China invested $1.03 trillion in research and development in 2024, surpassing the United States' $1.01 trillion in purchasing-power-parity-adjusted terms, according to OECD data the Information Technology and Innovation Foundation published on May 6, 2026. The $20 billion gap ends a 60-year run of US dominance in aggregate R&D spending.

In 1960, the United States accounted for 69 percent of global R&D expenditure — more than the rest of the world combined. By 2023, that share had fallen below 30 percent, according to Congressional Research Service figures cited by ITIF.

How fast has each country's R&D grown?

Since 2004, Chinese R&D outlays have expanded by more than 12 percent annually when adjusted for inflation — more than triple the US growth rate over the same period. China's investment now reflects four straight decades of compound expansion.

US growth has cooled. Between 2014 and 2019, US investment grew by an average of 5.7 percent annually. In the subsequent five years, the pace slowed to 4.4 percent annually. The deceleration affects budget planning across US labs and institutes that model future revenue on historical federal and corporate R&D trajectories.

How does R&D intensity compare?

China still trails the United States on R&D intensity — gross R&D expenditure as a share of GDP. US intensity stood at 3.4 percent of GDP in 2024, ahead of China at 2.7 percent. South Korea and Japan also outrank China on that metric, World Bank data show.

The trajectory is what R&D managers should watch. China's R&D intensity has grown by 4.1 percent annually since 2004. The United States has grown by 1.6 percent annually over the same period. US intensity actually fell from a 2022 peak of 3.5 percent to 3.4 percent in 2024 — a small absolute drop but a notable signal given the historical baseline.

What does the FY2027 budget proposal change?

President Trump's FY 2027 Budget Request would reduce nondefense R&D by 4 percent and raise defense R&D by nearly 80 percent, according to an AAAS analysis ITIF cites. The defense increase concentrates in development and late-stage testing — areas with limited spillover into other research fields. Basic research at the Department of Defense faces a 9 percent cut. Applied research there faces a 15 percent cut.

For R&D managers at universities, federal labs, and contract research organizations, those line items translate directly into fewer competing grants, smaller program budgets, and tighter eligibility criteria in the next fiscal cycle. Vendor portfolios weighted toward early-stage defense research — basic and applied work — face the steepest headwinds.

ITIF recommends rejecting the proposed FY2027 cuts and tripling both the Alternative Simplified R&D Credit and the regular R&D credit. The think tank argues that policy must combine increased federal funding with stronger incentives for private R&D investment to preserve US standing in advanced industries.

What stays unmeasured?

The OECD figures capture gross spending, not research quality, output, or commercialization rate. Treat the headline crossover as a portfolio signal: it informs where the next wave of patents, trained researchers, and industrial supply chains will accumulate, but it does not measure research productivity per dollar. R&D managers weighing site selection, partnership, and grant strategy should read the $1.03 trillion figure as a flow number, not a verdict on which country produces more useful science per dollar invested.

The next OECD R&D release will show whether FY2027 appropriations follow the budget request — and whether China's annual R&D growth continues to outpace the US at roughly three times the rate.