In this issue of the MERICS China Industries we cover the following topics:
China ramps up IP protection to defend interests of Chinese firms
Curb on energy consumption to impact commodity prices
MOST partners with China Development Bank to boost application of R&D
China promotes basic research to emerge as “transport superpower”
MOFCOM turns to cutting red tape and imports to boost consumption
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At a glance: The Central Committee of the Communist Party of China and the State Council issued guidelines to build a powerful intellectual property rights (IPR) country. The plan outlines policies and laws to be fleshed out by government ministries and numerical goals for 2025. Specific targets include:
- Construct a strong IPR country by 2025 in which the added value of patent-intensive industries accounts for 13 percent of GDP, and annual trade in IP royalties totals CNY 350 billion
- Achieve 12 high-value invention patents per 10,000 people by 2025 and cultivate enterprises that produce IP rights such as patents and trademarks
- Improve the IP legal system, particularly in new fields such as big data, AI and genetic technology and increase damages for IP infringements
- Participate in the construction and reform of global IPR governance e.g., by promoting IP bi- and multilateral negotiations and information sharing
MERICS comment: The plan is an extension of China’s policy ambitions, going back to the “Made in China 2025” strategy from 2015, that aims to transform Chinese companies from low- and mid-range assemblers to owners and creators of intangible assets like intellectual property in the global economy. While China has indeed been taking steps to improve its IP legal system, this has only partly been due to pressure of foreign business associations and governments. China’s main motivation has been self-interest. Previously, it was in China’s interest to have weak IPR to facilitate technology transfers. Now, efforts to improve China’s IP system, such as the amendments to China’s Patent Law effective since June 1, 2021, demonstrate their increased technological capabilities and an ambition to strengthen innovation as a key driver of China’s economic growth. In certain sectors, like telecommunications and AI, Chinese firms already produce high-quality IP.
The consequences for multinational companies (MNCs) are twofold. Firstly, IP protection in China will see further strengthening, e.g., through increased damages for IP infringement. The European Chamber of Commerce in China attests to a steady improvement in China’s IPR enforcement. This could embolden MNCs to further transfer high-tech production and R&D to China. Yet significant inadequacies remain in IPR enforcement as China applies the law on its own terms, and thereby keeps law a tool of Chinese policy. The policy did not mention any plans to increase the transparency of the judicial system. Secondly, with more indigenous Chinese IPR and a legislative system geared to favor Chinese firms, more Chinese companies will go after foreign ones. Chinese firms are increasingly taking the offensive and suing foreign competitors for infringing on their IPR. What’s more, Chinese courts have started granting anti-suit injunctions with the aim to block foreign companies from taking legal action abroad.
Policy name: Guidelines for Building a Powerful Intellectual Property Rights Country (2021-2035) (中共中央 国务院印发《知识产权强国建设纲要（2021－2035年）》) (Link)
Issuing bodies: CCPCC, State Council
Date: September 22, 2021
At a glance: The National Development and Reform Commission (NDRC) released a notice on improving measures to curb energy intensity and total energy consumption as part of the “dual control system.” The plan aims to improve the allocation and efficient use of resources and optimize the energy structure over the course of the next 15 years, in line with China’s commitment to peak emissions by 2030. Key measures outlined in the plan include:
- Establish two targets, one binding and one as an incentive, for provinces to reduce energy intensity and total consumption, based on local conditions e.g., level of economic and social development, industrial structure and layout, etc.