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Correct, the Nature Index is tracking high-quality research outputs.

China is also considerably outpacing US in terms of the number of STEM grauduates:

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https://cset.georgetown.edu/article/the-global-distribution-of-stem-graduates-which-countries-lead-the-way/

Well, to be fair, China does have 4x the population...

Sure, but this further highlights the problem, because in the same paper there is a chart of STEM graduates as a percentage of all graduates.

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In China, over 40% of college graduates earn a degree in a STEM field. In the United States, it is just 20%. And the trend is clear.

And American elites are still sleeping at the wheel.