While the US remains central to innovation research, China has become the biggest spender on later-stage development, a Boston Consulting Group study released last Monday shows.
China is expected to invest up to twice as much as the US, or $658 billion, in the back end of the research and development chain by 2018, focusing on translating basic and applied research into commercial products and new manufacturing processes.
US leadership in industrial innovation "looks far less secure", despite its push in front-end R&D investment, the report concluded.
The report suggested academic research should align with the interests of manufacturing industries.
The surge in research spending comes as part of the country's decade-long efforts to upgrade its manufacturing sector.
The world's second largest economy now ranks ninth according to the number of domestically domiciled high-tech public companies.
Innovation has sprawled out in diverse fields such as artificial intelligence, biotechnology, drones, e-commerce, electronic vehicles, mobile telecommunications, high-speed rail, robotics and supercomputing.
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