Companies listed on the main board of the Shanghai Stock Exchange (SSE) spent a total of nearly 900 billion yuan (126.7 billion U.S. dollars) on research and development (R&D) last year, latest data showed.

This figure represents an increase of about 5 percent year on year and suggests that the trend of growth in R&D expenses has been maintained for three consecutive years, according to the SSE, one of China’s two major bourses.

Notably, companies in aviation equipment, electricity, and telecommunications services reported an increase of more than 30 percent in R&D expenses.

The R&D expense ratio, which is calculated by dividing a company’s R&D expenses by its total revenue of software development and chemical pharmaceutical firms, has exceeded 10 percent.

Companies listed on the SSE’s main board with an R&D expense ratio of above 5 percent had an aggregate price-to-earnings ratio of 36.14 at the end of 2023, significantly higher than the average level across the board. This indicated that investors were optimistic about such companies’ future growth prospects.

The SSE said that high R&D expenses have promoted the development of emerging industries and the transformation of traditional sectors, which is conducive to fostering new quality productive forces in China.