China Wants Tech Independence, Increases R&D Spending

China Wants Tech Independence, Increases R&D Spending

Tech firms in China are climbing up the list for the world’s biggest spenders in research and development (R&D), a sign they may soon get rid of any reliance on Western technology. This comes as China aims to dominate the world on the tech front and their progress is making some in the West unsettled, imposing restrictions on exports of tech equipment to the Asian country.

Precisely, the US and Netherlands recently imposed export restrictions on semiconductors and the equipment to make them as the West are increasingly concerned about sharing technology with China. But the Asian economy, has refused to bow down. Its tech companies are also pumping money towards R&D which may soon completely wean them off US technologies.

A report by Bloomberg shows list of companies leading in the global spending towards R&D, with Chinese firms stepping up to the challenge in the past years.

Also read: Twitter Restores Substack Embeds to End Days of Tension

Of the 25 global leaders in R&D investments, China has four firms on the list. Of the total companies, Amazon leads with an investment of almost $80 billion. But as of April 4th, according to Bloomberg, Amazon’s figure represents spending on “technology and content” and not specifically R&D only.

Five years ago, only Huawei was on the list but has since been joined by other Chinese firms like TikTok owner ByteDance. Gaming giant Tencent and e-commerce, payments and cloud computing purveyor Alibaba Group complete the four Chinese firms on the list.

In 2021, ByteDance’s total figure was pegged at $14.6 billion which came from a report the firm shared with employees and was reported by the Wall Street Journal. Its annual revenue rose 30% in 2022, which may suggest its ranking in R&D spending also improved.

Writer Stephen Chen says a Chinese study showed the cost of innovation by Chinese companies significantly increased because of tech bans imposed by the US. The study analyzed about 1 000 Chinese firms between 2010 and 2020.

The study concluded the restrictions imposed on China’s hi-tech sectors increased that country’s R&D investment in these sectors by 52.9%.

China aims to dominate

Despite the restrictions by US, China is on the move to drive some of the world’s biggest breakthroughs, raising concerns in other competing countries.

From cloning to health research, from sea to space exploration, China is not stopping.

According to the Asia Financial, the situation, as of last year had become alarming the US National Science Board warned in a report – State of US Science Engineering 2022 – that China was pulling ahead of the US when it comes to key indicators of science and engineering prowess.

“S&E investments and capabilities are growing globally and, in some cases, the growth in other countries has outpaced that of the US,” Ellen Ochoa, chair of the board was quoted in a report.

The US was also falling behind China in areas such as growth in R&D investment, the manufacturing of critical emerging technologies and patents for innovative systems, National Defense reported.

According to the report, China contributed 29% of growth in global R&D between 2000 and 2019, compared to the US’s 23%.

China was also leading the US in knowledge and technology intensive (KTI), industry manufacturing although the US is the largest producer of KTI services.

Between 2010 and 2020, the US share of international patents also declined to 10% from 15% while China increased its share to 49% from 16% in that same timeframe.

Overall, China’s National Innovation-Driven Development Strategy states as a goal for the country to become a technological innovation powerhouse by 2050. The country’s objective is to increase R&D investments by 7% per year between 2021 and 2025.

R&D spending going towards AI

While pharma companies have generally been spending more on R&D, the most spectacular increase has been in the tech industry.

Top of the list on the R&D spenders is Amazon, followed by Alphabet, Meta, Apple and Microsoft in that order. According to Bloomberg, outside Apple, the companies leading in R&D are investing towards inventing and improving not so much physical products as algorithms and AI systems. The same goes for the Chinese tech firms ByteDance, Tencent and Alibaba.

These have all joined the race for AI prowess following the release of OpenAI’s ChatGPT in November which went viral globally. In China where the ChatGPT is restricted, Chinese firms there are coming up with their own alternatives, although the chatbot is available for users through unofficial channels.

However, in the US, most of these tech companies have announced huge layoffs, although the effect on the R&D spending is so far barely discernible.


Image credits: Shutterstock, CC images, Midjourney, Unsplash.