CHINAwatch

What is fueling child abduction in China?

Interview on Inside Story with Aljazeera English on 27 December 2012 together with Dale Rutstein, the China spokesperson for UNICEF, the UN child protection agency; and Victor Gao, the director of the China National Association of International Studies, a think-tank affiliated with the Chinese ministry of foreign affairs.

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As top patent filer, China on track to overcome the Middle Income Trap

According to “World Intellectual Property Indicators 2012” released by the Switzerland-based WIPO (World Intellectual Property Organization) on 11 December 2012, China tops the world in 2011 patent applications, with 526,412 filed, followed by the United States with 503,582 and Japan with 342,610.

Download World Intellectual Property Indicators 2012 - WIPO 11 Dec 2012

Patent filings grew by 7.8 percent worldwide in 2011 with high-income countries accounting for the majority of patent filings. But the report shows that upper middle-income countries represented about 60 percent of design filings worldwide, most of them in China.

The top 10 offices for patent applications received in 2011 were China, the US, Japan, South Korea, Europe ,Germany, India, Russia, Canada, and Australia. While China showed the largest growth in patent applications with 34.6 % increase in 2011, the European Patent Office (EPO) saw a 5.4 % decline.

The majority of patent activity worldwide was in areas such as computer technology; electrical machinery, apparatus and energy, audiovisual technology, telecommunications, and pharmaceuticals.

China leads head and shoulders in trademark applications, with over 1.4 million filed out of 4.2 million worldwide, which itself is a record number.

Industrial designs applications are also said to be a record number according to the report, with China accounting for 90 percent of all growth from 2009 to 2011.

A great deal of caution needs to be exercised in making international comparisons on the basis of aggregate data in the report. In particular, patents filed must be distinguished from patents granted and the data do not reveal the quality of technologies imbedded in individual applications.

Nevertheless, “For the first time in 2011, more patents were filed in the patent office of China than any other office in the world. In the 100 years before 2011, only three patent offices had occupied this position – those of Germany, Japan and the United States,” says Francis Gurry, WIPO Director-General in his Foreword.  

As far as China is concerned, the following findings are particularly instructive:

(a)         During the period 1995-2009, China (37.29%) had already been leading the United States (28.6%) in percentage contribution to worldwide growth in patent applications. During the period 2009-2011, China’s lead (72.1%) in numerical growth contribution became even more marked compared with the United States (16.2%) (Figure A. 1.1.2).

(b)        As regards patents granted in 2011, China numbers 3^rd (172,113) after Japan (238,323) and the United States (224,505) (Figure A.2.2.1). In terms  of percentage contribution to worldwide growth, during 1995-2009, China had a lead (32.8%) over the U.S. (17.39%) and Japan (22.1%) but during 2009-2011, the United States led in contributing 30.4% to worldwide growth, followed by Japan (23.9%) and China (23.3%) (Figure A.1.2.2).

(c)         In terms of origin counts, some fourth-fifths of China’s patent filings are resident, compared with about half of the United States filings.  Resident filings accounted for 86.26% of the 36.4% increase in China’s patent applications in 2011 (Figure A.2.1.3).  China registered 41% increase in resident applications (435,608) in 2011, overtaking the United States (432,298), but after Japan in the first position (472,417 applications) (Figure A.3.1.1)

(d)         In the category of international protection under the PCT (Patent Cooperation Treaty, 144 Members in 2011), China (16,402) trailed in fourth position after the United States (49,051), Japan (38,874), and Germany (18,852) (Figure A.5.1.2). In terms of country share in total 2011 PCT applications, the United States led with 26.9%, followed by Japan (21.3%), Germany (10.3%), and China (9%) (Figure A.5.1.3).

(e)         In terms of filings from individual PCT applicants, however, Chinese conglomerate ZTE (with 2826 filings) took the top position, followed by Japanese giant Panasonic (2463 filings) and another Chinese conglomerate  Huawei (with 1,831 filings) (Figure A.5.2.2).

(f)          Another tale-telling sign in PCT applications is the extent of global, rather than national, contribution. This is shown by the share of PCT applications with at least one foreign invention. In 2011, Switzerland topped the list with 79.3% while the United States registered 42.4% and Germany 24.6%, compared with much more self-reliant Asian innovators – China (6.8%), Republic of Korea (6.5%) and Japan (4.1%) (Figure A. 6.1).

(g)         China has registered an upsurge in complex and discrete technology patent applications. Rising rapidly from an index of 1 in 1995, China's complex applications reached over index 30 around 2008 and dropped slightly to around index 28 in 2010, while discrete applications reached around index 11.5 in 2008, also dropping slightly to about 8.5 in 2010 (Figure A.7.1.1).

(h)        As for R & D productivity, China shows a rapidly rising curve of resident patent filings per R & D expenditure, from a base of 1 in 2000 to an index of 1.6 in 2011 (Figure A.8.2), compared with the United States attainment of around 1.2 in 2010 from the same base.  The other top three origins - Republic of Korea, Germany and Japan – all remained below the 2000 baseline throughout the same period. However, in terms of number of resident patent applications per million R & D expenditure (2005 PPP$), the Republic of Korea led in 2011(at 3.7), followed closely by China (3.5) (Figure A.8.4).

(i)           As regards "utility model" applications (for shorter-duration protection), China displayed a similar trend, with 585,467 filings in 2011, followed by Germany (16,024), Russia (13,241), Republic of Korea (11,854), Ukraine (10,431), Japan (7,984), and Turkey (3,280) (Figure A.13.1.2).

(j)           As for trade mark applications, during 2004-11, filings from China’s  offices contributed to 46.6% of growth worldwide, compared with the United States (5.1%). During 2010-11, China’s lead was even more marked, accounting for 61.8% of application growth worldwide, compared with the United States (6.2%) (Figure B.1.1.3).

(k)        The applications figures were mirrored by registration data. During 2004-2011, China accounted for a lion’s share of 49.3% of trademark registration growth worldwide, compared with the United States (6.5%) and Germany (0.4%) (Figure B.1.2.3).

(l)           China was particularly dominant in industrial design patent applications, with 521,468 filings in 2011, towering over all other countries, of which none exceeded 90,000 including Republic of Korea (58,571), Germany (54,401), Turkey (41,218), Japan (30,805) and the United States (30,467) (Figure C.2.1.2).

(m)      The industrial design patent registration figures corresponded, with China registrations numbering 380,290 in 2011, compared with Germany (29,905), Republic of Korea (43,634), Turkey (37,607), Japan (26,274), and the United States (21,356) (Figure C.2.2.1).

Implications

Up to now, China has achieved a very limited number of the world’s cutting-edge technologies, let alone a single home-bred Nobel science laureate. Moreover, Chinese world brands are extremely rare and the country’s higher-technology exports remain to imbed a large proportion of foreign-owned patents and trademarks. So China cannot yet claim to be the world’s technology or innovation leader.

Nevertheless, provided China stays the course of innovation, the country should at least stand a very good chance of overcoming the so-called "Middle Income Trap", notwithstanding a looming about-to-age population profile. The trap has ensnarled many developing nations in levels of income around $8,000 as growth stalls and productivity fails to catch up with a dwindling pool of cheap labour.

China is producing 7 million university graduates every year, of whom the vast majority are in engineering and sciences. The country is also seeing a rapid rise of outward direct investments in enterprises and assets of strategic economic importance.

After a slow down in the aftermath of the financial crisis, China is now back to a more healthy growth rate of around 8%. So the target of 7.5% growth for 2012 is almost certain to be achieved. Provided an average growth rate of 7% is maintained in this decade, the aim of near-doubling the country's GDP per capita from $5,500 to $10,000 for China to become a middle-income country by 2020 doesn't seem out of reach.

At any rate, the WIPO report clearly shows that on the long road to innovation, China has truly past an epochal milestone, taking the baton of the world’s top patent filer from Germany, Japan and the United States, the first time in a century such a position is achieved by a developing country.

China's surging Outbound Direct Foreign Investment

Part of China's "Going Out"" strategy, China's OFDI, starting almost from zero, has been growing exponentially since the onset of the financial crisis.

Albeit still minuscule in global terms, China's OFDI is reaching "commercially and geoeconomically significant levels" which have ""begun to challenge internaional investment norms and affect international realtions," according to a Petersen Institute for International Economics Policy Brief (Number PB09-14) by Daniel Rosen and Thilo Hanemann dated June 2009 - "China's Changing Outbound Foreign Direct Investment Profile - Drivers and Policy Implications".

Download Petersen Institute Policy Brief - China's OFDI - Daniel Rosen & Thilo Hanemann - June 2009

The same two authors completed a Special Report on China's outbound direct foreign investments in the United States -"An American Open Door? - Maximizing the Benefits of Chinese Foreign Direct Investment" dated May 2011 for the Centre on U.S.-China Relations and the Kissinger Institute on China and the United States. Two-thirds of China's ODFI in America are from private enterprises and the national footprints are beginning to widen. The study examines the situation in detail and proposes ways in which such investments may be better managed.

Download Petersen Institue- An American Open Door - China's OFDI - May 2011

China's 2012 exports in transition

Interview here with CNC World, a new international 24-hour news channel owned by Beijing-based Xinhua News Agency released on 10 December, 2012.