Chinese large and medium-sized industrial enterprises invested 125 billion yuan (15.6 billion U.S. dollars) in research and development in 2005, an increase of 31 percent year-on-year, according to sources with the National Bureau of Statistics.

Ma Jingkui, a senior NBS official, told a press conference held here Saturday that R&D funds represented 0.76 percent of prime operating revenue in 2005, compared with 0.71 percent in 2004.

"Large and medium-sized industrial enterprises are starting to play a bigger role in innovation as government policies in support of corporate innovation begin to take effect", said Ma.

Statistics show large and medium-sized firms received 4.54 billion yuan of R&D funding from the government, a year-on-year increase of 28.6 percent.

But investment in research in China still has a long way to go. Chinese R&D investments represent 1.34 percent of GDP, compared with two percent in developed countries.

Ma pointed out that less than one fourth of large and medium-sized enterprises carry out research and development activities and less than 10 percent own patents.

Statistics show firms in dynamic, outward-looking eastern China provided over 75 percent of the total research and development investment in 2005.