China is closing the research and development gap -- fast.

China is closing the research and development gap -- fast.

The ability of American industry to stay ahead of its international
competition rests on the national gifts and resources that the U.S.
devotes to innovation. The research gap between the U.S. and China
remains vast. In December, Washington authorized $3.7 billion to
finance nanotechnology research, a sum the Chinese government cannot
easily match within a scientific infrastructure that would itself take
many more billions (and years) to build.

Yet when it comes to more mainstream applied industrial development and
innovation, the separation among Chinese, American, and other
multinational firms is beginning to narrow. Last year, China spent $60
billion on research and development. The only countries that spent more
were the U.S. and Japan, which spent $282 billion and $104 billion,
respectively. But again, China forces you to do the math: China's
engineers and scientists usually make between one-sixth and one-tenth
what Americans do, which means that the wide gaps in financing do not
necessarily result in equally wide gaps in manpower or results. The
U.S. spent nearly five times what China did but had less than two times
as many researchers (1.3 million to 743,000). China's universities and
vocational schools will produce 325,000 engineers this year -- five
times as many as the U.S.

For now, the emphasis in Chinese labs is weighted overwhelmingly toward
the "D'' side -- meaning training for technical employees and managers.
Nevertheless, foreign companies are moving quickly to integrate their
China-based labs into their global research operations. Motorola alone
has 19 research labs in China that develop technology for both the
local and global markets. Several of the company's most innovative
recent phones were developed there for the Chinese market.

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