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While the United States is still at the top in total investment in research and development — spending $500 billion in 2015 —
has made a startling finding: A couple of years ago, China quietly surpassed the U.S. in spending on the later stage of R&D that turns discoveries into commercial products. And at its current rate of spending, China will invest up to twice as much as the U.S., or $658 billion, by 2018 on this critical late-stage research.
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The country is still the global leader in “basic and applied” R&D, which makes early discoveries and further refines them. About a third of the $500 billion the country spends on R&D is funneled to those activities. But while two-thirds of the total goes to later-stage “development” R&D, China invests 84% of its R&D money on advances that yield commercial products. For the past decade, “development” R&D has been growing 20% a year in China, versus 5% in the U.S., the BCG report says. As recently as 2004, the U.S. spent four times as much as China.
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