China has overtaken Japan to become the world's second largest R&D performer after the United States, according to data compiled by R&D Magazine and Battelle. Chinese R&D expenditures are projected to reach US$136.3 billion in 2006, and rise nearly 10% to $149.8 billion next year. That compares to the US, which accounted for $328.9 billion in 2006 with Japan placing third at $127.8 billion.

By 2007, China will account for 14.8% of global R&D outlays. While that trails the US share (32.4%) and Europe (23.6%), China's rate of increase is far higher. Its GERD-to-GDP ratio has jumped to 1.4% in 2005 and will be nearly 1.6% next year.

Even more impressive, Chinese industry is the source of 57.6% of all R&D expenditures and performs 61.2% of the total. In contrast, US industry funds 63.1% of the national total and performs 68.9%. Canadian industry funds 47.5% of all national R&D and performs 53%.

India is also making strong gains, posting 2006 R&D outlays of $38.9 billion which are projected to rise 7.6% to $41.8 billion in 2007. That puts India ahead of the UK at $38.1 billion and just behind France at $42.9 billion.

Canada ranks well behind the global leaders at $21.9 billion for 2007, trailing South Korea ($29.5 billion) Brazil ($25.6 billion) and Russia ($23.3 billion).

The R&D Magazine/Battelle report also ranks the top 20 global industry R&D spenders. The US accounts for seven firms, followed by Japan (5), Germany (3), Switzerland (2) and one each for France, UK and Finland. The top 10 global R&D spenders are listed below: