Abstract: Because of the duplicity of R&D, outside technological opportunity may be substituted for firm’s internal R&D, and it may also encourage firm to increase R&D investment so as to enhance absorptive capacity. This paper analyzes empirically the relationship of R&D between industries using the panel data collected from China’s 34 industries from year 1998 to 2006.The empirical results show that the relationship of R&D between industries is complementary as the whole. The further research indicates that the R&D among manufacturing industries has the relationship of substitution, while the R&D among manufacturing industries and non-manufacturing industries has the relationship of complementation