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China and the UN System – the Case of the World Intellectual Property Organization

China and the UN System – the Case of the World Intellectual Property Organization
 François Godement
Special Advisor and Resident Senior Fellow - U.S. and Asia

The secret vote for the Director post at the World Intellectual Property Organization (WIPO), has handed China a crushing defeat, with an official from Singapore winning by 55-28 against China’s candidate, a long-time UN civil servant in the agency. The vote was preceded by a loud public diplomacy contest between China and the United States, but few expected the outcome to be so clear. China’s role has become controversial at two levels: that of undue Chinese influence throughout the UN, but also of China as an R&D power that knows its beef about innovation, or that is instead, as someone wrote, "a fox in the henhouse". These questions require distinct answers. The first issue starts from a very high place: a Chinese national now heads 4 of the UN’s 15 specialized agencies (3 more than any other country) and has placed 7 nationals as Deputy Directors-General, also a record. China’s mandatory contribution to the UN budget is now second only to the United States – and it has also put in place a Peace and Development Fund whose allocation is decided jointly by Chinese diplomats and the UN Secretary-General. It has become a procedural force far beyond its use of the veto, and also beyond its traditional leverage at the UN General Assembly, where it has been able for a decade to muster more voting coalitions than any other member.

China’s long arm at the UN

It is clear that China’s leverage has vastly increased and that it is misused. China’s influence radiates from its "core interests": Taiwan, which it consistently blocks at the World Health Organization (WHO) in spite of the island’s world-class medical system and contribution to global health and human rights, where it lobbies, threatens and sanctions, including by using budgetary levers to block peace-keeping operations that include human rights aspects. Recently, the Belt & Road Initiative has become a key topic to be rammed through many UN pronouncements and organizations. Fascinatingly, even the United Nations High Commissioner for Refugees (UNHCR), which has nothing to do with the Silk Road topic, felt the need to sign in Beijing a BRI MoU. The WHO’s Director has been embroiled in a controversy over his lavish praise of China in January 2020 – precisely the period when Chinese officials denied the gravity of the COVID-19 crisis and withheld information from the international community. Whether this was in the hope of gaining precisely more cooperation is pointless: it just means that at the UN one must court China to get results from it.

China is also a growing force in the area of patenting and intellectual property: both as a contributor and as a problem to innovation, since it is the country most often accused of stealing IP rights.

Caveats must be inserted: if the US was not pulling away at the political level from the UN system as it currently does, its balancing power would be larger. And if the EU were a united actor, it would also get better results, which has not happened in the recent selection of a new director for the Food and Agriculture Organization (FAO). Some technical agencies are fair game for Chinese influence: given the huge Chinese investment in IT and telecommunications, and its push in the area of 5G, it is not really surprising that a Chinese national – with a long career at the International Telecommunications Union (ITU) runs the organization. With some hesitation, it may be added that if spying is an issue, one does not really need to be a director at a UN agency to pry into its processes…

Is China really an innovation superpower?

China is also a growing force in the area of patenting and intellectual property: both as a contributor and as a problem to innovation, since it is the country most often accused of stealing IP rights. Because WIPO by definition handles very confidential material such as patent applications, the question has some added relevance. Indeed, when the PRC’s outspoken ambassador to the UK wrote to the FT in defense of China’s candidate, it was to pitch that person’s CV - 30 years with WIPO and a woman at that – but also to defend his country against accusations of "stealing" IP, made in the same newspaper by Peter Navarro, White House adviser and celebrated author of Death by China. The Office of the United States Trade Representative, which led a seven-month investigation into China's intellectual property theft and made recommendations to the Trump administration, estimates that "Chinese theft of American IP currently costs between $225 billion and $600 billion annually."

WIPO raises a different set of issues, which are often overlooked. First, should the organization be run by a national from an IP superpower, as China claims to be? Or should China, precisely for that reason and because it allegedly promotes democracy in international relations, desist and let a candidate from a nation less directly involved in the superpower rivalry take the helm of the organization? From this point of view, the selection of a Singaporean makes sense.

In fact, several East Asian countries are at the forefront of global innovation. What sort of an innovation superpower is China? There is no question that China has reached the first rank by far in terms of patent applications at WIPO. But most of China’s patent applications are for domestic use only – far less are sought for at least one foreign country. China’s rate of co-inventorship has dropped from 40 % to 5 % between the 1970-99 and 2015-2017 periods, with Japan, the US, Germany, Singapore and South Korea surpassing this rate. Nothing could prove better China’s turn towards indigenous innovation, while Western Europe appears as the world’s most active in co-invention. Innovation clusters such as Tokyo, New York, Silicon Valley still overtake Beijing and Shenzhen. Huawei is the only Chinese company that made it into the Thomson-Reuters index for 100 top innovators, that measures influence and revenue and not only the number of patents.

A Chinese Patent Survey undertaken in 2016 finds only 19% to be invention patents, the rest being either utility (technical) or design patents: in many countries, these would not be registered as patents, but they have important commercial applications. Sector-wise, IT and telecom are the leaders – a trend which is also heavily reflected in this sector’s share in China’s international patent applications. Again, the intersection with the ITU, 5G and AI is remarkably high. At the other end, China’s share of life science patents is very low.

The Office of the United States Trade Representative estimates that "Chinese theft of American IP currently costs between $225 billion and $600 billion annually."

These findings are consistent with other evidence from the Chinese policies designed to increase innovation as measured by the number of patent applications. Although overall subsidies for R&D relative to GDP are lower in China than in some other countries (contrary to conventional belief), these subsidies are heavily focused on state-owned enterprises (SOEs) and a few coastal clusters. Patents are encouraged and rewarded, and are often a requirement for obtaining a Ph.D. degree, which tends to inflate the number of applications.

Top-down innovation is not the best model

All things considered, China has still emerged as an important global innovator, but very focused in terms of geography and sectors. Its track record for international cooperation is much more limited and, in fact, declining. The concentration on SOEs confirms the choice of a top-down state industrial and innovation policy, even if that is not the best in terms of actual results. It would certainly be counter-productive to spread this model via WIPO, irrespective of the issue of technology theft.


Copyright: Hector Retamal / AFP

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