The Significance of Intellectual Property in Contemporary China
With its accession to the World Trade Organisation (WTO) on 11 December 2001, China formally committed to comply fully with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) immediately and without any transition period. This commitment to comply with the stringent TRIPS standards was a major undertaking for a country in which modern intellectual property (IP) laws had only begun to be drafted in the 1980s, and thus China’s subsequent compliance with the TRIPS Agreement is of significant interest to various groups of stakeholders: the WTO itself, trading partners and rights-holders. With WTO accession now already 15 years in the past, surveying the evolution of China’s intellectual property system from this point can provide a powerful and unique perspective of both the short-term transplant of TRIPS standards into the formal substantive law and the longer- term adaptation of these standards into local enforcement practices. It is clear that China swiftly amended its legislation to transplant TRIPS-compliant rules into the domestic IP system; however, a gap was soon perceived between the substantive legislation and enforcement practices experienced by rights-holders on the ground. Furthermore, many of China’s key trading partners such as the United States (US) and the European Union (EU) still express disquiet about the effectiveness of IP enforcement on the ground, with China continuing to be the source of 80% of counterfeit goods detected at the EU’s borders (European Commission 2015).
Nevertheless, it is undeniable that significant changes have been made to the IP system in China since accession to WTO, and further improvements to the IP system are now seen as a key government priority, as encouraging entrepreneurship and innovation is seen as key to rebalancing the Chinese economy which has previously relied on manufacturing low-cost exports as a key source of growth.
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K. Thomas, Assessing Intellectual Property Compliance in Contemporary China, Palgrave Series in Asia and Pacific Studies,
As costs such as labour increase, low-end manufacturing has been losing its competitiveness, and thus China needs to look elsewhere for alternative sources of economic development to sustain the remarkable rates of growth that have continued throughout the ‘reform and opening-up’ era since 1978. The People’s Republic of China’s (PRC’s) central government clearly sees investing in startups, high-tech companies and the service sector as the nation’s economic future, with Premier Li Keqiang claiming at the National People’s Congress (NPC) in March 2016 that 12,000 companies were founded every day in 2015. Many of these newly formed companies also benefit from substantial state benefits and handouts with the aim of inculcating a culture of ‘mass entrepreneurship’ to support future economic growth (Schuman 2016). Indeed, according to the Global Innovation Index 2016, China became a ‘top 25’ innovative economy for the first time, also becoming the first middle-income country to do so (WIPO 2016a, p. xviii). Nevertheless, despite impressive expansion in innovative activity in China, it is evident that an effective functioning IP system is a key foundational prerequisite upon which such an innovative knowledge-based economy can be constructed. Thus, intellectual property is of great significance in contemporary China and this study seeks to assess the evolving state of IP in China primarily through the experiences of respondents based on the ground in China to measure how China’s compliance with the TRIPS Agreement has changed since WTO accession in 2001.
This chapter will next consider the significance of international intellectual property by laying out the development of IP, from the national level in the early years of IP, to the international with the signing of the Paris and Berne Conventions in the late nineteenth century, to the global with the inclusion of international IP standards in the WTO system. Then the significance of WTO accession for China will be outlined as well as giving an overview of the key agencies involved in the IP system as well as considering the implications for the current IP system of the instrumentalist nature of the post-WTO legal system in China. The fourth section will describe the development of intellectual property in China prior to WTO accession, which occurred in four phases: during imperial China; introduction of IP laws in the early twentieth century by the Nationalist Guomindang government; the changes made after the Chinese Communist Party founded the PRC in 1949; and finally the modern IP laws passed since the ‘reform and opening-up’ period began under Deng Xiaoping in 1978. The final section will provide an outline of the research project, detailing the key research questions as well as offering an overview of the structure of the book and the content of the subsequent chapters.