China Is Closing the Innovation Gap With the U.S. | Best Countries


China is slowly but surely closing the innovation gap with the United States, with the country advancing fast in several innovation categories against the U.S., according to a new report from the Information Technology and Innovation Foundation, or ITIF, a nonprofit public policy think tank based in Washington, D.C. that focuses on technology research.

The report looked at 36 indicators related to basic research, research and development (R&D), venture capital or education.

“(I)n an average of all the indicators, China has cut the gap to the United States by a factor of 1.5 from the base year to the most recent year,” say the authors of the report. “For example, had China been 80 percent behind the United States a decade or so ago, it would be just 50 percent behind in the most recent year.”

Among the study’s major findings:

  • R&D spending: In 2007 China invested $129 billion investment in R&D, 33 percent less than the United States. By 2017, America’s research and development expenditures had grown at a 2 percent annual rate, while China reported a 13.1 percent growth.
  • China’s basic research expenditure relative to the U.S. doubled between 2007 and 2017 but still lags far behind the reported American figures.
  • The Chinese government spends more on R&D as a share of its gross domestic product than the United States, going from spending 84 percent of what the U.S. was reporting in 2007, to spending 1.2 times more than the U.S. in 2017.
  • The private sector spends more on R&D in China than in the U.S., but the gap is slowly closing. However, Chinese universities still conduct substantially less research than their American counterparts.
  • More than half of the top Chinese companies are now counted among the top 2,500 world innovator’s list put together by the European Commission, compared to only 2 percent of them in 2007.
  • As a share of its population, China produces almost 50 percent more computer science and engineering degrees than the U.S.

The report notes that Hong Kong, an autonomous territory in China that is a global financial center, was included in calculating indicators for China.

The report’s authors also note the implications of China’s innovation progress for other countries. As the other Asian tiger economies of Japan and South Korea moved from being “copiers to innovators,” they took market share away from companies in the U.S. and Europe. Given the size of China’s economy, the world’s second-largest with projections to eventually overtake the U.S., the Asian giant’s rise in innovation will have greater global impact.

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