Highlights

• China's A-share companies invest record RMB 745.7B in R&D.
• BYD leads in R&D investment with RMB 30.88B.
• BYD's overseas revenue surged 130% year-over-year, with higher pricing abroad fueling continued innovation.
• China's rare earth supply chain monopoly provides a strategic competitive advantage in electric vehicle technology.

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China’s A-share listed companies spent a record RMB 745.7B (USD 104.4B) on R&D in the first half of 2025, up 2.68% year-on-year. BYD once again dominated the field, investing RMB 30.88B (USD 4.3B)—a surge of over 50% compared with last year, equal to 8.3% of sales.

BYD also delivered RMB 371.28B (USD 52.2B) in revenue (+23.3% YoY) and RMB 15.51B (USD 2.2B) in net profit (+13.8% YoY). Six companies crossed the RMB 10B (~USD 1.4B) mark in R&D: BYD, China State Construction, ZTE, China Mobile, SAIC, and CATL. Meanwhile, tech-heavy boards like STAR and ChiNext showed R&D intensities in double digits, underscoring Beijing’s pivot from cost advantage to technology advantage.

New Signals to Watch

Two growth engines are feeding each other: R&D spending and overseas sales. BYD’s offshore revenue jumped 130% YoY to RMB 135.36B (~USD 19.0B), accounting for 36.5% of its total. Crucially, BYD’s models sell for 2–3x higher prices abroad than at home, especially in Germany, Brazil, Australia, and Thailand. Those margins recycle into more R&D, reinforcing its loop of innovation.

Rare Earths: An Invisible Tailwind

Behind the R&D headlines is China’s stranglehold on the rare earth supply chain—from Bayan Obo mine feedstock to NdFeB magnet production. This integrated base allows domestic EV makers like BYD to rely on secure, low-cost permanent-magnet motors while Western peers scramble for substitutes. Permanent magnets are critical for EV range, torque, and efficiency. Beijing’s export licensing on rare earths adds further strategic leverage.

Implications for the West

• Cost curve: Pairing secure magnet supply with multi-billion-dollar R&D budgets lets Chinese EV makers stay ahead in motor efficiency. Western OEMs experimenting with rare-earth-free designs face near-term efficiency penalties.
• Pricing power: BYD’s higher overseas pricing, plus its material hedge at home, create a durable margin-for-innovation cycle.
• Policy risk: If China further tightens magnet export rules, Western automakers could face a critical bottleneck just as EV adoption accelerates.

Rare Earth Exchanges has reported that the Chinese rare earth element supply chain monopoly, as well as growing sales downstream in verticals such as electric vehicles, is no accident. Part of a long-term, strategic orchestrated plan, China soon plans to surpass the U.S.A. in GDP, then move into oversight of digital currency, for example.  Or so that’s the plan.

Bottom line

China’s message is clear: R&D scale plus rare-earth security equals competitive firepower. BYD’s rise is not just about car design—it’s underwritten by China’s rare-earth monopoly feeding directly into global EV markets. Unless the U.S. and allies accelerate magnet production, processing, and substitution technologies—plus further downstream innovation, the gap will only widen.

Disclaimer: This article draws on Chinese financial media and corporate disclosures; sources include state-affiliated institutions. Figures and claims should be independently verified.

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