Countries control over intellectual property determines its ability to dictate international relations – Strong IP control is key to US hegemony, but China has surpassed and is surpassing in many industries
Harjani & Sworn 22 [Manoj; Manoj Harjani is a Research Fellow at the S. Rajaratnam School of International Studies and Coordinator of the Military Transformations Program. And Hannah; Hannah is a PhD student interested in the politics of global economic regulation and how small states engage with the regulatory preferences of great powers. She is particularly interested in pharmaceutical intellectual property regulations; the relationship between regulation, political legitimacy, and development in authoritarian states; and the role of mega-regional trade agreements in regulatory politics. She is also interested in cross-strait relations and alliance behavior. She received an MSc in International Relations from the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore and a Bachelor of Arts from Monash University; “US–China economic competition rests on intellectual property”, 29 June 2022; https://eastasiaforum.org/2022/06/29/us-china-economic-competition-rests-on-intellectual-property/]
Intellectual property (IP) has long been a sore point in relations between Washington and Beijing. US officials have repeatedly targeted China for widespread counterfeiting since its economic ‘opening up’ in the late 1970s. But after enduring a punishing series of legal reforms to join the World Trade Organization in 2001, the Chinese government is still under fire for weak enforcement, forced technology transfers and state-sponsored IP theft. Now China’s growing ability to produce IP indigenously is driving the evolution of US–China economic relations. In 2021, China was the world’s top patent filer for the third year in a row. Chinese firms have filed approximately 75 per cent of global artificial intelligence patents in the past decade and 40 per cent of all 6G patents, while the United States accounted for only 35 per cent of the latter. The country’s ability to produce IP across a number of critical and emerging technologies has been framed as evidence that China is surpassing the United States in knowledge production. While the significant growth in China’s patent filings point to genuine improvement in its ability to innovate, focussing on the number of filings is misleading. China’s production of more IP does not automatically translate into a strategic advantage in economic competition with the United States. Rather, it is high-quality IP that has assumed a critical role amidst globalisation and the emergence of global value chains, providing exclusive rights to license processes, brands and technologies essential for manufacturing. Value chains are hierarchical. At the apex, owners of high-quality IP dictate the terms of — and reap a greater proportion of profits from — economic activity taking place lower down in the value chain where the IP is paid for and used in assembly. ‘Moving up’ the value chain enables firms to capture a higher share of value added, giving countries a strategic advantage in dictating the terms of international trade. IP has become integral to economic power. The United States’ near-monopoly over high-quality IP ownership has allowed its firms to capture a disproportionate share of value added globally. US efforts to produce, regulate and protect IP can be framed as seeking to protect its power to shape the global economy. China’s leadership has doggedly pursued its own innovation pathway to maintain economic growth and avoid the middle-income trap by moving up the value chain. But regardless of Beijing’s intentions, this threatens US economic power conferred to it through greater IP ownership.