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[BEIJING] Despite significant reforms over the past two decades, China’s research and development (R&D) capabilities remain “underdeveloped and insufficiently exploited”, according to a report released this week by the Organisation for Economic Cooperation and Development (OECD).

In particular, the report points out that even though the country’s spending on R&D has increased from 0.7 to 1 per cent of the gross national product in recent years, it still remains far behind most OECD nations. And it says that a “better balance” is needed between improving the market-orientation of government research institutions, and preserving or boosting long-term science and technology capacity.

At the same time, however, the report suggests that too much research in universities is paid for by industry, leading to their relative neglect of basic research. Whereas, on average, universities in OECD countries receive about 6 per cent of their research funds from industry, in China more than 40 per cent of university R&D expenditure is financed by the enterprise sector.

The analysis of China’s spending on science and technology is in the latest edition of the annual OECD Science, Technology and Industry Outlook published in Paris yesterday (16 October). The main focus of the report is on R&D spending within OECD states (of which China is not a member). It says that “a fundamental shift is underway [in China] in how R&D resources are targeted, as companies and nations scramble to accelerate innovation”.

The report admits that “the current economic slowdown appears to be putting a dent in research and development outlays”. However it also points out that private industry is shouldering an increasing proportion of funding. “Companies are funnelling more resources to universities and private research institutes in an effort to broaden the search for new ideas,” it says.

The detailed look at science and technology in China follows a decision earlier this year to grant the country observer status on the OECD's committee for scientific and technological policy. The chapter on China is therefore intended to help the nation evaluate the challenges it faces in the wake of joining the World Trade Organisation.

The report’s authors conclude that although China has made significant advances in recent years in the way that science and technology is run, the research and innovation system is still in need of major reform if it hopes to match the level of innovation shown by the world's technology leaders.

One criticism the report makes, for example, is that “China’s R&D expenditures are skewed much more towards development than those of the more advanced OECD countries”. It points out that, whereas industrialised countries spend between 16 and 22 per cent of their funding for R&D on basic research, China only spends about 5 per cent.

The report adds that the relatively high expenditure by industry on university research, most of which is focused on experimental development, “not only helps to explain the low share of R&D expenditure on basic research, but also substantiates the argument that the R&D potential of the Chinese higher education system, especially for basic research, is underexploited.”

Furthermore it points out that most of the state's sponsorship of research goes to government-affiliated institutes instead of industrial enterprises, even though these are the main promoters of technological innovation. Finally the report says that, following its entry to the WTO, China will also need to take advantage of global knowledge networks to increase the rate of its development in science and technology.

The OECD report will hold few surprises for the Chinese government, which has been reforming its science and technology system since the mid-1980s in an attempt to move away from Soviet-style central planning to a more market-based system. However, it does underline the extent to which reforms are still needed, and highlights the roles that different actors — not only the Chinese government but also private enterprises and even Chinese scientists now working abroad — can play in the process of boosting its scientific capabilities.

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