A report released on Friday placed China 19th in a ranking of 40 major countries based on their innovative ability in 2013.
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China climbs one place in the annual report by the Chinese Academy of Science and Technology for Development, which attributed the improvement to higher knowledge-generating capability and better environment for innovation.
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The United States continued to be the most creative country.
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According to the report, in 2012, 1.98 percent of China's GDP was used in research and development (R&D), exceeding the 1.97-percent average for 28 European Union countries. The figure was estimated to be 2.09 percent in 2013.
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Chinese enterprises have also achieved great progress, with the index of enterprise innovation 2.2 times higher than in 2000, the report said.
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Amid progresses, China still faces fierce competition and needs sustained efforts to increase its creative ability, it warned, however.
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China's investment in R&D is still dwarfed by other major powers. The United States spent more on R&D in the past two years than China did in the last 20.Â