Abstract: By using the cointegration method, the relationship between the different forms of public R&D and economic growth from 1991 to 2005 in China is examined. The result shows that there is a long-term equilibrium relationship between public R&D and economic growth in China, i.e. the increasing public R&D expenditures and direct funding to corporations boost economic growth individually, This cons with the conclusions of Morales (2001). It is also found that the applied research of public R&D institution in regard to the long-term elasticity of economic growth is negative.

Key words: public R&D, economic growth, cointegration