China’s dominance as a manufacturing destination has diminished as labour costs in the country rise and as overall foreign direct investment flows plateau, but this is being offset by successes in capturing higher-value inward investment projects, such as those related to research and development. China is emerging as an R&D hub, in line with a government push to promote innovation and a race by Chinese companies to catch up with western competitors.

Research from fDi Markets, an FT data service, reveals that China has caught up with the US in attracting foreign investment in R&D. Between January 2010 and December 2014, China attracted 88 greenfield R&D projects from foreign companies, against 91 in the US, and these projects involved capital investment of an estimated $5.5bn — more than twice the amount for the US. This puts China first in the world for the amount of greenfield foreign investment in R&D projects since 2010 and second in number of projects.

Last year, fDi Markets tracked 11 R&D projects into China, for $1.3bn, compared with 17 projects totalling $327m into the US. The previous year, China received 24 R&D projects at nearly $1.4bn, in a year when global greenfield expenditure on R&D projects continued a decline seen since 2011.