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10-10-2005, 00:53 AM
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#1 (permalink)
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Postmaster General
Military Professional
Join Date: 08-20-03
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EU fears China's rising R&D spending
Quote:
EU fears China's rising R&D spending
By Raphael Minder in Brussels
Published: October 9 2005 22:00 | Last updated: October 9 2005 22:00
EU and ChinaWithin five years China will be investing a higher proportion of its gross domestic product in research and development than the European Union, as more western companies move their R&D eastwards, the European Commission fears.
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At present growth rates, the EU's public and private spending on R&D is set to rise from 1.93 per cent of GDP in 2003 to 2.2 per cent in 2010, well short of the 3 per cent target agreed by EU heads of government as part of the 2002 “Lisbon strategy”.
R&D investment in China was 1.31 per cent of GDP in 2003 but is rising at a double-digit rate.
Janez Potocnik, EU commissioner for research, warned: “The Chinese trend is extremely clear. If the trend continues, they [China] will catch us up in 2009 or 2010. The conditions for R&D in some emerging markets like China are improving and it is obvious that they [European companies] are transferring some of their investments there.”
Mr Potocnik's worries about Europe's unfavourable R&D environment range from excessive red tape to insufficient corporate tax incentives and continued divergences in intellectual property protection and patenting across the 25-nation EU.
In response to the R&D boom in countries such as China and India, Brussels will this week table new proposals to help retain and attract research funding in the EU.
A Brussels plan to double the EU's own R&D budget to €70bn over the next six years was shelved in June amid an acrimonious battle among EU leaders over future EU funding.
Mr Potocnik's forecast is certain to reinforce concerns that China will soon present as much of a competitive threat to Europe in high-value sectors such as information technology as in low-end manufactured goods such as bras and tee-shirts, which were at the heart of the textiles trade dispute between Brussels and Beijing earlier this year.
Peter Mandelson, the EU trade commissioner, told the Financial Times yesterday: “It is in fact a race to the top. If we don't raise our performance and increase our investment in research, we are going to be in trouble.”
The EU's 500 largest companies cut R&D investment by 2 per cent in 2003, while the 500 largest non-EU companies boosted it by 3.9 per cent. Furthermore, European spending was channelled to a small number of sectors, led by cars and auto parts.
The figures for 2004 corporate R&D spending, which are due out due next month, are again expected to show Europe under-performing the US and Asia.
Mr Potocnik declined to suggest where European companies should shift their R&D funding, but pointed out that, outside the EU, increasingly the largest beneficiary of corporate research spending was IT. “If you invest in research in IT, it's obvious that this can have an influence in all the other sectors,” he said.
http://news.ft.com/cms/s/3a7563b0-38...00e2511c8.html
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It appears that the EU has to reform or else the industry will move base to China and other countries, leaving Europe high and dry.
The repercussions will be worrisome for Europe.
What reforms should be in the offing? Will they be feasible?
If China does overtake Europe, it will have serious strategic implications. |
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10-10-2005, 01:12 AM
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#2 (permalink)
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Military Professional
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Quote:
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Originally Posted by Ray
It appears that the EU has to reform or else the industry will move base to China and other countries, leaving Europe high and dry.
The repercussions will be worrisome for Europe.
What reforms should be in the offing? Will they be feasible?
If China does overtake Europe, it will have serious strategic implications.
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Without a doubt you are correct, however isn't this kind of inevitable anyways? Europe has hit a wall demographically, and they've been underpreforming for a while because of that "red tape" and uncompetitive labor practices. I think that the governments of Europe have been (and to an extent are) reforming, but some of the problems simply aren't within their capacity to change. Aging population, government over-regulation, and entrenched unions will take years to alter, and by that time China and India will have overtaken Europe. |
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