John Berthelsen of the Asia Sentinel writes a thorough, and thoroughly alarming, piece about China’s investments in research and development compared to the U.S. R&D, and Chinese educational achievements versus American.

From “China’s Heavyweight R&D Spending“:

Hong Kong. Although previously China has publicly indicated its ambition to invest heavily in research and development, the amount to actually be devoted to the sector is staggering, and is expected to be distributed mostly by fiscal or government subsidy – actual cash payments.

Sean Darby, Asia strategist for Nomura international (HK) Ltd., estimated the amount of spending over the next five years in a report this week at 5 trillion yuan (US$758.4 billion), an even bigger amount than the mammoth – and successful – 4 trillion yuan stimulus package announced by the central government in 2008 as an attempt to minimize the impact of the global financial crisis.

Berthelsen’s analysis draws on a report on R&D by Research-Works, the leading independent equities research firm based in China, which has a summary and data points available here. He also cites Frank Vargo, the National Association of Manufacturers’ vice president for international economic affairs, who at a Shopfloor post detailed China’s violations of intellectual property rights and its government procurement mandates, “indigenous innovation.” (China’s ‘Innovation’ Policies Come at Expense of U.S. Manufacturers.)

Of China’s transgressions there’s no doubt. Still, as Research-Work’s managing director, Hugh Peyman writes:

China is no longer stuck in the Research and Copying, phase, as every other emerging leader went through, including the United States. Now China has real R&D and the products and processes that flow from it, something that has not yet registered with the popular mind, despite the mounting evidence.

This is the point at which we mention — for the first time this year at Shopfloor — that the R&D tax credit expires on Dec. 31, 2011.

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