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China economy

Made in China 2025? Not unless it starts spending more money, lawmaker says

  • Country on track to miss its goal to boost R&D spending to 2.5pc of GDP by 2020, just as it did five years earlier, senior finance official says
  • Despite target miss, actual funding rose 12.3 per cent in 2017 to 1.75 trillion yuan, making China world’s second-biggest spender after the US
PUBLISHED : Monday, 10 December, 2018, 1:02am
UPDATED : Monday, 10 December, 2018, 10:25am

China’s failure to meet its investment targets in research and development is undermining its efforts to become a leader in technology, a senior lawmaker said on Sunday.

Speaking at a forum organised by Chinese business magazine Caijing, Yin Zhongqing, deputy director of the financial and economic affairs committee of the National People’s Congress, said the country was on course to miss a key target of its current five-year plan – which ends in 2020 – after missing exactly the same target in 2015.

Of all the economic and social development targets set by Beijing in the 2011-15 plan, the only one it failed to achieve was R&D spending as a proportion of gross domestic product. The target was 2.2 per cent, while the actual figure was 2.1 per cent. The 0.1 percentage point shortfall meant the country spent about US$100 billion less on research that was planned.

While the goal for 2016-20 was to raise R&D spending as a proportion of GDP to 2.5 per cent, Yin said the government was once again lagging behind, as the actual figure recorded for the first two years of the plan – 2016 and 2017 – was just 0.07 percentage points higher than for the equivalent period of the previous plan.

He said that while state-sponsored investment plans such as “Made in China 2025” were sparking criticism overseas of Beijing’s apparently limitless flow of funds for key technologies, the reality was that China was not only behind advanced economies in terms of R&D spending but was not even hitting its own targets.

Back to the future of self-reliance for China’s military technology

The Achilles’ heel that is China’s lack of self-sufficiency in key technologies was never more evident than in April when ZTE – the world’s fifth-largest telecom equipment manufacturer – found its business hamstrung by a US ban on parts sales to the Chinese company.

While China’s spending on research and development has been growing significantly in absolute terms – up 12.3 per cent year on year in 2017 to 1.75 trillion yuan (US$254 billion) to put it second in the world behind the US – as a share of GDP it still lags far behind the global big spenders.

The Chinese figure of 2.1 per cent is just half that of South Korea’s, and significantly below Japan’s 3.5 per cent, Germany’s 2.9 per cent and the United States’ 2.8 per cent.

US trade war weakens China’s position as global leader in automation and robot manufacturing

At the first meeting of a new leading group on science and technology on Thursday, Chinese Premier Li Keqiang acknowledged the gap between China’s relative spending on research and that of other countries, but said there was also a need for more innovation.

Government agencies should create a good environment for research, while scientists should set themselves long-term goals to achieve the best results, he said.

Yin said that more funding should be made available for basic research and in those areas where there were “bottlenecks in the country’s development”.

He also suggested the creation of a national champion system to reward scientific achievement, and called for better integration of civilian and military research teams.