R&D spending in China

Based on article from The FT, 15 January 2007

It is predicted that at the current rate, Chinese research and development spending (R&D) will overtake that of the EU in 4 years and the US in 7 years - it already exceeds that of Japan.

In order for the US to maintain its high standard of living it needs to make sure that superior technology stays within its borders through more R&D spending because the US simply cannot compete with China's large population and lower production costs.

Whereas increase in US R&D spending rises about 4% a year, R&D in China increases at 20% a year. Government policy has played a part in this, allowing a bit more freedom for global companies.

The US's huge current account deficit reflects the loss of its current productive capacity and also its weakening technological superiority. The US's once had a trade surplus in advanced technology before 2002 but now they have a deficit mainly due to the rising technological deficits the US has built with China since 1995.

Links:
China threatens America's lead in technology - The FT