Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
July 4, 2015

Once Again, R&D Competitiveness Debate Looks at China

Appropriations season is getting into full swing on the Hill, and Senate appropriators have heard from top administration science officials about federal research funding and innovation. A slew of outside groups have also submitted written testimony. At least a couple are echoing the 2005 report “Rising Above the Gathering Storm” from the National Academies.

About 50 organizations working under an umbrella called Close the Innovation Deficit — including the American Association of Universities, the American Association of the Advancement of Science and Aerospace Industries Association — had this to say:

Over the past decade, while R&D expenditures as a share of GDP remained nearly flat in the United States, they increased by nearly 50 percent in South Korea and nearly 90 percent in China. Today, the major Asian economies collectively perform a larger share of global R&D than the United States. Since 2001, the share of worldwide R&D performed by Asian countries has grown from 25 percent to 34 percent. China’s global share grew from just 4 percent to 15 percent during this period. Consequently, China alone now performs nearly as much of the world’s high-tech manufacturing as we do here.

The American Association for the Advancement of Science similarly writes:

In 2011, the United States ranked below nine countries, including South Korea and Switzerland, in R&D intensity — research and development spending as a percentage of GDP. While our declining commitment to research may not be evident for decades, some troubling trends are already developing.

The issue – particularly as it relates to China – also came up recently during a hearing back in March, when House Appropriations Commerce-Justice-Science Subcommittee Chairman Frank R. Wolf, R-Va., wanted to know how the U.S. budget for science compares to what China spends. Dan Arvizu, chairman of the National Science Board, told Wolf at the time that the U.S. spends $429 billion in research and development in both private and public money, while China spends $208 billion, citing 2011 numbers from NSF’s 2014 Science and Engineering Indicators.

That’s less than half of what the U.S. spends. But he later said that the proportion of China’s spending on research and development relative to their economy is growing at a faster rate than the U.S., meaning that while we spend more, China is projected to spend more money on R&D than the U.S. by 2022, he said, citing projections by Batelle and R&D Magazine.

The House Ways and Means Committee, meanwhile, has approved a bill (HR 4438) that would make permanent an expiring research tax credit. CQ Roll Call reporters Katy O’Donnell and Amrita Khalid say the legislation would allow researchers to deduct up to 20 percent of the amount in which their qualified research expenses exceed a calculated base amount for the current taxable year.