Update | China spending more than Europe on science and technology as GDP percentage, new figures reveal

China has overtaken the European Union in expenditure on science and technology as a percentage of its economic output as Europe’s economy stagnates, figures released by the Organisation for Economic Co-operation and Development have revealed,  

The country once known as the world’s factory devoted 1.98 per cent of its gross domestic product to science and technology in 2012, a 7.6 per cent increase from the previous year. The current Five Year Plan aims for an increase of expenditure to 2.2 per cent of GDP by 2015.

In comparison, the 28 member states of the European Union invested only 1.97 per cent of their joint economic output in R&D in 2012, a mere one per cent increase from a year earlier. The trend is expected to continue as the EU’s economies registered zero growth in 2013 and are expected to grow by only 1.4 per cent this year, according to Eurostat.

Michael Jennings, the European Commission's spokesperson for research, told the South China Morning Post that his institution had raised the issue with member states. "The European Commission has long warned that China is catching up in terms of R&D intensity," he said.

"The EU has to increase R&D spending, in the public sector but especially in the private sector," said Jennings. "The fact that the EU-level programme for research, Horizon 2020, has received a boost of nearly 30% is a good sign," referring to the HK$840 billion research fund established in 2011.  

Naubahar Sharif, a science policy expert at the University of Science and Technology, said one reason for this change was multinationals shifting research to China. “They are able to shift their R&D activities to locations such as the Chinese coastal regions where high-quality labour is more reliable, abundant, and cheaper,” he said.

As such, French car maker Peugeot opened a tech centre in Shanghai in 2008. German car maker BMW followed suit last year.