ITIF-創(chuàng)新戰(zhàn)爭：中國在企業(yè)研發(fā)方面如何趕超美國（英）

Innovation

Wars:

How

China

Is

Gainingon

the

United

States

in

Corporate

R&DTRELYSA

LONGANDROBERTD.

ATKINSON

|

JULY

2023ChinawantstodisplacetheUnitedStatesas

the

world’sleadinginnovationeconomy.BusinessR&Dinadvanced,

traded-sectorindustriesisakeyindicatorofitsprogress—andit

is

catchinguprapidly.Congressand

U.S.state

governments

shouldrespondbyboostingR&Dtaxincentives.KEY

TAKEAWAYS...U.S.headquartered

firms’R&Dspendinginadvancedindustriesrose

from80percentabovetheglobalaveragein2013tonearly100percentmorein2021.Chineseadvanced

industrieswentfrom80percentbelow

theglobalaverageto30percentbelow.Leavingoutsoftware,theyshould

catchup

tothe

UnitedStatesby2034.In2013,U.S.advanced-technology

firms’size-adjustedR&DspendingexceededthatofChinese

firmsinnineadvancedsectors.By2021,

Chinese

firms’spendingwashigherintwoofninesectorsand

tiedinathird.....Inwage-adjustedR&Dspendingas

ashareofGDP,Chinaisnowabovethe

globalaverageinsixofnineadvanced

industries.Inseven

ofninesectors,

U.S.firms’size-adjusted

R&Dspendinghadeitherdeclinedorremained

stagnantwhileChinese

spending

rose.Chinese

firmsalsoinvestedmorethanU.S.

firmsintraded

sectors

thatare

notadvanced,investing

$34billionin

R&D,whileU.S.firmsinvested$19billion.U.S.firms

spent240percentmore

thanChinese

firms’spendingof$154

billion.Butadjusting

forChina’slowerR&Dsalaries,U.S.firmsonlyspent80percentmore

thanChinese

firms—$529billioncomparedtoChinese

firms’$295billion..Torespond,CongressshoulddoubletheAlternativeSimplifiedCreditrateto28percentandrestore

fullexpensingofR&Dexpenditures,andstatesshould

takesimilarsteps.CONTENTSKeyTakeaways

1Introduction

3ExaminingAdvancedSectors

3AerospaceandDefense

8ElectronicandElectricalEquipment

11GeneralIndustrials

13IndustrialEngineering

16PharmaceuticalandBiotechnology

18SoftwareandComputerServices

21TechnologyandHardwareEquipment

23AlternativeEnergy

26AutomobilesandParts

28AllOtherSectors

31NonadvancedTradedSectors

31NontradedSectors

32PolicyRecommendations

34Conclusion

35Appendix1:

IndustrySectorGroups

36Appendix2

37KeyDifferencesBetween

EUR&D2,500ScoreboardandBusinessEnterpriseR&DExpenditureEstimates

37LocationofR&DActivity

37NominalDollarFigures

37SectorClassification

37AdditionofAmazonintothe2021EUR&DScoreboard

37Endnotes

38INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE2INTRODUCTIONAdvanced,traded-sectorindustriespowertheU.S.

economy’s

globalcompetitiveness.1

Akeyindicatorofstrength

inthoseindustriesis

theamountfirmsinvestinresearchanddevelopment(R&D)toproducenewinnovations.As

China

vigorouslychallengestheUnitedStatesforgloballeadership

intheinnovationeconomy,it

isthereforeimportanttoassesswherethetwocountriesstand

intheiradvanced

industries’privateR&Dspending.2ThisreportusestheEU

R&D2,500Scoreboard,

whichcovers90percentoftheworld’sprivate-sectorR&Dspending,to

compareU.S.-andChinese-headquartered

firms’R&Dspendingin

threegroupsof

economicsectors.3

First,weexamine

nine

strategicallyimportantadvanced,

traded-sectorindustries.Second,wecompareU.S.andChinesefirmsacrossallnon-advancedtradedsectors.Finally,weexaminenon-tradedsectors.Thereare,however,some

caveatsaboutthisdataset:thecompanies’locationsarecategorizedbytheirheadquartersratherthanwhereR&Dinvestmentsoccurred;

theR&Dspending

isinnominaldollars,companysectorsareclassifiedbymainbusinessactivities,

andmostof

thedatapresentedheredoesnotattempttoadjustforpurchasingpowerparitytoreflectlowerR&DsalariesinChina.(Seeappendix2fordetails.)Eachsectionof

thereportexaminesU.S.andChineseprivate-sectorR&Din

those

sectorson

asize-adjusted

basis—firstrelativeto

the

sizeoftheirrespectiveeconomies;

thenasproportionsofglobalR&Dineach

sectororgroupof

sectors;and

finallyusinganindustrialconcentrationratioknownasalocationquotient(LQ),which

isR&Das

ashareof

acountry’snationaleconomyversustheglobalaverage.Wealsocomparetheextenttowhich

privateR&Disconcentratedamongeachcountry’stopfour

firmsontheEUR&D2,500Scorecard.ThedatashowsthatwhileU.S.firms’investmentinR&Disgrowing,Chinaiscatchingup.Onasize-adjusted

basis,U.S.

firms’R&Dinvestmentsinthenineadvancedsectorsin2013exceededthatof

Chinesefirms.4

Butby2021,U.S.firmshadlosttheirlead

intwoofthenine

sectors,whileChinaclosed

thegapinthe

otherseven.5

TheUnitedStatescouldpotentiallylose

globalmarketsharesin

theotherseven

sectorsasChinesecompaniescontinuallyexpandR&Dinvestmentwithgovernmentsupport.

Inaddition,

because

theybenefitfromextensiveintellectualpropertytheftandforcedtechnologytransfers,Chinesefirmsdo

nothave

to

investasmuchinR&Das

Americanfirms

togetthesameinnovationresults.6

Think

ofChinaasa

freerider,livingon

theR&Dinvestmentsof

U.S.andotherforeign

firms.Butin

additiontothatfree-ridingstrategyandthe

impactofhavingR&Dworkerswithlowersalaries,

Chinese

firmsalsoareinvesting

more

intheirownin-housecapabilities.Inresponse,

Washington

needstodo

abetterjob

of

incentivizingtheprivatesectorto

continueinvesting

inR&D.Thisshouldincludeexpandingprogramsthatfund

jointindustry-universityresearch,boostingtheAlternativeSimplifiedR&DCreditratefrom

14percenttoat

least28percent,andrestoringR&Dexpensing.

It’s

much

easierto

keepU.S.industries’globalmarketshares

throughsuchpoliciesthantolosethem

andlaterhavetoworkmuchhardertowinthemback,oftenin

vain.EXAMINING

ADVANCED

SECTORSThefollowingsubsectionscompare

theUnitedStates’andChina’sprivatebusinessR&Dspendingfromfirms

innineadvanced

sectors:

aerospaceanddefense,electronicandelectricalequipment,generalindustrials,

industrialengineering,pharmaceuticaland

biotechnology,INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE3softwareand

computerservices,

technologyandhardwareequipment,

alternativeenergy,andautomobilesandparts.Itisimportanttonote

thatthesampleoffirmsonlyincludesthe

top2,500R&Dspendersglobally.TheaverageU.S.firmin

advancedsectorsspendsmore

onR&DthandoestheaverageChinesefirm.

In2021,659U.S.

firms

and424Chinesefirmsin

theseninesectorsmade

theEUR&D2,500scoreboard.7

(Refertoappendix2ondetailaboutAmazon’saddition

into

the2021data.)Thisiscomparedwiththerestoftheworld’s618

firms.8

(See

table1.)The

averageU.S.firminvested$802

millionon

R&D,0.06standarddeviationsabovetheaverage

firm’sR&Dspendingof$655millionin

thesectorsglobally.9

Incomparison,theaverageChinesefirminvested$363milliononR&D,0.12standarddeviationsbelow

theaveragefirm.10Table

1:

Number

of

firms

in

nine

advanced

trade

sectors,

202111UnitedStatesRest

of

theWorldSectorChina79734710652455Total47833720724916714844Pharmaceuticals

andBiotechnologySoftwareandComputerServicesTechnologyHardwareand

EquipmentElectronicandElectricalEquipmentIndustrialEngineeringAutomobilesandPartsAerospaceandDefenceGeneralIndustrials2631977141282815152136678910287752433516164AlternativeEnergy8Total6604246181,702Collectively,U.S.firmsin

thesenineadvancedsectorscontinue

toinvestmoreinR&D

thandoChinese

firms.In2021,

U.S.firms

spent3.4

timesmorethanChinesefirms:$529billiononR&D,whileChinesefirms

spent$154billion.12

Asaresult,U.S.

firms’R&D

sharewas47.4percentcomparedwithChinesefirms’13.8percent.13

(See

figure1.)This

is

comparedwiththerestoftheworld’s39percent.14

Evenwhencontrollingfor

grossdomesticproduct(GDP),U.S.firms

stillspentmore

thanChinese

firms.Forevery$1,000ofGDP,U.S.firms

in

theseninesectorsspent$22.70on

privateR&D,whileChinesefirmsinvested$8.67.15

Therestoftheworld’sfirmsspent$7.80.16

Inotherwords,bothU.S.andChinesefirmsinvested

moreinR&Dasashareof

theirR&Dcomparedwiththe

restoftheworld,butU.S.

firmsstilloutperformChinese

firms.INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE4Figure

1:

R&D

spending

by

U.S.

and

Chinese

firms

in

all

advanced

sectors

(including

Amazon),

202117$30$529.3B$25$20$15$433.0B$153.8B$10$5$00%20%40%60%80%100%GlobalShareFigure

2:

U.S.

and

Chinese

firms’

wage-adjusted

R&D

spending,

all

advanced

sectors

(including

Amazon),

202118$4$3$529.3B$2$294.8B$1$00%10%20%30%40%50%60%70%80%90%100%ShareofGlobalR&DINFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE5Whenadjustingforwagedifferences,Chinesefirmsare

rapidlycatchingup

toU.S.firms’spending.Althoughwagesaredifficultto

measure,PayScalehasestimated

thatresearchscientistsinChinaearned1.9times

lessthan

theirU.S.counterparts—$45,446comparedto$87,132intheUnitedStates.19

ThisdifferencemeansChinesefirms’R&Dspendinggoesfarther.

Whenwagedifferencesareadjusted

for,U.S.firmsonlyspent80percentmorethanChinese

firms—$529billioncomparedtoChinese

firms’$295billion.20

Moreover,adjustingforbothwagedifferencesandGDP,U.S.firms’spendingwasonly37percent

more

thanChinesefirms’—$1.74per

$1,000ofGDPcompared

to$1.28forChinesefirms.21

(Seefigure2.)U.S.firms’size-adjusted

R&DspendingwaslargerthanChinesefirms’in2021.Thesize-adjustedR&DspendingcomparesU.S.andChinesefirms’R&Dspendingasashare

oftheirrespectivecountry’sGDP

tothe

globalaverageR&Dspendingas

ashareoftheworld’sGDP.Thisresults

inan

industryconcentrationratio

knownas

anLQ,whichweexpressasamultiple.Forexample,

ifacountryhas

twice

theglobalaverage

corporateR&Din

agiven

sector,thenitsLQinthatsectoris

2x.TheLQ

isimportantin

thisanalysisbecauseitcomparestheperformanceoffirms

ineachcountrywiththeglobalaverageafteradjusting

for

thesizeofeachcountry’seconomy.Bythatmeasure,U.S.firms’size-adjustedR&DspendingwashigherthanChina’sinsixof

the

nine

sectors.Theseincluded

thesoftwareandcomputerservices,technologyandhardware,

andpharmaceuticalandbiotechnologysectors.22

However,in

threesectors—generalindustrials,

electronicandelectricalequipment,andindustrialengineering—U.S.firmseithertiedor

werelowerthan

Chinesefirms’size-adjustedR&Dspending.23

(Seetable2.)Moreover,Chinese

firmsare

closing

thesize-adjustedR&DspendinggapwithU.S.

firmsinadvancedsectors.

Insevenofninesectors,U.S.

firms’size-adjustedR&Dspendinghadeitherdeclinedorremained

stagnantwhileChinese

spending

rose

since2013.24Table

2:

U.S.

and

Chinese

firms’

size-adjusted

R&D

in

nine

advanced

sectors

(2021

LQs)25Chinese

LQ,SectorU.S.

LQ3.1x2.2x2.2x1.8x1.1x0.8x0.7x0.5x0.5xChinese

LQWage-AdjustedSoftwareandComputerServicesTechnologyHardwareand

EquipmentPharmaceuticals

andBiotechnologyAerospaceandDefenceGeneralIndustrials0.7x1.2x1.1x1.7x0.3x0.6x0.2x0.3x1.1x1.7xIndustrialEngineering1.6x2.4xAutomobilesandParts0.6x1.0xElectronicandElectricalEquipmentAlternativeEnergy1.3x2.0x0.3x0.6xINFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE6U.S.firmshavehistoricallyexceededChinesefirms’R&Dinvestments,butChinese

firms’R&Dinvestmentsare

rapidlygrowing.From

2013to2021,U.S.firms’R&Dshareofthesenineglobalsectorsrose

from39.1percentto47.4percent.26

Incomparison,Chinesefirms’R&Dsharerosefrom3percentto13.8percent.27Chinese

firms

in

advanced

sectors

are

heavily

investing

in

R&D

and

catching

up

to

U.S.

firms

tocompete

in

the

global

economy.AlthoughChinesefirms’R&DshareoftheglobaladvancedsectorsisstillbelowU.S.firms’becauseof

theirsmallereconomy,theirsize-adjustedR&Dinvestmentiscatchingup.Whencontrolling

forGDP,U.S.

firms’R&Dinvestmentrosefrom80percentto100percentmore

thantheglobalaverage(1.8xto2.0x).28

Incomparison,

Chinese

firms’rose

from80percentbelowtheglobalaverageR&Dinvestment(0.2x)to30percentbelow

theglobalaverage(0.7x).29

(Seefigure3.)Thisis

importantbecauseit

meansthatshould

this

trendcontinueonpace,Chinawouldcatchupto

theUnitedStates’currentlevelby2049.30Figure

3:

Projected

R&D

spending

by

U.S.

and

Chinese

firms

in

all

advanced

sectors3150%45%40%35%30%25%20%15%10%5%3.0x2.5x2.0x1.5x1.0x0.5x0.0x0%2013

2017

2021

2025

2029

2033

2037

2041

2045

2049

2053U.S.

Share

ChinaShare

U.S.

LQ

ChinaLQTheUnitedStatesreliesmore

onfirmsinthe

softwareandservicessectortomaintain

itsgrowthinsize-adjustedR&Dspendingforadvancedsectors.AccordingtoStatista,

theUnitedStatesisthelargestR&Dspenderinsoftware.32

From2013to2021,U.S.firms’R&D

spendinggrew

from80percent(1.8x)to

100percent(2.0x)abovethe

globalaverage.

Withoutthesoftwareandservices

sector,U.S.

firms’R&Dspendingremainedstagnantat

60percentabovetheglobalaverage.Incomparison,

Chinese

firms’R&Dspendinggrewaboutthesameevenwithoutthesoftware

thesector(0.26xto0.76x).Asaresult,

withoutthe

software

sector,Chinesefirmsareprojected

tocatchuptoU.S.firms’R&Dspendingby2034.(See

figure4.)INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE7Figure

4:

Projected

R&D

spending

by

U.S.

and

Chinese

firms

in

all

advanced

sectors,

excluding

software

andcomputer

services3340%35%30%25%20%15%10%5%3.0x2.5x2.0x1.5x1.0x0.5x0.0x0%2013

2017

2021

2025

2029

2033

2037

2041

2045

2049

2053U.S.

Share

ChinaShare

U.S.

LQ

ChinaLQAerospace

and

DefenseTheaerospaceanddefensesectorincludesmanufacturers,assemblers,

and

distributorsofaircraftparts,

aircrafts,andcommunicationsatellitesused

inbothcommercialandprivateairtransport.34

Thesectoralsoincludesproducersofmilitaryaircraft,

radarequipment,

andweaponsused

inthedefenseindustry.35In2021,15U.S.firmsinthis

sectormade

theEUR&D2,500list,

includingRaytheonTechnologies,Boeing,

andLockheed

Martin.36

Five

Chinese

firms,includingAVICElectromechanicalSystems,ChinaAerospaceTimesElectronics,

andChinaAvionicsSystems,also

made

thelist.37

In2021,theaverageU.S.

firminthe

sectorspent$626milliononR&D,a0.17standarddeviation

abovetheaverage

firm’s

R&Dspendingof

$495millionin

theaerospaceanddefense

sectorglobally.38

Incomparison,theaverageChinese

firminthe

sectorspent$144

million,0.46standarddeviationbelowtheaverage

firm’s.39U.S.firms

spentabout13

times

moreonR&DthandidChinesefirms:$9.4billion

comparedwith$721

million.40

Whencontrolling

forGDP,U.S.firms

spent10timesmorethanChinesefirms

($0.40onR&Dforevery$1,000

ofGDPcompared

with$0.04

inChina).41

Asaresult,U.S.firms’R&Dspendingmadeup43.2percentofthe

globalsector’sR&Dspendingcomparedwith3.3percentforChina.42

Thisiscomparedwith

therestof

the

world’s53.5percentandR&Dspendingof

$0.21forevery$1,000.43

(Seefigure

5.)Whenwagesareadjustedfor,U.S.

firmsstillspentabout

6.8

timesmorethanChinesefirms—$9.4billioncomparedtoChinesefirms’$1.4billion.44INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE8Figure

5:

R&D

spending

by

U.S.

and

Chinese

firms

in

the

aerospace

and

defense

sector,

202145$0.50$0.45$0.40$0.35$0.30$0.25$0.20$0.15$0.10$0.05$0.00$9.4B$11.6B$0.7B0%20%40%60%80%100%ShareofGlobalR&DU.S.firmshaveconsistentlyhadahigherglobalshareof

R&Dspending.

From2013to

2021,U.S.firms’shareof

globalR&Drosefrom35percentto43percent.46

Chinesefirms’sharesrosefrom0.1percentto3.3

percent.47Thetopfour

U.S.andChinesefirmswiththehighestR&Dspendinghaveconsistentlyplayedacrucialrole

indrivingbothU.S.andChinese

firms’

shareofglobalR&D.In

2013,thetop

fourU.S.firms

accountedfor81percentofthedomesticsector’sR&Dspending.48

Andin2021,thetopfourfirmsstillaccountedfor80percent,

meaningthesefirmsmadeup

34.4percentoftheglobalsector’sR&Dspending.49

Thisdecreased

relianceoccurreddespitethenumberofU.S.firmsdecliningfrom19

to15during

thisperiod.Similarly,the

top

fourChinesefirms’R&Dspendingaccountedfor100

percentoftheChinesesector’sR&Dspendingin2013.50

Andin2021,these

topfourChinesefirmsstillaccountedfor87percentofthecountry’sspendinginaerospaceanddefense.51

(Seefigure6.)Theslightdeclinein

reliance

ispartiallybecausethenumberofChinesefirmsincreased

fromone

tosix.Inotherwords,theUnitedStatesandChinadependontheirtop

fourfirms

to

maintaincurrentlevelsof

R&Dcompetitiveness.INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE9Figure

6:

Top

four

U.S.

and

Chinese

firms’

share

of

domestic

R&D

in

aerospace

and

defense52120%100%80%60%40%20%0%20132017UnitedStates2021ChinaU.S.firms’size-adjustedR&Dspendingwas60percenthigherthan

theglobalaverage

(1.6x)in2013,rising

to80percentabove

theglobalaverage(1.8x)in2021.53

Incomparison,Chinesefirms’R&Dspendingwas

nonexistentin2013andwasstill80percentbelowtheglobalaverage(0.0xto

0.2x)in2021.54

(Seefigure7.)Figure

7:

U.S.

and

Chinese

firms’

shares

of

global

R&D

in

the

aerospace

and

defense

sectors5550%45%40%35%30%25%20%15%10%5%2.0x1.8x1.6x1.4x1.2x1.0x0.8x0.6x0.4x0.2x0.0x0%201320172021ChinaLQU.S.

ShareChinaShareU.S.

LQINFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE10Electronic

and

Electrical

EquipmentTheelectronicand

electricalequipmentsectorincludesmakers

anddistributorsofelectricalparts

forradiosandotherconsumerelectronics,

including

cablesand

transistors.56

Thesectoralso

includescompaniesproviding

mechanicalandelectronicsecurity;

filtration

systems;productsused

inthemeasurementof

electric,gas,

andwater;

pollutioncontrolequipment;andelectricaldevicesandcomponentsmarked

tobusinesses.57In2021,41U.S.firms

made

theEUR&D2,500list,includingDanaher,

KeysightTechnologies,andNorthropGrumman,

while106Chinesefirms,

includingByd,BoeTechnologyGroup,andHangzhouHikvisionDigitalTechnology,

alsomadethelist.58

Thatsameyear,

theaverageU.S.firmspent$299

million

onR&D,whiletheaverageChinese

firmspent$228million.59

Thisiscomparedwiththe

globalaveragefirm’s$408million.60

Inotherwords,both

spentless

than

theaveragefirm

in

thesectoronR&D,meaningfirmsinothercountriesarebetteratpromotinginnovationwith

theirhigherR&Dspending.Despite

U.S.firms’higheraveragespendingonR&D,Chinesefirms

spend

more

onR&DthandoU.S.firms

collectively.

In

2021,U.S.firms

spent$12.3billion

onR&D,whileChinesefirmsspentalmostdouble,or$24.1billion.61

Duetothelargenumberof

Chinesefirms,

theirR&Dshareof

theglobalsectorwas23.8percent,while

U.S.firms’sharewasjust12.1percent.62Adjusting

forGDP,Chinesefirmsalsospentmore

thanU.S.firms.For

every$1,000ofGDP,Chinese

firmsspent$1.36onR&Dcomparedwith

$0.53forU.S.

firms.63

Thisiscomparedwiththerestof

the

world’sR&Dshareof

64.1percentandspendingof$1.17

forevery$1,000.64(Seefigure8.)Moreover,

whenadjusting

forwages,Chinese

firmsspent3.8

times

morethanU.S.firms—$46.3billioncomparedtoU.S.firms’$12.3billion.65Figure

8:

R&D

spending

by

U.S.

and

Chinese

firms

in

the

electronic

andelectrical

equipment

sector,

202166$1.60$1.40$24.1B$1.20$65.1B$1.00$0.80$0.60$12.3B$0.40$0.20$0.000%20%40%60%80%100%GlobalShareINFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE11U.S.firms

inthesectorhavenotalwayslaggedbehindChinesefirmsinR&Dspending.

In2013,U.S.firms’shareof

R&Dspendingintheglobalsectorwas12.2percentcompared

withChinesefirms’2.5percent.67

(See

figure10.)However,U.S.

firmsdidnot

increasetheir

R&Dinvestmentinproportionalitytothe

growthof

R&Dspendingin

theglobalsector.

Incomparison,Chinesefirms’growthexceeded

theglobalsector’sgrowth.

Asaresult,Chinesefirms

caughtup

andwereroughlyonparwithU.S.firms

inR&Dinvestmentby2017,witheachholdingabout

11percentofthe

globalR&Dspending.68

Andby2021,ChinesefirmshadoutspentU.S.firms,holdingaglobalshareof23.8

percentcomparedwithU.S.

firms’

12.1

percent.69Chinese

firms

in

the

electronic

and

electrical

equipment

sector

not

only

caught

up

but

now

exceed

theUnited

States

in

promoting

R&D

and

competitiveness.Thetopfour

U.S.firms

with

thehighestR&Dspendinghave

consistentlyplayedakeyroleindrivingU.S.firms’shareofglobalR&D.In2013,

thetop

fourU.S.firmsaccounted

for44percentofthedomesticsector’sR&D.70

In2021,theystillaccounted

for37

percent,meaningthese

firmsmadeup4.5

percentoftheglobalsector’sR&Dspending.71

Thedecreasedrelianceoccurreddespite

thenumberofU.S.firmsinthesectordecliningfrom

54

to41in

thatperiod.Incomparison,Chinesefirms’shareofglobalR&Dhasbecomelessdependentonthetop

fourChinese

firms.72

In2013,

thetop

fourChinesefirmscomprised46percentof

thedomesticsector’sR&Dspending.73

Yet,by2021,

theleading

fourChinese

firmsaccountedforonly25percent.74

Thisdecreasedrelianceoccurredprincipallybecause

thenumberof

Chinesefirmsincreased

from28to

106.(Seefigure9.)Inotherwords,

theUnitedStatesdependsmoreonitstopfourfirmsto

maintaincurrentprivatesectorR&Dcompetitivenesslevels.Figure

9:

Top

four

U.S.

and

Chinese

firms’

share

of

domestic

R&D

in

electronics

and

electrical

equipment7550%45%40%35%30%25%20%15%10%5%0%20132017UnitedStates2021ChinaMoreover,comparedwith

theglobalaverage,U.S.

firms’size-adjustedR&D

investmentsworsened

from2013to2021,whenU.S.R&Dspendingdecreased

from60

percentto50INFORMATIONTECHNOLOGY&INNOVATIONFOUNDATION

|

JULY2023PAGE12percent

oftheglobalaverage(0.6x

to0.5x).76

Incomparison,Chinesefirms’R&Dspendingincreased

from20percentto130percentofthe

globalaverage

(0.2x

to1.3x).77

Inthis

period,Chinese

firmsincreasedtheirR&Dspendingby$1.22forevery$1,000ofChina’sGDPcomparedwithU.S.firms’

growthof

$0.13.78

(See

figure10.)Inotherwords,Chinesefirmshavenotonly

caughtup

butnowexceedU.S.firms

inpromotingR&Dandcompetitiveness.Figure

10:

U.S.

and

Chinese

firms’

shares

of

global

R&D

in

the

electronic

and

electrical

equipment

sectors7925%20%15%10%5%1.4x1.2x1.0x0.8x0.6x0.4x0.2x0.0x0%201320172021ChinaLQU.S.

ShareChinaShareU.S.

LQGeneral

IndustrialsThegeneralindustrialssectorincludescompanies“engaged

inthreeor

moreindustrialbusinessactivities,noneof

which

isthedominantbusinessline.”80

Moreover,thesectoralsoincludescompaniesthatmanufacture,distribute,and/orproducepaint,

materialcoatings,resin,plasticproducts,chemicalsusedinplastic,structuralglassandotherglassproducts,andpackagingproducts.81In2021,15U.S.firmsmade

theEUR&D2,500list,includingGeneralElectric,Honeywell,and3M.SixteenChinesefirms,includingMetallurgicalCorporationofChina,ChinaInternationalMarineContainers,

andSunwodaElectronics,also

made

thelist.82

In2021,theaverageU.S.firminthissectorspent$457milliononR&D.83

In

comparison,the

average

Chinese

firmspent$308million,a0.15

standarddeviationbelowtheaveragefirmglobally.84

Thisiscomparedwiththeaverage

firm’sR&Dspendingof

$393million

globally.85U.S.firms

inthegeneralindustrialssectorspendmore

onR&DthandidChinesefirms.In2021,U.S.firms

spent$6.9billiononR&DcomparedwithChinesefirms’$4.9billion.86

DuetoU.S.firms’higherR&Dinvestments,theirR&Dspendingmadeup27.3percentoftheglobalsector’s.87

Incomparison,

Chinese

firms’spendingonlycomprised19.6percent.88

AdjustingforGDP,U.S.firmsdidnotspendalotmore

thanChinesefirmsonR&D.For

every$1,000of

GDP,U.S.firms

spent$0.19

onR&Dcompared

withChinesefirms’$0.18.89

This

iscomparedwiththerestof

the

world’sR&Dshareof

53.1percentandspendingof$0.24

forevery$1,000.90INFORMATIONTECHNOLOGY&INNOVATIONF