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China Pays Heavily to Access Best IP Assets

Demand for technology cost country $35 billion in intellectual property royalties.


BEIJING - China has been lavishing money on intellectual property right royalties with a 20-year streak of double-digit growth amid efforts to close a long-standing gap in technology and innovation.


China's external payments of IPR royalties rose 24 percent year-on-year in 2018 to $35.8 billion, resulting in a deficit of $30.2 billion, the latest data from the State Administration of Foreign Exchange showed. This marked an average annual growth of 22 percent from 1997 to 2018. The fast expansion represents not just the country's demand for advanced technology to support its economic development and industrial upgrading. It demonstrates China's enhanced IPR protection and respect for innovation as well, SAFE said.


Stronger demand


The payments were mainly in the computer, telecommunications, electronics, auto manufacturing, shipbuilding and aviation sectors. They accounted for more than 40 percent of the total. The United States, Germany and Japan were the top three exporters.


Stronger IPR protection is a requirement of foreign companies and even more so of Chinese enterprises.


Although growth is shifting down a gear, China remains a dynamic market full of opportunities, striving to build an economy reliant on technology and innovation.


In 2018, the contribution of technological advances to China's economic growth rose to 58.5 percent, according to this year's central government work report.


In pursuing innovation-driven development and fostering new growth drivers, China has recorded stellar rise in homegrown innovation on the back of strong investment and better IPR protection.


China's spending on research and development increased to 1.96 trillion yuan (about $293 billion) last year, about 2.18 percent of its GDP.


The number of patent applications saw a year-on-year increase of 16.9 percent, amounting to 4.32 million at home and abroad.


According to the Global Innovation Index, China's global ranking in terms of innovation jumped from 22nd in 2017 to 17th in 2018.


Qi Aimin, an IPR expert with Chongqing University, said the large deficit in IPR royalties reflected a discrepancy between the country's insufficient IP supply and rapidly expanding demand.


"The data also show Chinese companies have a rising eagerness on IPR investment and compliance in competition," Qi said. "Though the deficit is going to persist, it will narrow in the long run with China's IPR-related capabilities growing."


Brighter prospect


A report by the Information Technology and Innovation Foundation, a US think tank, showed China's high-tech manufacturing value-added grew from 30 percent in 2006 to 77 percent in 2016.


If this growth rate was to continue, China would exceed the US in high-tech manufacturing value-added by 2020, according to the report.


The report said it is a misconception that China was a copier, as it can and does innovate.


In addition to fostering stronger homegrown innovation prowess, China is assuming a greater role in international cooperation in IPR-related issues.


The country has been active in contributing wisdom to the development of international rules on IPR. Cooperation under the Belt and Road Initiative is a typical example of this, said He Zhimin, deputy chief of the China National Intellectual Property Administration.


It has established partnerships with more than 40 countries participating in the initiative and offered IPR training programs for experts and officials from nearly 30 of them, He said.


China has also advocated joint efforts with Belt and Road-participating countries in fighting IPR infringements and creating an environment for protection, he said.


Source: China Daily

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