China's Surge in US Research Investments Yields Rapid Growth in Patents

Strategic Insights -

Chinese companies, once absent from US research hubs, are now investing heavily in American researchers to create patents for new software, Internet infrastructure, and more. This push is part of China's shift from being the world's factory floor to a driver of innovation. The rapid growth in China's US investments will be a key topic at economic and security talks between top US and Chinese officials in Washington, who are negotiating a bilateral investment treaty.

Key Takeaways:

  • Chinese firms, including Huawei Technologies and ZTE Corp., are using US researchers to create patents at a rate that roughly doubled worldwide in each of the last three years, reaching 910 in 2014.
  • Humanwell Healthcare Group, a Chinese drug company, has invested over $50 million in a New Jersey subsidiary that employs dozens of US researchers, resulting in four patents approved in the US and European Union.
  • Chinese firms are advantages of setting up labs in the US, where there are over 800,000 people with research doctoral degrees in science, engineering, and health, to access innovation and compete in the domestic market.
  • The cumulative stock of foreign direct investment in China from the US makes up just over 1% of the FDI sunk into Chinese businesses by all nations, according to US government data.
  • China's share of America's FDI stock is even smaller, but it has been growing rapidly in recent years as Beijing has eased restrictions on outward investment.
  • The Thomson Reuters data also shows a sharp increase in recent years in patents by Chinese firms using German and Japanese researchers.

Statistics:

  • 910: Number of patented inventions by Chinese firms that involved at least one US researcher in 2014.
  • $50 million: Amount invested by Humanwell Healthcare Group in a New Jersey subsidiary that employs dozens of US researchers.
  • 1.1 billion: Annual flows of foreign direct investment (FDI) in China from all nations.
  • $11.9 billion: FDI flows from the US to China in 2014.
  • 101: Number of later inventions that cited Huawei's US patent for processing fiber optic signals.
  • 1.75%: Research and development expenditures as a proportion of economic output in China in 2010.
  • 2.2%: Research and development expenditures as a proportion of economic output in China this year.

Sources:

  • (No specific source mentioned for the funding allocations or exact dates of the investments. External reference: Thomson Reuters global intellectual property database; Rhodium Group; US government data)
  • (Source mentions a US National security Review.) External reference: Staff writer Evan Ramstad's report)
  • Washington Post
  • (No Source Available)