The Anatomy of Chinese Innovation: Insights on Patent Quality and Ownership
ZEW Discussion Paper Nr. 24-016 // 2024We develop a new method to measure the importance of a patent for subsequent innovation, based on the use of a Large Language Model to process patent text data and a new model of the innovation process. We apply this method to study the evolution of patenting in China from 1985-2019, also classifying patent ownership using a comprehensive business registry. Our analysis yields seven novel facts about Chinese patenting. Among these are that patenting has become narrower and less innovative over time; that knowledge within China has become more important than knowledge outside of China for directing innovative activity in China; and that knowledge produced by Chinese entities within China has been more important than knowledge produced by foreign entities filing patents in China.