R&D to keep rising Chinese rivals at bay

As China shifts into a more advanced industrialised economy, Japan has slowly but surely lost to some of its comparative advantages to its rival. One possible solution to help the government keep pace would be to concentrate research and development efforts on a few key sectors where Japanese players still hold a large competitive lead.

By: Alicia García-Herrero Topic: Innovation & Competition Policy Date: September 20, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: Developing the EU-China relationship amid rising global trade tensions

Bruegel director Guntram Wolff is joined by Alicia García-Herrero, senior fellow at Bruegel, and Zhang Weiwei, director at The China Institute of Fudan University, following up a Bruegel conference focused on the potential for closer economic links between China and the EU.

By: The Sound of Economics Topic: Global Economics & Governance Date: September 20, 2018
Read article More on this topic More by this author

Opinion

China Made Two Promises in Africa. Can It Keep Them?

China has committed to a market-driven relationship with Africa, as well as a new $60 billion investment plan on the continent, following the recent China-Africa summit. In this light, the author assesses the China-Africa economic relationship, suggesting those new objectives may not be so easy to achieve.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 19, 2018
Read article More on this topic More by this author

Opinion

China real estate developers: a grey rhino in the jungle of financial risks

The author assesses the Chinese real estate industry’s liquidity concerns and its leverage, which is estimated to be four times higher than its global peers.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: September 18, 2018
Read about event

Past Event

Past Event

China's digital economy

How to measure China's digital economy?

Speakers: Alicia García-Herrero, Claudia Vernotti and Reinhilde Veugelers Topic: Global Economics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 17, 2018
Read about event More on this topic

Past Event

Past Event

Perils and potential: China-US-EU trade relations

We are hosting a number of Chinese and EU experts to discuss trade relations between the three forces.

Speakers: Miguel Ceballos Barón, Alicia García-Herrero, Wei Jianguo, André Sapir, Herman Van Rompuy, Zhang Weiwei, Guntram B. Wolff, Zhou Xiaochuan, Zhang Yansheng and Ruan Zongze Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 17, 2018
Read article More by this author

Opinion

US-China trade war: What’s in it for Europe?

To help evaluate whether the market response is warranted or exaggerated, the author measured the trade impact of additional import tariffs based on standard economic theory, namely two key parameters—the tariff pass-through rate and the price elasticity of demand. The end of multilateralism seems clear, at least for trade.

By: Alicia García-Herrero Topic: European Macroeconomics & Governance, Global Economics & Governance Date: August 23, 2018
Read article

Opinion

Goodbye deleveraging: Fiscal and monetary expansion to support growth in China

China has opted for a renewed fiscal and monetary stimulus to address the risk of the US-led trade war. The dual policies send a clear signal that economic growth is the priority, but such measures do not come without a cost. Deleveraging efforts will have to be put on hold for the time being.

By: Alicia García-Herrero, Gary Ng and Jianwei Xu Topic: Finance & Financial Regulation, Global Economics & Governance Date: August 23, 2018
Read article Download PDF

External Publication

Export and patent specialization in low carbon technologies

The low-carbon technology sector is going through a period of disruptive innovation and strongly increased investment, which is likely to continue. Global investment in new renewable power is the largest area of electricity spending. The political momentum to combat climate change was reinforced in the Paris Agreement, when almost every country in the world agreed to aim for carbon neutrality in the second half of the century.

By: Robert Kalcik and Georg Zachmann Topic: Energy & Climate, Innovation & Competition Policy Date: August 7, 2018
Read article Download PDF More on this topic More by this author

External Publication

The impact of artificial intelligence on employment

Technological development, and in particular digitalisation, has major implications for labour markets. Assessing its impact will be crucial for developing policies that promote efficient labour markets for the benefit of workers, employers and societies as a whole.

By: Georgios Petropoulos Topic: Innovation & Competition Policy Date: July 31, 2018
Read about event More on this topic

Past Event

Past Event

Should we revisit the patent system for pharmaceutical products?

Analysis of the legal issues with the current IP system for regulated market authorisations for pharmaceutical products, as well as its economic effects.

Speakers: Arno Hartmann, Christian Jervelund, Margaret K. Kyle, Roberto Romandini, Bruno van Pottelsberghe, Amaryllis Verhoeven and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 9, 2018
Load more posts