Trade war could hit China’s innovation powerhouse plans

China’s ambition to become a leader in innovation may be hampered by the US trade war, with concerns that fewer patents for original inventions may be filed in China as subsidies and other incentives dry up amid slowing economic growth.

As part of Beijing’s push to transform the country from the world’s factory into a self-sufficient powerhouse, Chinese companies have been encouraged to file patents domestically and internationally, with tax cuts and subsidies as high as 50,000 yuan (US$7,200), according to government documents.

But Hong Kong-based intellectual property expert Catherine Zheng has warned that declining revenues may reduce these and other financial incentives in the wake of an economic slowdown.

“Local governments have been offering these subsidies to patent filing, but if the economy slows, we worry that such subsidies may not be as much as before,” Zheng, senior intellectual property lawyer and partner at Deacons law firm, said. “This means the number of patent applications from Chinese companies may drop.”

China is the fastest-growing source of patent applications, a result of a national policy to encourage innovation.