Commentary: China files the most patents but does this mean it surpasses US in knowledge production?

MORE PATENTS, BUT FEW GRANTED ABROAD BY GLOBAL GOLD STANDARD

This is likely due to China’s IP tending more towards adaptive innovation – over half its domestic filings are utility patents. These have lower eligibility requirements, protection periods and retention rates, indicating lower IP quality.

Moreover, in 2020, only 8 per cent of China’s patents were granted abroad compared to 29 per cent of the United States’. Overseas patents are crucial for protecting a country’s IP across global value chains. 

Only 10 per cent of global gold standard “triadic” patents – a set of patents that are registered with EU, Japanese and US patent offices to protect the same invention – were filed by China in 2019, while the United States accounted for 22 per cent. 

Even globally-recognised Chinese companies like Huawei, which has successfully developed extensive IP portfolios in emerging sectors such as 5G, are outliers in a corporate environment lacking high-quality IP filings.

China’s innovation trajectory differs from previous rising powers, which have historically leveraged a more balanced alliance between the public and private sectors to develop IP. 

Although the private sector is the biggest contributor to research and development (R&D) spending in China, this statistic is complicated by the fact that state-owned enterprises dominate China’s corporate landscape, accounting for almost half of total R&D spending in 2020.

China’s R&D spending has grown at a significantly faster rate than the United States since 2000. Yet its declining total factor productivity reflects the high level of state investment in inefficient firms.