According to China's Ministry of Finance, the 2025 central budget will allocate ¥398.12 billion yuan ($55 billion) for science and technology, a 10% increase from 2024. This allocation is the third-largest item in the budget, surpassed only by national defense and debt interest payments.
The increase in spending on science and technology by 10%, or $5 billion, emphasizes that China wants to accelerate its national R&D this year, which will speed up its plans for self-reliance in sectors such as semiconductors. $5 billion will not build the country a breakthrough but will rather help with existing projects, particularly in fields such as semiconductors, AI, space exploration, and quantum computing.
Also, remember that China's economy is slowing, and the government frequently disguises economic stimulus plans within large-scale initiatives like this, allowing it to avoid directly labeling it as a stimulus.
In 2024, China allocated ¥361.9 billion for science and technology expenditures, achieving 97.6% of the budgeted target. The government increased support for fundamental research to strengthen China's capabilities in cutting-edge scientific discovery and technological innovation. Investment was directed into major national initiatives, particularly in strategic sectors such as semiconductors, artificial intelligence, and space exploration. Last year, China also introduced support for Small and Medium Enterprises (SMEs), including special financing programs to assist innovative SMEs with risk-sharing mechanisms through national financing guarantee funds. In addition, tax reductions and subsidies were offered to tech enterprises to encourage innovation.
China plans to channel its science and technology spending on 'Science and Technology Innovation 2030' major projects targeting integrated circuits, artificial intelligence, and quantum computing technology. Governments tend to invest money into projects that may not pay off for years, so expect China to invest in fundamental research in the aforementioned areas. This will strengthen China's global competitiveness in these key industries in the coming years, which is particularly important for China's ongoing rivalry with the U.S.
