China and the UN System – the Case of the World Intellectual Property Organization

Is China really an innovation superpower?

China is also a growing force in the area of patenting and intellectual property: both as a contributor and as a problem to innovation, since it is the country most often accused of stealing IP rights. Because WIPO by definition handles very confidential material such as patent applications, the question has some added relevance. Indeed, when the PRC’s outspoken ambassador to the UK wrote to the FT in defense of China’s candidate, it was to pitch that person’s CV - 30 years with WIPO and a woman at that – but also to defend his country against accusations of "stealing" IP, made in the same newspaper by Peter Navarro, White House adviser and celebrated author of Death by China. The Office of the United States Trade Representative, which led a seven-month investigation into China's intellectual property theft and made recommendations to the Trump administration, estimates that "Chinese theft of American IP currently costs between $225 billion and $600 billion annually."

WIPO raises a different set of issues, which are often overlooked. First, should the organization be run by a national from an IP superpower, as China claims to be? Or should China, precisely for that reason and because it allegedly promotes democracy in international relations, desist and let a candidate from a nation less directly involved in the superpower rivalry take the helm of the organization? From this point of view, the selection of a Singaporean makes sense.

In fact, several East Asian countries are at the forefront of global innovation. What sort of an innovation superpower is China? There is no question that China has reached the first rank by far in terms of patent applications at WIPO. But most of China’s patent applications are for domestic use only – far less are sought for at least one foreign country. China’s rate of co-inventorship has dropped from 40 % to 5 % between the 1970-99 and 2015-2017 periods, with Japan, the US, Germany, Singapore and South Korea surpassing this rate. Nothing could prove better China’s turn towards indigenous innovation, while Western Europe appears as the world’s most active in co-invention. Innovation clusters such as Tokyo, New York, Silicon Valley still overtake Beijing and Shenzhen. Huawei is the only Chinese company that made it into the Thomson-Reuters index for 100 top innovators, that measures influence and revenue and not only the number of patents.

These findings are consistent with other evidence from the Chinese policies designed to increase innovation as measured by the number of patent applications. Although overall subsidies for R&D relative to GDP are lower in China than in some other countries (contrary to conventional belief), these subsidies are heavily focused on state-owned enterprises (SOEs) and a few coastal clusters. Patents are encouraged and rewarded, and are often a requirement for obtaining a Ph.D. degree, which tends to inflate the number of applications.

Top-down innovation is not the best model

All things considered, China has still emerged as an important global innovator, but very focused in terms of geography and sectors. Its track record for international cooperation is much more limited and, in fact, declining. The concentration on SOEs confirms the choice of a top-down state industrial and innovation policy, even if that is not the best in terms of actual results. It would certainly be counter-productive to spread this model via WIPO, irrespective of the issue of technology theft.

Copyright: Hector Retamal / AFP