Contributed by: Sharon Zheng, FinTech Expert
The evolving Chinese Generative AI technology is emerging as a distinct component of innovation that is set to transform China’s international trade. Given my background as an independent consultant on the intersection of technology, trade, and globalisation, I will discuss how China’s regulatory policy on generative AI is transforming global business from a qualitative perspective.
China’s Supremacy in Generative AI Patents
During the period of 2014 to 2023, China submitted around 38000 applications for patent on generative AI technology, which constitutes nearly 70% of that filed globally. The number is six times that of the United States which filed 6276 patents within the same time frame. Out of the top ten applicants of generative AI patents in the world, 6 are Chinese companies which include Tencent, Ping An Group, Baidu and the Chinese Academy of Sciences.
This drastic increase in the number of patent applications demonstrates China’s relentless expansionist agenda in AI technology. China has been pursuing a dominant position in AI technology. Nevertheless, the enormous number of patents raises issues concerning their value and possible use. In the past, China’s strategy regarding patents leaned more toward quantity which came at the cost of quality. The most crucial issue remains whether these generative AI patents will be transformed into actual real world applications and to what extent will they hold relevance internationally as well as domestically.
Evaluating The Quality and Commercialization of Patents
Although China has an impressive number of patents, their strategic business value and quality are critical considerations. In the past, China’s patent policy focused on the quantity of patents filed over their quality, but the data shows increasing positive trends. The patent grant ratio for applicants from China improved to 55% in 2023 from 30% in 2019, and the rate of commercialisation in high-tech industries improved too. This implies a positive change in the rate of innovation for generative AI.
This trend can be illustrated with a few examples. For instance, research from China developed an AI powered algorithm that can make the process of drug development faster, which means cures for different diseases can be made available to patients in a timely manner. Another example is Ping An Insurance Group that has taken a leading role in AI patenting in China by applying for 101 generative AI patents in areas of application in banking and finance, which make up 6% of their portfolio. These results are a demonstration of China’s increasing willingness to improve the standard of quality and real-world impact of their generative AI innovations.
Challenges in patent quality
An analysis on a country’s advancement in AI domestically and abroad can be seen through the lens of its patent filings. China’s enormous surge in patent registration is an indicator of its aggressive support in developing technology innovation. WIPO studies attribute 47% of patent applications globally to China in 2023, indicating that the country is looking to step ahead and dominate the technological arms race. At the same time, focussing on the influence China will have on the AI ecosystem internationally reveals multifaceted issues in patenting.
Issues In Patent Quality
While one may focus on the sheer quantity of patents being applied for, WIPO attests that there persists a problem in the relevancy of these patents internationally. The grant ratio – a measure of how many patents are issued in proportion to how many are applied for – brings further granularity into this. In China, the grant ratio of new-generation AI patents is roughly 32%. Leading tech players like Huawei and Baidu have grant ratios of 24% and 45% respectively. In comparison, developed nations like Japan and Canada have much higher grant ratios sitting at 77% and 70% respectively. This shows that a large number of Chinese corporations are making patent applications but a large portion of these applications fail to pass the assessment requirements that come with them.
At the same time, Chinese patents do not have effective international reach. China only files 7.3% of its patent applications overseas, which indicates a concentration on the domestic market. This is in stark contrast to countries like Canada and Australia which file a large percentage of their patents overseas, which illustrates a proactive approach to fostering multiple jurisdictions for intellectual property protection. The lack of international Chinese patents can limit their relevance and use in other countries which undermines the possibility of commercially marketing Chinese AI technologies abroad.
Impact on international Trade
Global competitiveness is determined by trade relations of a country suffering from lack of quality and scope of internationally imposed patents. Internationally enforced high-quality patents form the axis of competitive advantage provided to a specific firm enabling them to strategically license technologies, penetrate new markets, and consolidate globally with other firms. On the other hand, commercially unproductive patents without tangible attributes and unprotected in vital markets yield no benefit at all and stagnate business activities.
China emphasizing the quantity of patents filed rather than their quality or international scope economically has some consequences:
- Local Emphasis: The high number of domestically filled famed patents demonstrates that Chinese inventions are designed primarily for domestic consumption. All these factor enhancements will arguably lead to the reduced global influence of China’s AI technologies and limit participation in the global value chain.
- Lack of Market Defense: Without having a patent to secure their interests, Chinese companies face the risk of not being able to commercialize their technologies in foreign countries due to technology spoofing leading to loss of revenue.
- Impression of Innovation Value: Limited international applications coupled with lower grant ratios may have an impact on the Chinese innovation value perception which may affect foreign investments and partnerships.
Strategic Approaches
China can consider the following approaches in order to boost the impact of its AI innovations globally:
- Improving Patent Standards: Moving from quantity to quality focus increases grant ratios and more innovations are likely to pass international standards. Such a strategy is likely to require more rigorous internal review processes accompanied by more funding of research and development.
- Increasing International Applications: It is important to motivate businesses and corporations to file for patents in various jurisdictions which promote global IP protection which in turn aids in commercialization and collaboration internationally.
- Toughening Enforcement Frameworks: Enforcement of IP rights is one the most effective ways to increase the attractiveness of Chinese patents to foreign investors and/ or partners.
Global Competitiveness and Strategic Considerations
The global technology landscape has become significantly different because of the improvements of China in artificial intelligence (AI) in recent years. One of the most important transformations is the development of DeepSeek, a new Chinese AI model ready to compete with Western models in terms of price, and effectiveness with American tech behemoths. This shift indicates that China has set its sights on improving the grade and global Anglo-Saxon relevance of its AI technology to remain competitive internationally.
DeepSeek: A Disruptive Force in AI
DeepSeek burst onto the scene in December 2024 and received massive recognition for its capability to match the performance of the best Western AI models, particularly OpenAI’s GPT-4, while being significantly cheaper to develop. This is impressive particularly because China doesn’t have access to advanced AI chips and many extensive datasets which have always been barriers to China’s development of AI. The achievement of DeepSeek indicates that Chinese corporations are increasingly discovering novel ways to deal with these obstacles and change the scope of deep learning and artificial intelligence.
DeepSeek’s approach deeply altered conversations and business practices within the industry. NVIDIA and other dominant industry players’ stocks were subjected to huge fluctuations as capital interrogated the market regarding DeepSeek’s entry. This has been called an “AI Sputnik moment” and now serves as a marker in the significant change in the AI competition.
Strategic Repercussions
DeepSeek’s rise shifts the most critical perceptions following the scaling expectations of OpenAI. Active users increased to more than 400 mln weekly in February 2025, from 300 million in December 2024. This growth is another illustration of the already aggressive nature of AI competition and has proven to be even more dominant when it comes to innovation politics.
Pressure competition stemming from DeepSeek’s calculated attacks equally shifted strategy among Western tech leaders, the most notable being Musk’s unbidden OpenAI stock buyout bid of 97 billion dollars when the AI company was valued at about 300 billion dollars. This best demonstrates the rush towards integrating AI to thwart unforeseen competitors.
Improving Parenting Standards and Global Scope
It is well known that China leads in the amount of AI-related patent applications, however, there are serious concerns about the relevance and overall quality of these patents.
The achievement of DeepSeek demonstrates progress towards not just boosting the volume, but also the quality and usefulness of AI patents. This tactic assists in ensuring that such innovations are not only useful in the country, but are also competitive internationally.
On the other hand, there are still gaps. The inability to access advanced AI chips, a staggering amount of quality data, and the complex algorithms required for large model training remain considerable obstacles. Such restrictions could prevent the effective deployment and international outreach of China’s AI technologies, which could make China’s generative AI patents less effective in contributing to the advancement of AI technology globally.
DeepSeek’s creation serves as an example of China’s increasing competitiveness in the technology field. China’s innovation capabilities, in spite of constraints, was showcased when it developed a low-cost AI model that surpassed the efforts of the West. Subsequently, this change forces large technology companies around the world to revise their strategic plans in light of yet another strong competitor.
In order to maintain and improve its position within the global AI landscape, however, China will first need to overcome dire obstacles. Advanced technology access, enhanced data quality, innovation-friendly environments, and newly formulated patent strategies contingent on quality and international focus are all necessary. These changes would allow the technological advancements to be utilized and for China to gain global competitiveness.
Conclusion
AI technology advancements from China are changing the dynamics of international trade. China is improving AI technologies and automating trade functions to improve efficiency and set new trade standards. However, China’s long-term impact on AI will largely depend on the quality and scope of China’s generative AI patents and their relevance outside the country. With the constant evolution of these technologies, it’s easy to see their direct integration into global commerce, which makes it increasingly important for stakeholders worldwide to take notice and strategize accordingly.