China's Drive Towards Greater Intellectual Property Protection

Intangible assets such as patents, trademarks, know how and other intellectual capital absorbs $1trillion of investment funds every year worldwide. The China Intellectual Property Protection website notes that China will become the world's largest file of new patents by 2012 based on present growth. Thus, Intellectual property has become, and will continue to be, a central issue in terms of China's continuing economic development. Numerous commentators have given their verdict on how China's intellectual property regime will look in the years to come.As China's economy has developed, this has prompted growing domestic and international demands for more social, economic and technological information, all of which require protection through an effective intellectual property system. This paper looks at both the potential costs and benefits of a stronger IP system in China would have, and evaluates the associated internal and external pressures. We show that throughout the 1980s and 1990s US pressure was instrumental in bringing about IP-related reform, driven by a fear of the huge losses US companies were facing at the hands of Chinese IP infringers, and the threat to their ability to harness the full potential of China's enormous potential consumer society. Yet, more recently, there has been a growing domestic recognition of the potential benefits of IP which has prompted a shift towards internal demands at a governmental and business level. Furthermore, we argue that a strong and effective intellectual property system is essential to the continuing development of the Chinese economy, to encourage innovation, technological change, and the development of strong, reputable, Chinese brands in the international market.