US R&D spending outpacing China’s

Closely watched science and technology indicators from Washington DC show the US is still the world’s biggest spender on research and development, confounding expectations that China would takeover the lead.

A faltering Chinese economy and plummeting birthrates have driven a conversation over whether the world has reached ‘peak China’, where Beijing’s economic and geopolitical ascendancy over the US no longer looks inevitable. Now, a similar debate is happening in the domain of R&D.

On 13 March the US’s National Science Board (NSB), which advises Congress and the president, released its biennial State of US Science & Engineering report, a gold-standard set of data on the shape of the world’s R&D effort.

It shows that the US still retains a healthy lead, spending $806 billion on R&D, both public and private, in 2021, the latest year the report calculates. China spent $668 billion.

While China has been catching the US over the last two decades, on the basis of these statistics, it no longer looks on a trajectory to overtake it.

“We’ve all been waiting to see when those two curves cross, and they haven’t crossed,” said Arati Prabhakar, director of the White House Office of Science and Technology Policy at an event launching the report.

Back in 2018, it looked inevitable that China would soon take the top spot. In that year, the NSB issued a warning that on current trends, it expected China to surpass the US in R&D investment by the end of the year.

But in recent years the US has seen a “huge surge” in corporate spending on R&D, particularly by IT and pharmaceutical companies, Prabhakar said.

“It came from businesses,” she said. “What you see in these numbers is the intensification of our innovation economy.”

The statistics bear this out: from 2018 to 2021, business R&D spending ballooned by more than a third, to over $600 billion. Meanwhile, federally funded R&D stayed roughly flat as a proportion of the economy, Prabhakar noted.

Private sector R&D is now so important in the US than it funds almost as great a proportion of basic research (36%) as the federal government (40%).