Is the Dragon Learning to Fly? An Analysis of the Chinese Patent Explosion

This paper analyses characteristics and determinants of the recent explosion of patent filings by Chinese firms both in China and the United States. We construct a firm-level dataset by matching USPTO and SIPO patents to Chinese manufacturing census data for the period 1999-2006. Using this integrated firm-level dataset, we show that the patent explosion is accounted for by a tiny, highly select group of Chinese companies in the information & communication technology (ICT) equipment industry. This handful of ICT companies accounts for nearly all Chinese USPTO patent filings as well as the vast majority of domestic SIPO patents despite there being a larger number of Chinese companies distributed across a wider range of industries that seeks patent protection domestically. Our empirical analysis further suggests that firms patenting in both US and China are considerably younger, larger and substantially more export-oriented than firms patenting exclusively in China. Our study contributes to the debate on China’s innovative prowess and its potential to transition from an imitator to an innovator economy.