Intellectual Property Rights in the Wto Accession Package: Assessing China’s Reforms

In this paper I consider implications of China’s recent and ongoing reforms in intellectual property rights (IPRs) as it attains membership in the World Trade Organization (WTO). I discuss the consistency of China’s IPRs laws with WTO requirements and indicate outstanding issues. I then present basic economic theory of the need for IPRs, distinguishing among patents, trademarks, trade secrets, and copyrights. IPRs can be an important stimulus to innovation and economic growth if structured correctly and introduced in an environment of active competition. Otherwise they may diminish growth by limiting imitation and diffusion, leading to difficult policy choices. I compare China’s post-WTO IPRs regime with standards that seem appropriate for a middleincome developing economy. Overall, the new legal regime seems sensible for China’s position but there are some discrepancies that raise questions about policy. The current IPRs situation in China is analyzed, based on interviews of enterprise managers, public officials, and scholars. China has implemented a strong set of laws but there remain severe problems with enforcement. A final section shows that applications for IPRs are rising sharply but the use of IPRs differs greatly across regions, largely because of significant income disparities.