Technology Protectionism and the Patent System: Strategic Technologies in China
Abstract: The national treatment principle, a centerpiece of many trade-related international treaties, mandates nondiscriminatory application of treaty provisions to nationals and foreigners. In international patent law treaties, the principle prevents countries from free-riding on foreign technologies, thereby preserving incentives for global innovations. Concerns about violation of the principle at the Chinese patent office have been voiced in business and policy circles, but there is little empirical evidence backing this claim. Using data on about half a million patent applications filed in China we find no, or only weak, evidence of anti-foreign bias in the issuance of patents overall. However, foreign applications in technology fields that are of strategic importance to China are four to seven percentage points less likely to be approved than local applications, all else equal. Given the importance of industrial policy in China and the country's strong focus on indigenous innovation and intellectual property, the empirical results provide a case of technology protectionism by means of the patent system.