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Abstract

Although many developing economies are increasingly influencing the global economy, China’s influence has been the greatest of these by far. Once hindered from competition by political and economic restrictions, China is now a major economic player. As China’s economic might has grown, so too has the demand for intellectual property protection for technologies originating from China. In this article, we present a detailed empirical study of Chinese patenting trends in the United States and the implications of these trends for the global economy. We compare these trends to patenting trends from earlier decades. Specifically, we compare Chinese patenting trends to Japan, South Korea, Brazil, Russia, and India. We study how patent allowance rates for Chinese patent applications at the United States Patent and Trademark Office have improved, and how these allowance rates compare to allowance rates in earlier “boom” periods from other East Asian countries. While many believe that China is an exception in many respects, we find that patents for innovations originating from China seem to track a well-trodden path laid down by countries like South Korea in earlier decades. As a historical matter, we show empirically that China’s patenting trend is not unique. It is instead strikingly similar to the patenting trends of other Far East Asian countries whose inventors have applied for patents in the United States. In other words, Chinese innovation is moving up the value chain in product development much like other Far East Asian countries have done in the past. We also find that China appears to be setting itself apart from other BRICS (Brazil, Russia, India, China, and South Africa) countries in successfully seeking patent protection for technological innovation and in producing products with higher levels of technological sophistication and innovation. Our empirical results can be largely explained by four factors. First, our work underscores the role of foreign direct investments by multinational corporations in China; foreign direct investments are a major factor driving U.S. patent filings from China. Second, Chinese government policies have promoted patent protection and aligned Chinese patent office procedures with the procedures of the U.S. Patent and Trademark Office. Third, investment in research and development in China by both domestic and foreign entities has increased significantly. Fourth, the Chinese government has committed to moving up the value chain in products and services.

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