As requested by the U.S. Senate Finance Committee, the U.S. International Trade Commission on Monday released the first of two comprehensive reports detailing the impact on the U.S. economy of China's "indigenous innovation" policies and its local intellectual property enforcement regime.
The report's release, timed to co-incide with the U.S.'s 21st annual trade summit with the Chinese this week, re-iterates several years' worth of American companies' complaints about the insufficient level of intellectual property enforcement in China, as well as the country's perceived protectionist policies in the form of a "web" of indigenous innovation policies.
But it also provides a comprehensive examination of China's developing system of intellectual property, and it offers various frameworks with which to measure the scope of the policies' economic impact on the United States.
The second report is due in May.
Both Democratic and Republican leaders of the Senate Finance Committee used the opportunity as a bully pulpit to publicize their efforts to press the Chinese government about intellectual property issues.
“It is time for China to get serious about protecting American innovation,” said Sen. Max Baucus, D-Mont., the committee's chairman in a statement. “China continually fails to protect and enforce American intellectual property rights and discriminates against American businesses. Small steps and empty promises won’t cut it when American jobs are on the line. This week’s U.S. – China trade talks are the perfect opportunity for China to make serious commitments to address these issues. It is time for action.”
"Despite China’s serious problem with intellectual property infringement, the U.S. government hasn’t done a comprehensive economic analysis of the impact on the U.S. economy until now. This two-part report will fill that gap,” added Sen. Chuck Grassley, R-Iowa, the committee's top Republican.
As defined by the ITC report, China's "indigenous innovation" policies manifest themselves through government procurement policies, technical standards, anti-monopoly laws and tax regulation -- all designed to block U.S. companies from accessing the Chinese market.
Among the findings of the almost 200-page report:
- Shenzhen and Guangzhou are production and distribution hubs for copyright-infringing products. These two states are also where most infringing video games are produced. The games are officially banned in China.
- Piracy of Western music and movies flourishes in China because they're officially banned. When they're not banned, there's a delay in the release of the works because content companies have to find a local Chinese partner to distribute the product online.
- The Chinese government’s focus on indigenous innovation has spurred a boom in patenting by Chinese inventors, who are then suing foreign companies for trying to market similar technologies in China.
- The Chinese State Intellectual Property Office (SIPO) received 976,686 applications in 2009, with invention patent applications growing by 18 percent, utility model patents by 38 percent, and design patents by 14 percent compared to 2008.
- Most SIPO applications were filed by domestic inventors: in 2009, Chinese applicants filed 73 percent of invention patent applications, 99 percent of utility model patent applications, and 97 percent of design patent applications.