China's southern tech hub Shenzhen spent a record amount on research and development (R&D) last year, rivalling Beijing's level and vastly exceeding that of neighbouring Hong Kong to cement its position as a national research mecca.

Shenzhen's R&D expenditure jumped to 223.66 billion yuan (US$30.93 billion) in 2023, surpassing the 200-billion-yuan mark for the first time and up by nearly 19 per cent from the previous year, according to government data released last week.

R&D made up just under 6.5 per cent of the city's gross domestic product (GDP), breaking through 6 per cent for the first time.

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That made Shenzhen, home to Big Tech companies like Huawei Technologies and Tencent Holdings, the second-largest R&D hub in China in terms of both absolute expenditure and spending relative to GDP, according to the municipal government.

Top-ranked Beijing put 294.71 billion yuan into R&D last year, representing over 6.7 per cent of its GDP. The Chinese capital city is home to many of the nation's top educational institutions and research facilities.

In terms of enterprise R&D spending, however, Shenzhen said it took the lead. The city's companies spent 208.57 billion yuan on R&D in 2023, accounting for over 93 per cent of total R&D spending in Shenzhen.

A Huawei Technologies store in Shenzhen, the company's headquarters. Photo: Iris Deng alt=A Huawei Technologies store in Shenzhen, the company's headquarters. Photo: Iris Deng>

The city has named social media and video gaming behemoth Tencent, as well as US-sanctioned telecoms equipment giant Huawei, as its R&D leaders.

Huawei last year spent 164.7 billion yuan on R&D, equivalent to 23.4 per cent of its full-year revenue, the company said in March. The company has emerged as a champion of China's self-reliance drive, aimed at reducing dependence on foreign technology. It is a leading provider of home-grown alternatives to Nvidia's artificial intelligence processors.

Tencent's R&D expenditure last year amounted to 64.07 billion yuan, according to the company's annual report.

By comparison, Shenzhen's R&D spending dwarfed the levels seen in Hong Kong, the neighbouring financial hub striving to boost its science and tech ecosystem.

Hong Kong spent HK$30.13 billion (US$3.87 billion), or around 28 billion yuan, in R&D in 2022, increasing 8 per cent from the previous year but still less than one-fifth of the amount Shenzhen spent in the same year.