Credit crunch may boost Chinese science

Hepeng Jia/Beijing, China

China’s research budget is unlikely to be hit by the global financial crisis, and may even receive a further boost, according to policy experts.

’China’s financial system is still isolated to the global market, and the impact [of the credit crunch] on the Chinese government’s budget has been quite limited,’ says Mu Rongping, director of the Chinese Academy of Sciences Institute of Policy and Management in Beijing.

According to the National Bureau of Statistics, China’s R&D spending was 366.4 billion yuan (US$53.9 billion) in 2007 or 1.49 per cent of gross domestic product (GDP). Mu believes that the country’s research budget, which has enjoyed double digit growth over the last 20 years, will continue to increase.

Xue Lan, a professor of science policy at Tsinghua University, says that China’s research spend could even benefit from Wall Street’s woes.

China’s exports - the main driving force of the country’s economy - have been severely hit. According to Xue, that could lead to increased government spending to reinvigorate the economy.

’There’s a wide consensus among policymakers that further spending on science and technology should be high on the list of priorities, if there’s a boost to public spending,’ he told Chemistry World.

But meanwhile, there are some signs that the financial crisis could be beginning to take its toll on China’s chemical sector.

The latest statistics from the China Petroleum and Chemical Industry Association (CPCIA) show that in the first eight months of 2008 the sector racked up 2.2 trillion yuan (US$319.8 billion) in sales - 31.3 per cent higher than over the same period in 2007, and profits were up 32 per cent to 133.9 billion yuan (US$35.2 billion). But those figures mask the fact that profits grew even faster the year before and were up over 50 per cent on 2006.

Zhao Jungui, CPCIA deputy secretary general, says that it is too early to decide if China’s chemical industry is suffering a big slowdown as a consequence of the credit crisis. ’We need further observations before reaching any definitive conclusions,’ he told Chemistry World.

But Mu argues that even an industry downturn could be good news for science because it could push Chinese companies to devote more of their resources to science-based innovation instead of competing on costs or investing their profits in the stock markets.