China should surpass Japan this year to become the world's No 2 investor in research and development after the United States, the Organization for Economic Co-operation and Development (OECD) said yesterday.

China is expected to spend just over US$136 billion on R&D in 2006, passing Japan's forecasted US$130 billion, the Paris-based OECD said in a report on world technology trends.

China's spending on R&D as a percentage of GDP, known as R&D intensity, has more than doubled from 0.6 per cent of GDP in 1995 to just over 1.2 per cent in 2004, the OECD said.

In current prices, this represents an increase from just over US$17 billion in 1995 to US$94 billion in 2004. This means R&D spending is growing even faster than the economy, which is expanding by between 9 per cent and 10 per cent a year, according to an OECD press release yesterday.

Figures for 2005 and 2006 are projected on the assumption of a continuation of growth in R&D spending last year and in 2006 at the same average rate as was observed over 2000-04.
Sources with the Ministry of Science and Technology declined to comment on the report, but said last year's figure was less than one fourth of the OECD's 2006 figure.

According to the ministry, China spent 245 billion yuan (US$30.6 billion) on R&D in 2005, which was about 25 per cent more than in 2004.

Of the 2005 total amount, about 55 per cent was from the central government, said the ministry. There was a rapidly increasing percentage from businesses.

According to Dirk Pilat, head of the OECD's science and technology division, "the rapid rise of China in both money spent and researchers employed is stunning."

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