The Tech Cold War: What can we learn from the most dynamic patent classes?

Abstract

This research assesses key aspects of the Tech Cold War between the World’s two largest economies, the US and China. We focused on the patenting performance in four most dynamic patent classes at both the EPO and the USPTO in the period from 2000 to 2019. The data shows that China has had a very fast catching up in terms of patent counts, and was ranked no lower than #5 in all of those patent classes, in both the EPO and the USPTO in 2019. However, an assessment of patent quality shows that a significant gap still remains between the Chinese firms and their counterparts in the US and in other most developed economies. Despite that qualitative disadvantage, the patent data that was analysed also indicates that the quantitative catching up has to a reasonable extent been based on endogenous R&D effort and learning dynamics, a finding which is confirmed by the weak involvement of the major Chinese firms in patent co-ownership networks in the overviewed patent classes. In the now unlikely scenario of no significant changes in the global competitive environment, including in the WTO and TRIPS rules, China becoming the global technological leader before the end of the 2020s would have been a possibility with a reasonable likelihood. However, the political economy of the Tech Cold War has made difficult any linear extrapolation of recent trends.