Translating IP Into Revenue: China’s Changing Place in the Global IP Landscape

Trustee Chair in Chinese Business and Economics  >  Trustee China Hand

China’s innovation drive has made enormous strides in the past few decades, but progress has been uneven and is incomplete, a key theme of the program’s recent report, The Power of Innovation. This pattern is reflected in Chinese efforts to become creators of intellectual property (IP) and leverage those rights into greater technology leadership and revenue.

China is infamous for its IP theft. It still may be a significant issue, though over the last decade American companies doing business in China have identified IP theft as of decreasing relevance to their own businesses. That change in illicit behavior may also be reflected in the world of IP royalty and licensing payments.

From an international perspective, China has historically been a net payer when it comes to IP. Becoming the world’s factory was accompanied by expanding licensing fees to create products both for use in China and for export to the rest of the world. But in the last decade, Chinese companies have started to receive more payments for their own IP, a sign of growing creativity and technological acumen (see Figure 1). Although there’s been a drop from the peak of 2022 (which could be for a variety of reasons), the overall trend of China receiving more IP income is clear. 

Another way to look at China’s changing position in international IP is to compare how much the country earns from others relative to what it pays, its IP receipts-to-payments ratio. As Figure 2 shows, while China still pays around $4-5 for every one dollar it receives, this ratio has shifted in the country’s favor compared to a decade ago, when China earned only $1 for every $20 it paid out.

In comparative terms China appears at first glance to still have a profile similar to other emerging economies, such as India and Brazil (Figure 3), all with ratios well under 1.0. However, this comparison understates China’s scale: in absolute terms the country received more in IP payments than South Korea in 2024. Moreover, China’s low ratio also reflects the sheer volume of  manufacturing occurring on by both domestic and foreign-owned factories; they all  import a lot of components for which they have to pay royalties, boosting China’s overall payment figures. That is why in 2024 China was the third largest payer, behind only Ireland and the United States putting it far ahead of countries with similarly low ratios.

Although China does not publish IP receipts by industry, its global patent filings provide some clues of which industries are driving this new revenue. China’s largest PCT patent categories were for digital communication, computer technology, and machinery with large increases in areas like pharmaceuticals, and medical technology (see Figure 4). 

Telecom giant Huawei serves as an instructive microcosm of the “digital communication” industry. The company received $630 million in patent licensing revenue in 2024, mostly from 4G and 5G devices followed by automotive and consumer electronics – roughly half of what Ericsson earned in patent licensing in 2024 ($1.27 billion), a third of Nokia's ($2 billion), and about 10 percent of Qualcomm's ($5.57 billion). Huawei also reported that its IP payments are still larger than what it receives, reflecting both sides of China’s current IP story – increasing receipts but still a net payer. 

Another example is battery maker CATL, which has been expanding licensing of is IP through its “license royalty service” (LRS) model. This is the model behind CATL’s cooperation with global firms such as Ford, Tesla, and GM – partially in response to U.S. restrictions and scrutiny as well as the attractiveness of CATL’s leading IP in lithium-iron phosphate batteries. The Ford plant in Michigan is emblematic of this kind of strategy – Ford owns and operates the plant while paying licensing fees to CATL for LFP technology.

Pharmaceuticals is another striking area where rapid shifts are occurring. In the first three months of 2025, 32% of out licensing biotech deal value occurred in China, verses 21% reported in 2024 and 2023. Global firms like Pfizer, AstraZeneca, and Bristol Myers Squibb have all made licensing deals with Chinese firms. This shift is likely not yet visible in the IMF data and is another example of how China’s innovation is reversing the direction of flow for IP.

None of these examples are exhaustive accounting, but they each give a unique perspective into how China’s shift towards supplying more of the world’s IP is playing out.

Related Trustee Chair Activities

Scott Kennedy, The Power of Innovation: The Strategic Value of China’s High-Tech Drive, CSIS Report, March 2, 2026.

Event: “China’s Great Tech Leap Forward and the Implications for the United States,” March 2, 2026.

Scott Kennedy, Wang Qiuyang, and Mingda Qiu, “Show Me the Receipts: China’s Rising IP Payments to the United States,” Trustee China Hand Blog Post, August 19, 2019.