China now leads the United States in high-impact research in 69 of 74 critical technologies tracked by the Australian Strategic Policy Institute. Two decades ago, the United States led in 60 of the 64 technologies tracked, while China led in just three.
In artificial intelligence, China now leads in total AI patent output, even as U.S. companies continue to produce many of the world’s leading models. And across nine advanced industries, Chinese firms have dramatically increased their R&D investment, overtaking U.S. firms in four sectors — industrial engineering, automobiles and parts, electronic and electrical equipment and general industrials — after trailing in eight of nine a decade earlier.
China is even closing the gap in biopharmaceuticals — an area the United States has long dominated. China’s share of the global innovation pipeline has climbed from about 2% a decade ago to roughly 30% today. As of 2024, China leads the world in launching clinical trials.
These alarming developments stem largely from shifts in intellectual property (IP) policy. IP rights are among America’s most valuable strategic assets — yet in recent decades, U.S. leaders have allowed them to erode. At the same time, China is increasingly embracing IP.
To remain competitive with China and protect its national security, America must preserve its IP advantage.
IP is an invaluable American asset
Intellectual property is a major source of U.S. economic strength. In 2024, IP-intensive industries generated $11.4 trillion, or 44% of U.S. private-sector GDP, according to the U.S. Patent and Trademark Office. They supported 65.8 million jobs and accounted for more than 81% of U.S. commodity exports.
The biopharma sector illustrates how strong IP protections support economic growth. With strong IP rights, the United States leads the world in turning biopharmaceutical discoveries into commercial products. Our biopharma industry generates more than $1.65 trillion in economic output and employs roughly one million workers.
IP also gives America a significant advantage in international trade. In 2022, the United States ran a $74 billion intellectual property trade surplus, while China ran a $31 billion deficit. China may be a manufacturing powerhouse, but America has long excelled at developing and commercializing cutting-edge technologies — thanks in large part to its strong IP system.
China is taking advantage of IP
China is notorious for stealing American IP, which has created a misconception in Washington that the U.S. patent system is a vulnerability. According to this theory, since the patent system requires inventors to publicly disclose their inventions, it gives Chinese competitors opportunities to reverse-engineer technologies or design around patent claims.
But that approach is misguided. For one, the best solution to IP theft isn’t to rely less on IP protections — it’s to strengthen enforcement.
More fundamentally, although Chinese IP theft is a real problem, it doesn’t tell the whole story. Much of China’s innovation ascent has come from embracing IP rights, rather than subverting them. That makes a strong U.S. patent system strategically valuable.
In 2000, Chinese inventors filed just 250 international patent applications through the Patent Cooperation Treaty. The United States filed 33,966. By 2025, Chinese applicants filed 73,718 international patent applications, while the United States filed just over 52,000.
China’s growing reliance on patents extends across industries. In 2023, Chinese inventors filed nearly twice as many international patent applications on energy inventions as U.S. inventors. As of 2024, China held more than 190,000 active patents in robotics — roughly two-thirds of the global total.
By maintaining a strong patent system, America can turn China’s embrace of IP to its own advantage. Consider Huawei. The telecommunications giant was the world’s top filer under the Patent Cooperation Treaty in 2025, with over 7,500 applications published. It also received over 3,000 U.S. patents that year — the fourth-highest total of any company.
To file those patents, Huawei had to publicly disclose its inventions in English, giving American innovators detailed technical information they can study, build on, or design around. Huawei’s patents are also subject to U.S. challenges and litigation, giving the United States leverage to ensure American inventors seeking patents in China are treated fairly.
While Huawei is under scrutiny for raising U.S. national security concerns, it is far preferable that they publicly disclose their technology than keeping it hidden through trade secrets.
And U.S. leaders can strengthen America’s economic might by keeping patent protections strong and attractive to international innovators, who we want to invest and manufacture here.
Conversely, restricting Chinese companies’ participation in the U.S. patent system — as some policymakers have proposed — could limit Americans’ access to valuable technical knowledge, weaken America’s ability to secure strong IP protections abroad, and invite retaliation against American patent holders in China.
America’s future depends on a strong IP system
U.S. policymakers must confront the specific risks China poses, including patent and trade-secret theft, forced technology transfer, and IP deals that risk exposing strategically important military, cybersecurity, and data-security innovations. But they should target those risks directly, rather than impose blanket licensing or investment restrictions that could also hurt American inventors.
Policymakers should also prioritize domestic reforms to strengthen America’s IP system. They should clarify patent eligibility in advanced technology sectors, reduce duplicative patent challenges, and better align the Patent Trial and Appeal Board’s standards with those used in federal courts.
Strong and predictable patent rights, sustained investment in fundamental research, and clear rules for challenging and enforcing patents give U.S. innovators more confidence to invest in new technologies and bring them to market. In the race for technological leadership, America’s strongest defense is preserving the conditions that keep our own innovation system strong.