China should overtake Japan this year to become the world's No 2 investor in research and development after the United States, the Organization for Economic Cooperation and Development (OECD) said yesterday.

China's R&D spending is expected to top US$136 billion in 2006, surpassing Japan's forecasted US$130 billion, the Paris-based OECD said in a report on world technology trends.

China's spending on R&D as a GDP percentage, known as R&D intensity, has more than doubled from 0.6 percent of GDP in 1995 to over 1.2 percent in 2004, the OECD said.

In current prices, this represents a real increase from just over US$17 billion in 1995 to US$94 billion in 2004. This means R&D spending is blossoming faster than the economy, which is expanding between 9 and 10 percent a year, according to an OECD press release yesterday.

Figures for 2005 and 2006 were projected assuming a continuation of growth in R&D spending at the same average rate as was observed over 2000-04.

Sources with the Ministry of Science and Technology declined to comment on the report, but said last year's figure was less than one fourth of the OECD's 2006 figure. According to the ministry, China spent 245 billion yuan (US$30.6 billion) on R&D in 2005, around a quarter more than 2004.

Of the 2005 total amount, about 55 percent was from the central government, said the ministry, although the business share was rapidly increasing.

According to Dirk Pilat, head of the OECD's science and technology division, "the rapid rise of China, in both money spent and researchers employed, is stunning."

(China Daily December 5, 2006)