The upsurge of domestic patent applications in China: Is R&D expenditure or patent subsidy policy responsible?

Abstract

This chapter studies the impact of Chinese government policies on the upsurge of domestic patent applications in China. We find that the explosion in the number of patent applications in China is significantly correlated with increased expenditure on R&D by companies, universities and other entities. However, based on regression modeling, we also find that provincial government subsidy programs have played a crucial role in the upsurge in domestic applications since 2010. Disconcertingly, patent quality is diminished by these subsidy programs due to the distorted incentive structure that they create for filing patent applications. The Chinese experience has important policy implications for other countries.