China has overtaken Japan to become the second biggest spender on research and development behind the US, a report from the Organisation for Economic Co-operation and Development revealed.

The country is expected to invest $136bn in research and development this year after growing by more than 20 per cent in the past year, ahead of the the $130bn from Japan but still well behind the $330bn the US will invest, the OECD said.

The report is the latest indication of the dramatic rise in research spending in China.

Dirk Pilat, head of the OECD's science and technology division, said the surge in Chinese research was "stunning". He added: "Chinese investment has been growing rapidly for some time, but it is still a surprise that it has overtaken Japan so quickly."

Mr Pilat said that the bulk of the spending in China was on development work, to alter products for the fast-growing Chinese market, rather than basic scientific research.

The number of patents coming from China that were registered with the patent office in the US, Europe and Japan is still low and a string of recent scandals over academic fraud have also raised questions about how well the money is spent.

But Mr Pilat added that some multinationals were beginning to move genuine research to China because of the high numbers of skilled scientists they could recruit in Shanghai or Beijing. "There are some signs that they are starting to do fundamental or breakthrough work in China," he said.

As well as increasing spending on university science departments, the government has also been eager to attract multinational companies to open research centres in the country.