How close is China to the technological frontier?

From Anil Gupta, bad news:

To be sure, China’s R&D expenditure increased to 1.5% of GDP in 2010 from 1.1% in 2002, and should reach 2.5% by 2020. Its share of the world’s total R&D expenditure, 12.3% in 2010, was second only to the U.S., whose share remained steady at 34%-35%. According to the World Intellectual Property Organization, Chinese inventors filed 203,481 patent applications in 2008. That would make China the third most innovative country after Japan (502,054 filings) and the U.S. (400,769).

But more than 95% of the Chinese applications were filed domestically with the State Intellectual Property Office—and the vast majority cover “innovations” that make only tiny changes on existing designs. A better measure is to look at innovations that are recognized outside China—at patent filings or grants to China-origin inventions by the world’s leading patent offices, the U.S., the EU and Japan. On this score, China is way behind.

The most compelling evidence is the count of “triadic” patent filings or grants, where an application is filed with or patent granted by all three offices for the same innovation. According to the Organization for Economic Cooperation and Development, in 2008, the most recent year for which data are available, there were only 473 triadic patent filings from China versus 14,399 from the U.S., 14,525 from Europe, and 13,446 from Japan.

Starkly put, in 2010 China accounted for 20% of the world’s population, 9% of the world’s GDP, 12% of the world’s R&D expenditure, but only 1% of the patent filings with or patents granted by any of the leading patent offices outside China. Further, half of the China-origin patents were granted to subsidiaries of foreign multinationals.

That’s the worst news you are likely to read today.  By the way: “…the allocation of government funds for R&D projects is highly politicized.”