We investigate the role of public funding in the rapid ascent of Chinese science by examining the impact of a major upgrade of a funding program of China's National Natural Science Foundation in 2011. Using research grant level data and a difference-in-differences estimator, we found that the more generous funding resulted in higher research output, measured by the total number of publications, but not a higher quality of research in terms of the impact factor of the journals in which the research was published. This belies significant variation in the impact of the change in funding by researcher characteristics: 1) less-established researchers benefit more from the funding upgrade; 2) scientific fields that are more likely to be financially constrained benefited more; 3) researchers from less-prestigious research institutions made more productive use of the additional funds. Finally, we found that the funding upgrade has led to increasing collaboration with researchers from top science-producing foreign countries for the less-prestigious institutions.