Pharmaceuticals, data processing, and data transmission are the predominant driving sectors of innovation. Comparatively, China has nearly 80% of the world share in patents for alkaloid and plant extracts, and around 60 percent of global share of pharmaceutical activity. Digital data transmission and processing systems however have also recently seen a sharp increase in filings, on par with both the U.S. and Japan. However, most filings are held by thousands of individual inventors with a handful of patents each, rather than large portfolios maintained by research institutions or corporations that would be seen in the U.S., thus the quality of these IP may be suspect.

While domestic innovation is on the rise within China, accounting for approximately 80% of all filings, China's foreign patent filings have been mostly flat. The domestic annual applications have grown from 239,663 in 2008 to 629,612 in 2013; however, the number of inventions filed abroad has only grown from 13,005 in 2008 to 33,222 in 2013. Nonetheless, a few large multinationals have emerged in the global patent landscape, including Huawei, ZTE Corp, Shenzhen Huaxing Optoelectronic, Alibaba Group, BOE Technology Group, Lenovo, Tenecent, and others.

In an effort to shift the country to a more innovation-driven economy, the Chinese National Patent Development Strategy has outlined several strategic industries positioned for growth over the next 5 years, including biotechnology, alternative energy, clean energy, equipment manufacturing, broadband infrastructure, and semiconductors. For more information on the Thomson Reuters report, visit http://ip.thomsonreuters.com/sites/default/files/chinas-innovation-quotient.pdf.