Listed companies in China invested 1.6 trillion yuan (nearly 221 billion U.S. dollars) in research and development (R and D) in 2023, achieving an overall R and D intensity of 2.21 percent, according to the China Association for Public Companies (CAPCO).
More firms also released individual sustainability reports on Environmental Social Governance (ESG) and social responsibility, said the association.
The increased R and D investment is aimed at enhancing productive capabilities and prepare for future industrial shifts, according to the association.
State-owned enterprises led the charge with an R and D expenditure totaling 770 billion yuan (over 106 billion U.S. dollars), representing 61 of the top 100 firms in R and D spending. Private companies showed strong innovation with an R and D intensity of 3.75 percent, surpassing the market average.
In 2023, the Shanghai Stock Exchange reported that its main board companies invested nearly 900 billion yuan (over 124 billion U.S. dollars) in R and D, marking a 5 percent increase from the previous year and extending a three-year growth streak.
Significant growth in R and D expenditure occurred in sectors of aviation, electricity, and telecommunications, with some industries' growth exceeding 30 percent.
The STAR Market of the Shanghai Stock Exchange also saw robust growth, with a 14.3 percent rise in R and D spending, totaling 156.1 billion yuan (about 22 billion U.S. dollars). Notably, 83 companies maintained an R and D intensity of over 20 percent for three consecutive years.
Data from the Beijing Stock Exchange show that in 2023, R and D investments of listed companies continued to increase, totaling 8.7 billion yuan (over 1.2 billion U.S. dollars) throughout the year, a year-on-year increase of 6.37 percent, achieving growth for three consecutive years.
Over 70 percent of these companies saw a year-on-year increase in R and D investments, with an average R and D intensity of 5.01 percent, and 36 companies' an R and D intensity exceeding 10 percent.
"The continuous growth in R and D inputs of China's listed companies is conducive to constant integration of sci-tech innovation into industrial development, promoting the emergence of new industries and the transformation of traditional industries on a par. This ongoing accumulation plays a crucial role in making breakthroughs in many frontier industries,” said Yan Xiang, chief economist at Hua Fu Securities.
On the environmental and social governance (ESG) front, CAPCO data showed that 2,115 companies issued sustainability reports in 2023, nearly 300 more than the previous year, representing 39.7 percent of listed firms. The financial sector registered the highest disclosure rate of 92.8 percent, significantly above the roughly 40 percent average across other industries.
Data from the Shanghai Stock Exchange show that in 2023, 952 companies on the main board disclosed specialized reports on Environmental Social Governance (ESG), social responsibility, and sustainable development, accounting for 56 percent of the total.
The SSE 50, a benchmark index of the 50 largest stocks on the Shanghai Stock Exchange, had a 100 percent disclosure rate, and over 90 percent of the companies listed in the SSE 180 -an index comprising the 180 largest stocks - also disclosed their ESG practices.
Market attention on ESG indices also increased as 138 indices were released by the end of the year. They include 104 stock indices, 31 bond indices, and 3 multi-asset indices, which are tracked by 86 funds totaling a value of 105 billion yuan (over 14.5 billion U.S. dollars).
The Beijing Stock Exchange showed similar engagement, with all companies disclosing social responsibility information in their annual reports. Fourteen companies went further, publishing detailed reports on their ESG efforts.
"Many listed companies' disclosures indicate that they are actively enhancing energy efficiency and reducing pollutant emissions through technological innovation and optimized management. More and more companies are disclosing detailed data on climate management targets, carbon dioxide reduction, and renewable energy usage. The newly implemented guidelines for sustainable development reports have clarified disclosure methods, which will continue to improve the quality and volume of information disclosure of listed companies in China," said Zhang Gang, chief analyst at Southwest Securities.