Behind the recent surge of Chinese patenting: An institutional view

This paper examines a number of forces that have possibly contributed to the explosive growth of Chinese patenting over the past decade. After a review of previous hypotheses and conventional wisdom, this study proposes an additional explanation and argues that patent subsidy programs implemented by each provincial region have played an important role in the growth of Chinese patenting. This institutional change, taking place at the province-level, has induced an increase in patent propensity among not only firms, universities, and research institutes, but also individuals. Empirical evidence based on publicly available data provides solid support for this argument. It was also found that a larger fraction of applications are granted patent rights since the implementation of such programs, suggesting that reduction in patent application quality may not be a serious concern, unless the criteria used for patent examination have been lowered.

► I examine various forces that may have driven the patent surge in China.
► The implementation of patent subsidy programs is an important contributing factor.
► Patent subsidy programs have induced an increase in patent propensity.
► The effect of subsidy programs is comparable to that of R&D and the legal change.
► The patent grant ratio increased after the implementation of subsidy programs.