China has transitioned from a beneficiary to a creator of international intellectual property.
China has prioritized the construction and improvement of an IP protection system as it's the basis for pursuing a knowledge-based economy. The construction of such a system, however, can't be accomplished overnight. China is a latecomer in the construction of an intellectual property system. Compared with The Patent Act of 1790, the first patent statute passed by the federal government of the United States, China's first patent law was not introduced until 1984.
China has included the protection of invention, utility model and design patent rights in its Patent Law. It has cooperated with the World Intellectual Property Organization (WIPO) on IP legislation from the very beginning and amended its Patent Law three times.
China has adopted internationally accepted policies and standards and stringent IP protection measures to crack down on various types of IP infringements. In particular, in 2017, the Chinese Supreme Court released the Outline of the Judicial Protection of Intellectual Property in China (2016-20) mapping out a blueprint for further improving the judicial protection of IP rights.
In April 2019, the Standing Committee of the National People's Congress approved amendments to the Trademark Law and Anti-Unfair Competition Law. These amendments strengthen the protection of trademarks and business secrets and explicitly forbid forced technology transfer. By successively acceding to almost all the important international IP treaties and signing 171 multilateral and bilateral intellectual property cooperation agreements and memorandums of understanding with 63 countries, regions and international organizations around the world, China has become an important member of the international IP protection community, realizing its transition from a beneficiary to a creator of international IP.
Finally, China has become an innovator of IP development strategies. For the world's largest developing country, the scarcest resource is knowledge and the most important development strategy is knowledge-based development strategy. China promulgated the Outline of the National Intellectual Property Strategy in 2008 to greatly improve the IP system, create a sound judicial, market and cultural environment for IP protection, and significantly enhance the capacity of businesses to create, use, protect and manage IP.
Within less than 40 years, starting from scratch, China has grown to be the world's largest generator of IP. On April 1, 1985, the first day when China's Patent Law was implemented, only 3,455 patents were applied for, while in 2018, China received 1.54 million applications for invention patents, ranking the highest in the world for the eighth consecutive year, and 432,000 invention patents were granted, the most in the world. In 2018, China received 7.37 million trademark registration applications and 5 million trademarks were registered.
In addition, China's IP has witnessed explosive growth over the past years, with the IP comprehensive development index growing 118.3 percent from 2010 to 2017, an average annual growth of 11.8 percent, higher than the economic growth rate during the same period and ranking top in the world.
Moreover, China's efforts in IP protection have received wide acclaim from the international community. China's contribution to international IP has surpassed that of the US, with the number of invention patent applications by Chinese residents surpassing that of the US in 2009 and that of OECD countries in 2015.
Francis Gurry, director general of WIPO, spoke highly of China in this regard on April 24, 2019, noting that China has become a role model in IP creation and protection.
Finally, China's expenditure on the use of IP ranks the second-highest in the world. China's expenditure on the use of IP, including royalties and licensing fees, totaled $1.3 billion in 2000 and surged to $28.7 billion in 2017, 22.4 times the figure in 2000 and with an annual average growth rate of 20.1 percent. The expenditure surpassed that of Germany in 2007, that of Japan in 2013, and now ranks second to the US. The revenue generated by US IP is still the highest in the world, reaching $128.4 billion in 2017, 26.9 times the revenue generated by Chinese IP.
Instead of making a big fuss about individual IP infringement cases, the US government should face the reality that the total IP assets created by China have already surpassed those of the US. Therefore, blocking Chinese technological innovation, such as the 5G, means isolating itself and opening the door to China means more development opportunities for itself. "China is already an innovation economy," said Geoffrey Garrett, Dean of the Wharton School of the University of Pennsylvania. The US has a comparative advantage in incubating innovation while China has an advantage in popularizing innovation, making the two highly complementary. China is good at scale application of cutting-edge technologies and turning ideas into concrete results. By cooperating the two could achieve win-win results.