For me the most interesting business story of the week was the news that China is set to surpass the US in terms of patent applications. Set to the background of Chinese President Hu Jintao’s visit to the White House last week, this story received scant media attention given its importance as a barometer of the future structure of the world economy.
Perhaps we shouldn’t be too surprised to find out that China is on the verge of ‘out innovating’ the US. After all, last year China became the second largest economy in the world and the country is increasingly acting with the kind of confidence, even swagger, that befits a country with a population not far short of one and a half billion individuals. ‘Made in China’ has been a common label on our clothes, electronic goods, toys and many other consumer items for over 30 years so it is high time that China takes leadership in innovation.
Why this matters is that China will not only be the factory of the world but it will also be producing more of the higher-value goods that drive global GDP growth. Indeed, ‘technology booms’ that drove the US economy during the 1990s and Japanese economy in the 1970s and 1980s had as their base a significant rise in patent applications in the preceding decades. Technological innovation accounts for over 80% of economic growth in the world today demonstrating the need to create smart, knowledge-based economies.
With the Chinese set to lead the world in innovation for decades to come the country will have to beef up its IPR legislation for sure but the shifting sands of the global economy are moving firmly eastwards once more.