China’s Race to Become The World’s Leading IP Producer: A Forecast of Global Innovation

After consistently establishing itself as the country with the most patent applications in the world, China is well on its way to becoming an IP powerhouse—but what does this mean for the rest of the world?

A little over a decade ago, China had a strong reputation as one of the most prominent players in the world’s counterfeiting and copyright infringement markets.

From America’s Next Top Model franchise to Apple’s iPhone line, it seemed for a while that anything profitable and famous in the world was bound to have a plagiarized version of it pop up in China at one point or another. And as Chinese manufacturers continued to evolve, the country was on the path to eventually becoming synonymous with copyright infringement.

However, it appears that China has managed to run in the opposite direction recently.

For the past few years, China has made significant strides in its efforts to become a technological superpower by carrying out ongoing efforts to establish itself as the world's leading IP producer.

The country has transformed itself from a low-wage economy into a high-tech powerhouse. In fact, according to the World Intellectual Property Organization (WIPO), China accounted for 46.8 percent of all patent applications worldwide in 2022—showing its commitment to shedding its past image.

As Asia’s manufacturing powerhouse continues to hammer away at the goal of cementing its status as the global leader in innovation, one question arises:

What will China’s future as an IP powerhouse be like?

While the next few years bear a near-endless assortment of possibilities, there are several developments that are expected to come out of China’s push for dominance on the IP stage.

Dissecting China’s Current Gameplan

China's technological and economic rise has been remarkable in recent years.

Bolstered by a rapidly expanding tech sector, the Chinese government has set its sights on achieving global technological leadership, surpassing the United States, and becoming the world's leading nation in IP. With this objective in mind, China has allocated substantial resources to advancing its technological capabilities to meet its goals.

China’s current game plan to become the world’s leading IP producer comes after President Xi Jinping’s recent campaign to steer the country towards becoming a technological powerhouse. During the 2022 Chinese Communist Party Congress, President Xi pledged to follow through with this effort, saying:

“We will increase investment in science and technology through diverse channels and strengthen the legal protection of intellectual property rights to establish a foundational system for all-around innovation.”

To get where it aims to be, the Chinese government plans to leverage the impact of three fundamental approaches that will put it at the forefront of the global IP landscape. Together, these strategies are constantly deployed and enforced to pave the way for a “new China”:

Strategy #1: Improving Existing Technologies

In recent years, Chinese manufacturers have doubled down on their product and process innovation efforts to move gradually toward becoming the world’s most prominent manufacturing giant. One of the ways they’ve been able to do this (while maintaining their lead in the IP race) is by taking existing technologies and improving them in every way possible.

Through reverse engineering, Chinese manufacturers allocate their resources and efforts toward understanding existing technologies from other countries. This opens up a wide range of opportunities for them to deliver more affordable products that also help with the ideation process for future inventions.

With this strategy, China has created highly competitive alternatives that have become their original creations and can be protected with IP protection.

For instance, in the smartphone market, China has developed its brands—such as Huawei and Xiaomi, which have made inroads in the global market. In 2020, this proved to be a successful effort as Huawei overtook Samsung to become the world's largest smartphone maker thanks to new, patentable features that the manufacturer released over the years.

Another example of China's strategy of improving existing technologies aiding its efforts to become a global leader in innovation is investment in the development of electric vehicles (EVs). Because of this, the country now stands as the world's largest producer of EVs—with Chinese conglomerate BYD being a driving force behind this result.

Strategy #2: Inventing New Solutions

Aside from improving existing technologies, China’s efforts to become the world’s leading IP producer are backed by its efforts of inventing new solutions. This approach is reflected in China's Made in China 2025 plan, which aims to make China a world leader in emerging technologies—such as AI, robotics, and biotech.

For instance, China's investment in AI has been substantial, with the government aiming to make it a $150 billion industry by 2030. This development has paid dividends in the country’s campaign for IP superiority, paving the way for creating and developing 14 successful unicorns within the Chinese AI industry.

While some may argue that the developments above aid more to China’s efforts towards becoming a technology superpower instead of an IP leader, the country’s patent statistics serve as a numerical rebuttal worth noting.

According to researchers at RS Components, this result is representative of the outcomes the country aims to achieve within the Artificial Intelligence side of the patent landscape—and with every other industry it can tap into.

Strategy #3: Mobilizing Its Legal System to Pry and Patent Technology from Other Nations

By using its legal system to assert ownership over technological creations and projects from other nations, China is positioned to gain access to new innovations that will allow it to further extend its lead in the IP race.

Although controversial, China’s strategy of prying and patenting technology from other nations has proven to be impactful in its goal of becoming the world’s leading IP producer. Doing such has allowed the country to acquire exclusive ownership of patents to industry-standard technologies—ranging from rare-earth magnets and automotive sensors to x-ray telescopes and antennas.

Why Is China Headstrong In Its Pursuit of IP Supremacy?

With the recent efforts that China has undertaken to secure global IP producer leadership, many are left asking one question:

“Why is a country that has always been known as a leading counterfeiter suddenly so interested in Intellectual Property?”

Regarding results and data, the answers point towards capitalizing on incentives that come with developing and acquiring protections like patents, copyrights, trademarks, and trade secrets.

With IP's impact, influence, and financial effects growing over the years, choosing to create and innovate has yielded more economic and political incentives than ever. This poses a valuable opportunity for China to shed its past image of large-scale counterfeiting and copyright infringement.

Apart from what may be described as a “PR overhaul,” China’s recent efforts to become the world’s leading IP producer are also driven by its resulting achievements in various industries.

One example of this cause-effect relationship is demonstrated in what’s come out of China's investment in battery technology. With upscaled production pipelines and incentivization, the country has become a leader in battery production—confirmed by the fact that it is responsible for 80% of the world's lithium-ion battery production.

How the Future Looks Like With China As the World’s IP Leader

With China’s three paths to IP superiority—improving existing technologies, inventing new solutions, and legally prying and patenting technology from other nations—there is much room for speculation over what’s to come.

Especially when the country maintains a firm lead on IP production that spans decades.

Once China becomes the world’s leading IP producer, three outcomes are expected:

The Good (or Good for China, Rather)

At the very minimum, maintaining a position as an IP leader will allow China to catch up to and surpass other leading nations on both a GDP and industry-related scale. This outcome also bears the possibility of the country creating new industries and thousands of new technologies, which can lead to a more significant margin in IP production between China and its closest competitors.

The Great

Regarding global influence, China's efforts to become the world’s leading IP producer also merit the likelihood of a positive impact on global innovation. This possibility may be realized when the country’s efforts to create new technologies and industries lead to upticks in innovation and new opportunities for businesses and consumers worldwide.

The Not-So-Great

Conversely, China maintaining its lead in the IP production race, in the long run, may also lead to adverse outcomes when accounting for the effects of its efforts to pry and patent technology from other nations.

According to experts, China’s strategy of using its legal system to assert ownership over foreign technologies could hurt global innovation. This strategy may discourage innovation and harm global collaboration if companies are concerned that their IP may be at risk of being taken by China's legal system while forcing countries to implement further restrictions that will hamper Chinese innovation, such as those employed in its microchip dilemma.

Could China Becoming the Top IP Producer Mean Well for the World?

As China continues to double down on its IP efforts with innovation, inventing, and legal system mobilization, it stands as a strong contender for IP production leadership. However, whether China succeeds in becoming the world's leading patent, copyright, trademark, and trade secret producer will depend on how successfully it can balance its desire for technological superiority with the need for global collaboration and innovation.