An intellectual property regime with Chinese characteristics? : researching the added value of a Sino-capitalist perspective towards analyzing China's IPR

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Thesis for the MSc in Political science: Political economy

An Intellectual Property Regime

with Chinese characteristics?

Researching the added value of a

Sino-capitalist perspective towards analyzing

China's IPR

Author: D.D. van der Neut

Student number: 10458328

Date: 22/06/2018

Word count: 20163

Supervised by Dr. J.Y. Gruin

Second Reader: Dr. L. Linsi

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Abstract

This thesis aimed to find the added value of a Sino-capitalist perspective in analysing China's Intellectual Property Regime. It finds that the added value of a Sino-capitalist perspective is three-fold. Firstly, the added value is that the Sino-capitalist

perspective finds that every integration into the world economy is different because two factors mediate it. Second, the added value lies in Sino-capitalism's focus on how Guanxi business networks incorporate themselves in a changing IPR. Third, the added value is that the Sino-capitalist perspective uncovers that the state is to be seen as a separate entity in the IPR that strategically acts to influence the institutions in an IPR and that the state has its own incentives to control specific categories of knowledge. Furthermore, the thesis argues that the added value of the Sino-capitalist leads to several theoretical insights that form a basis for further research into China's Intellectual Property Regime and to Intellectual Property Regime development in general.

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Chapter 1: Introduction

In 2001, China acceded to the WTO. The accession meant that the country had to sign the TRIPS treaty, the most important and extensive Intellectual Property agreement in the world. However, even though the letter of China's law was

harmonised with the requirements of TRIPS, it is mostly uncontested that China does not adequately enforce the law and is therefore not compliant with the global IP laws. As a result of this, Chinese companies continue to use foreign Intellectual Property on a vast scale, without permission (IP Commission, 2017: 16). The US IP Commission sees Intellectual Property theft by China as one of the greatest dangers to the US economy and also as one of the most significant economic crimes of the 21st century (IP Commission, 2017: 16).

The relevance of this matter will only grow over the coming decades. The protection of IP has been a hotly debated subject. Intellectual Property is becoming more relevant for economic activity due to the transition to ‘informational

capitalism'. This transition entails a change from the production of tangible industrial goods, to intangible informational goods (Castells, 2006). Other scholars name this transition: the transition to a 'knowledge-based economy' (Gurpinar, 2013: 30). Informational goods have a different production process, in which: "Intellectual

property is more critical than physical property in these productive processes”.

(Zukerfeld, 2017: 247). As the importance of informational goods grows, the

relevance of Intellectual Property in the world economy, and in trade-related issues in particular, can only be expected to grow. As the importance of IP grows, the importance of a credible and well-functioning global IP system grows accordingly. Consequently, the behaviour of China towards Intellectual Property is exceptionally relevant: if a significant economic player like China will continue to infringe IP rights, global IP agreements might lose their credibility towards other countries (Brander et al, 2017).

Considering this relevance, it is necessary to have a good understanding of China's Intellectual Property Regime (IPR). If we understand what drives change in China's IPR, we can make more credible claims about the future of China's IPR. Nevertheless, the existing perspectives on institutional change in China's IPR that the

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literature offers have some analytical blind spots. A theoretical approach that might overcome these blind spots is McNally's Sino-capitalism, which finds its roots in the comparative capitalism literature. Be that as it may, Sino-capitalism is not a theory that was devised to analyse Intellectual Property. Therefore, we have to translate Sino-capitalism into an analytical perspective for Intellectual Property Regimes and assess whether analysing an IPR from this perspective adds to our understanding of institutional change in China's IPR. Therefore this thesis answers the following question: What is the added value of a Sino-capitalist perspective in analysing China's Intellectual Property Regime?

By researching what the added value of a Sino-capitalist perspective is, we can find a complete picture of institutional change in China’s IPR. Therefore, the added value of a Sino-capitalist perspective can also lay the basis for a Sino-capitalist theory of China’s IPR, because it generates new theoretical insights.

To find the added value of a Sino-capitalist perspective towards IP, the following steps will be taken. Chapter 2 contains the literature review. This literature review serves to inform the reader about the relevant debates that this thesis

touches upon and it serves to identify the existing approaches to IPR change in China. Chapter 3 includes this thesis' methodological section and further explains why this thesis must be seen as an ‘exploratory’ work. Chapter 4 will argue why the yet existing perspectives have certain analytical blind spots that can be overcome by introducing the capitalist perspective. Chapter 5 will analyse how the Sino-capitalist perspective analyses certain aspects of the IPR and how that analysis differs from the current perspectives, thereby arguing what the added value of the Sino-capitalist perspective is. Chapter 6 will discuss the theoretical insights that can be derived from the added value of Sino-capitalism. Chapter 7 contains the

conclusion.

This thesis finds that the added value of a Sino-capitalist perspective is three-fold. First, the added value is that the Sino-capitalist perspective finds that every integration into the world economy is different as two factors mediate it. Second, the added value lies in Sino-capitalism's focus on how Guanxi incorporates itself in a changing IPR. Third, the added value is that Sino-capitalism's uncovers that the state is to be seen as a separate entity in the IPR that strategically acts to influence the

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institutions in an IPR and that has its own incentives to control specific categories of knowledge.

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Chapter 2: Literature review

This chapter will discuss two debates in the literature regarding IPR development. The first debate serves to inform this thesis further and to provide some context. Firstly, it demonstrates that it is necessary to analyse how the law is enforced instead of only analysing the letter of the law. Secondly, it brings the argument forward that an IPR in which the law is not (properly) enforced might serve a country's economic growth. This debate is essential to understand the discussion concerning China's non-compliance with IP.

The debates concerning China’s non-compliance provide essential

information for the analysis. The first debate demonstrates that there are two main ways of analysing China's IPR. The second debate builds on to these two ways of analysing the IPR but serves to identify the three existing perspectives for predicting China’s future compliance. This thesis aims explicitly to contribute to this second debate, regarding China's future compliance. Sino-capitalism is introduced to overcome the blind spots that the existing perspectives in this debate have.

2.1 The debates concerning the relationship between intellectual

property and economic development

There has been a debate in the literature about the relation between IP regimes and economic development, and there is a debate about the (quantitative) measurement of IPR's. These two debates are linked and provide helpful insights for this thesis. It is important to emphasise that these two debates are not so much debates, as they are discussions in which the knowledge of the topic evolved throughout the years. Consequently, this section will deal with both debates.

2.1.1. The relationship between economic growth and the IPR

Developing countries were long encouraged to implement a strong Intellectual Property Regime. This encouragement was based on claims that were made by scholars that believed that a strong IP regime would always lead to increased

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technological capabilities and growth (Romer, 1986). Nevertheless, there is a

growing consensus emerging from the literature that: suggests that the relationship

between IPR protection and innovation is not necessarily linear (Peng et al, 2017a:

903). This non-linearity is for example encountered by Hudson & Minea (2013), who find that the relation between IP and innovation rests is dependent on other

variables such as the country's wealth. These findings by Hudson and Minea are part of a larger strand of research that a strong IP regime has a different on developing countries, other examples of such literature is the work of Allred & Park (2007), or the work of Elhanan Helpman who already demonstrated the harmful effects of global IP regimes on developing countries in 1993 (Helpman, 1993).

A more recent account that attempts to clarify why strong IP does not lead to innovation is provided by Sweet & Maggio, who find that strong IP regimes are not positively related to development, but with economic complexity (Sweet & Maggio, 2015: 669-670). Sweet & Maggio therefore confirm findings of other scholars, such as Odagiri (2010: 2), who already argued that developing countries should not follow the TRIPS treaty for optimal results. Papageorgiadis & Sharma (2016: 70) summarise the conclusion of all these findings by stating that the "Empirical evidence suggests a

negative or an inverted U-shaped relationship between strengthening IPR systems and innovation”.

2.1.2. The measurement of IP regimes

The quantitative measurement of IP regime strength can be traced back to the account of Ginarte and Park (1997) who created a framework for IPR strength comparison. The focus of their index was based upon the ‘letter of the law'. Even though enforcement of the law is one of their five of indicators, their analysis is limited to what the letter of the law says about enforcement options: they analyse the burden of proof-reversals1_{, preliminary injunctions}2_{and contributory}

1_{A burden of proof reversal is a legal concept in which the burden to prove the infringement}

of an IP right (e.g. a patent) for the right holder, changes into a burden of proof for the ‘alleged infringer' to proof that infringement did not take place.

2_{Preliminary injunction is a legal measure in which a right holder asks the court to stop a}

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infringement3_{(Ginarte & Park, 1997: 54).}4_{Nevertheless, when the WTO introduced}

the TRIPS agreement as a prerequisite for WTO membership, many countries

harmonised (or were ‘forced' to harmonise) their IP laws with TRIPS (Stoianoff, 2012: 70). This agreement meant that the letter of the law became more harmonised. Even though Park (2008) updated the index, the results that the index generated sat more and more uneasy with (legal) scholars. This unease was caused by the fact that for example, China's IPR's strength was at a level comparable to that of developing countries in 1995, while in 2005, it was comparable to that of the most developed countries (Park, 2008). This growth in IPR strength happened while China still had the reputation of being the world's biggest infringer. This discrepancy between the index and the reality changed the focus of IP measurement indexes.

Many scholars concluded that these discrepancies have to be attributed to the difference between law and enforcement, as in the case of China: “China has

made significant progress on the legislative end but continues to experience severe enforcement problems” (Worldbank, 2005: 326). Later attempts to measure IPR

strength have focused more on the actual enforcement of such laws (Maskus, 2012). This change in focus was fuelled by the insight that: While a strong regulatory IPR

framework may exist though enacted laws, these laws may not be effectively administered and enforced”. (Papageorgiadis & Sharma, 2016: 70). Therefore

Papageorgiadis (2014) concluded that the focus of IP indexes should change more towards enforcement practices (2014: 589). Consequently, Papageorgiadis and Sharma (2016) combine the enforcement indicator created in Papageorgiadis with Park’s assessment of the legal framework. They find that enforcement is a decisive factor in the relation between IP regimes and innovation.

3_{According to US law (35 U.S. Code}_§271(c),_{a contributory infringer is:}_"_{Whoever offers to} sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or an apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer."

4_{What these measures have in common is that they increase the possibilities that an IP right}

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What is to be taken away from these two debates is that the focus of analysis when researching an IPR has shifted from solely analysing the law, towards a focus on analysing law enforcement. Furthermore, these debates are interlinked as they serve as information for one another. This focus on enforcement changed the

measurement of IPR strength. Researchers that focus on the relation between economic growth and IPR strength use this measurement of IP strength. This focus debouches on the fact that it is now mostly uncontested in the literature that

actively enforced IP laws are not beneficial for all countries. These insights are of the utmost importance for this thesis for two reasons. Firstly, the debates show that the focus of analysis should be on how the law is enforced instead of purely analysing the law. Secondly, the debates demonstrate that an IPR in which the law is not (properly) enforced might serve a country's economic growth best. This is essential to understand the discussion concerning China's non-compliance with IP.

2.2 The debate concerning China’s non-compliance with global IP laws

There has been extensive debate in the literature about China's (non-) compliance with the global IP laws. This debate is incited by China's status as the world's largest IP infringer (IP Commission, 2017).

The discussion in the literature can be split up in two debates. Firstly, the debate in which scholars try to explain China’s non-compliance with global IP laws. Secondly, the debate that discusses the future of China’s IP regime.

2.2.1: Why is China non-compliant?

The debate in which scholars aim to explain China's current non-compliance with global IP laws can be split up into two ‘branches'. The difference between the two branches is their level of analysis, as will become clear in this section. It is important to mention that the distinction and categorisation into two branches are not present in the literature.

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consider institutions, but only the first branch analyses how they specifically operate in China.

The first branch focuses on explaining China's non-compliance by analysing the country's institutional IP framework.

Explaining China's non-compliance has been done quite extensively throughout the last decades. Yang (2003) analysed the consequences of a

developing IP system in China. Wang (2004) was among the first to research which institutions foster non-compliance with IP laws. Cao (2015), states that IP regimes are not merely a number of laws or policies, they are an institutional framework: "A

country’s IP law is the main element of a basic institutional environment for IPR; however, IP law itself cannot guarantee effective legal enforcement if legal,

economic, political, social, and cultural institutions are not correctly positioned" (Cao,

2015: 42). Therefore Cao’s analysis of China’s non-compliance focuses on the legal, but also economic and political institutions related to China's IP regime. He argues that the lacking enforcement of intellectual property rights is due to the bad institutions in the country: "The barriers to the formation of a healthy IP

environment in China by legal, economic, political, social, and cultural institutions include: an immature IP legal system, the short existence of a private economy, a shortage of indigenous innovations, an unregulated market, local protectionism, and traditional cultural values". (Cao, 2015: 42-43). In line with Cao's account, Kshetri

(2009) analyses China’s institutional framework and emphasizes the importance of the government as the constructor of IP institutions: “The most severe barrier to the

institutionalization of IPR probably is related to a lack of social and cultural

acceptability of IPR” (Kshetri, 2009: 163). Furthermore, his analysis focuses on the

importance of the perception of IP, both in government, institutions and citizens. He sees the government as a separate entity, which is dominated by the political elite. This elite has a different perception of IP than other actors in society do. Another account that analyses China's IP institutions is provided by Long & Wang (2015), who try to explain lacking enforcement of IP rights by analysing the legal institutions that are in place. Swike et al. (2008) also analyse China's IP framework, but they do this to deliver practical ‘recommendations’ for Western business. Consequently, they

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evaluate why enforcement of IP rights is lacking. (Swike et al, 2008: 499). Another article that emphasises the importance of analysing institutions is written by Li & Yu (2014). They find that China lacks the legal institutions for proper IP enforcement. They find that China's lacking enforcement cannot be explained without zooming in on the specific legal institutions that create non-compliance (Li & Yu, 2014: 406). Another proponent of analysing China's institutional framework is Zimmerman (2013), who explains China's lacking enforcement (and therefore non-compliance with global IP laws) by pointing at the historical development of the IP system

(thereby emphasising cultural and socio-political factors). He focuses on the fact that Chinese institutions have never been enforcing IP, even though the government did implement several campaigns to improve enforcement (Zimmerman, 2013: 147).

The second branch focuses on explaining China’s non-compliance by focusing on China's stage of development instead of its IP institutions.

Where literature on Intellectual Property compliance and the ‘stage of development’ in general tends to consider the fact that (developing) countries may lack the ability to enforce IP (Yu, 2016); the specific literature on China's non-compliance and its stage of development explains China's IPR as a result of lacking incentives instead of abilities. McHardy Reid (2012) focuses on the distinction

between IP producing countries versus IP consuming countries. He argues that there is a relation between the state of development and IP ownership, which makes that China will become a net-producer of IP instead of a consumer. He supposes that there is a ‘threshold of compliance' somewhere at a point on the development/IP ownership scale (McHardy Reid, 2012: 56-58). Chu et al. (2014) apply a

Schumpeterian growth model (that considers how far a country is from the

technological frontier) and compare this with the stringency of the IP regime. They find that China carefully adapts its IP policy to its stage of technological and

economic development.5_{The idea that China is now in a state of development in}

which countries do not enforce IP is also put forward by Raustiala & Springman (2013). They argue that China does not have the incentive to create a strong IP

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regime. Another proponent of this line of thinking is Peng (2013), who puts forward a historical argument that supposes all countries that had to ‘catch-up'

technologically and economically over the years used to infringe Intellectual Property.

2.2.2: Will China become compliant with global IP laws?

As displayed in the previous section, research into China's non-compliance can be categorised into two branches that differ in their focus of analysis. While these two branches do not fundamentally oppose each other, their focus of analysis does have particular consequences for the debate concerning China's future compliance with global IP laws.

The debate concerning China's future compliance can be divided into three perspectives. The distinction between the perspectives is made according to what the author deems to be the most critical driver of change in China's IP institutions. The fact that they consider one ‘driver’ to be most important does not mean that they do not consider other factors.

The three perspectives that are extracted from the literature in this section will be used throughout the thesis. Introducing the Sino-capitalist perspective is an attempt to overcome the analytical blind spots that these perspectives have. The analytical blind spots form the gap in the existing literature that this thesis aims to overcome.

Firstly, the branch that considers economic growth to be the most critical driver of change in IP institutions. In the previous debate concerning China's current non-compliance, a branch of scholars argued that lacking economic development is the reason for non-compliance. That argument can also be used to predict future compliance: when China grows economically, its IP institutions will change accordingly. This is precisely the argument that is made by Peng et al. (2017a, 2017b).

Peng et al. (2017) argue that to understand the current IP situation, we have to look at the history of IP. Institutions make the rules of the game under which firms compete with each other: "Thus a key proposition of the institution- based view

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is that individuals and organizations (such as firms and governments) ‘‘rationally pursue their interests and make strategic choices within the formal and informal constraints in a given institutional framework” (Peng et al, 2017a: 894).

Furthermore, they argue that firms are not merely recipients of these rules, the needs of firms can alter the institutional framework. Consequently, we have to analyse the long-term processes in which the needs of firms change, therefore the institutions eventually ‘follow'. Analysing how these path dependent institutions can transition over a long period is, therefore, their answer to understanding the future of IP (Peng et al, 2017a: 893-895). Their ultimate prediction is that China's IP

institutions will change: “Eventually, China will become an IPR power when its IPR are

pirated outside of China” (Peng et al, 2017a: 903).

The argument Peng et al. (2017) put forward is deeply rooted in the ‘economic perspective’. The logic of their argument is based on incentives that change under economic growth. Institutions are path-dependent, but when the economy grows, and firm capabilities change, institutions will have the incentive to change and will deviate from their institutional paths. Therefore the economic perspective supposes that when the Chinese economy grows, and firms become capable of producing IP (e.g. McHady Reid, 2012), China will start to respect IP.6_{It is}

important to emphasise that this thesis will use 'economic growth' as an umbrella term for a very complicated process that is explained differently by multiple authors. The relation between 'economic growth' and IP revolves around concepts such as 'technological capabilities of firms', 'innovative capacity of an economy' or 'export complexity'. Zooming in on how this process works exactly is beyond the scope of this thesis. Therefore 'economic growth' stands for the process in which an economy develops which changes firm capabilities to produce IP.

Secondly, the branch of scholars that consider China's current institutional framework to be the most critical driver of change in China's IP institutions. This

6_{A more nuanced version of the economic argument is given by for example Yu (2014), who}

argues that authors that focus on culture should ‘consider' the economic argument.

Nevertheless, Peng's argument serves as a better example as their argument is sharper and aimed at diminishing the relevance of other explanations (See for example Peng's (2013)

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argument might seem somewhat tautological, but the point is that these scholars suppose that institutions are path-dependent. The fact that the Chinese IP

institutions are on a particular path holds that they will stick to this path, also under economic growth. That stands in sharp contrast with the branch that considers economic growth to be a reason for institutions to deviate from their respective paths.

This contrast becomes apparent when reading Brander et al. (2017), whose article is written as a reaction to Peng et al. (2017a, 2017b). Similar to Peng et al., they take an institution-based view, in which institutions are path dependent actors that shape the rules of the game. However, they deviate from the ‘economic branch' as they believe the path-dependency is persistent, even under economic growth. Their focus of analysis is rooted in the first branch mentioned in the previous debate (that focuses on analysing institutions), as they argue that China has distinctive institutions that foster non-compliance, such as the structure of the government, the collectivist tradition and Guanxi business networks (Brander et al, 2017: 915). They extend this explanation for non-compliance to the future, by arguing that these specific institutions are different from those of countries that have started to respect IP in the past. In their vision, China's institutions will remain to have incentives that do not support the respect for IP. The only way to make IP institutions deviate from their path is external pressure from other countries (Brander et al, 2017: 911).

The argument that is put forward by Brander et al. is exemplary for this branch that focuses on China's current institutions and supposes that the distinctive path dependence that they are on will not result in compliance with the global IP laws (e.g. Zimmerman, 2013; Swike et al, 2008). An important implication of this vision is the fact that if it ‘matters' that institutions are different in every country, this also means that the paths of these institutions are different per country. This branch will be referred to as the ‘static perspective', which refers to the fact that (Chinese) institutions have certain incentives that will remain to be unchanged over time if foreign pressure does not influence these incentives.7

7_{This thesis refrained from using ‘institutional perspective' or ‘path-dependent' perspective}

since it might confuse because the other approaches also use an institutional perspective that considers path dependency.

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Thirdly, the branch of scholars that consider ‘social norms' to be the most critical driver of change in IP institutions.

Cao (2015) and Kshetri (2009) use a similar focus of analysis as is often used by authors in the ‘static perspective' since they both analyse China's particular institutional framework. Nevertheless, they do not come to a ‘static' conclusion. These scholars argue that China's non-compliance can be traced back to social institutions that foster enforcement problems. These social institutions are not static: when society establishes popular support for IP protection, problematic IP

legal enforcement will completely change. The creation of an innovative nation and the push for indigenous IP will also eventually lead to IPR enforcement" (Cao, 2014:

46). IP enforcement is a social issue, which makes that changes will be slow and cannot be enforced ‘top-down’. Social institutions that have developed over time foster certain social norms, these institutions will only change if popular acceptance for IP changes.

The argument that sees popular acceptance as the most important driver for change in IP institutions supposes that political and economic institutions shall only change according to changes in social institutions. Social institutions form social norms and therefore drive human behaviour. Nevertheless, these institutions are subject to ‘popular acceptance' of IP. So while social institutions shape norms, they are also shaped by what the public thinks of IP. This popular acceptance is most dependent on the question of whether IP is deemed to be beneficial for domestic actors.

Table 1: Conclusion of the existing perspectives

Approach Main argument for the critical driver of IP institutional change

Economic

perspective

IP institutions will deviate from their respective paths when the economy grows which means that the incentives for institutions change

Static perspective IP institutions are static in the sense that they will not change

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that they are on. The only factor that might change this institutional path is foreign pressure.

Social perspective IP institutions will change according to changes in social

institutions. The popular acceptance of IP is the most important aspect that changes these social institutions. This acceptance is most dependent on whether IP is deemed to be beneficial by the population.

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Chapter 3: Methodology and methods

3.1 Theory building

The most critical remark that has to be made is that this thesis does not aim to ‘test' the effect of Sino-capitalism. The goal is to asses China's IPR through a new

perspective, thereby creating new theoretical insights. The nature of the piece can, therefore, be perceived as ‘exploratory’, since it explores Sino-capitalism's added value in analysing China's IPR.

Instead of testing a hypothesis, this thesis is more of an exercise in theory building. Theory building involves the construction of a theory about the relation between two or more concepts. Concepts are the building blocks of a theory (Shoemaker et al, 2003: 15). Theory building is "driven by the desire to explain

something. Before there is a theory, there is usually a theoretical problem."

(Shoemaker et al, 2003: 145). The problem can be practical or theoretical: From any

of these starting points, we can move into some of the processes involved in building theory (Shoemaker et al, 2003: 146).

This thesis explores the possibility of a new perspective that explains China's IPR and specifically what drives change in it. As argued by Kaplan (1964: 309): "we

need not look for the true theory, but countenance and encourage various theories, and without thinking of them only as so many candidates for the single post to be filled" (Shoemaker et al, 2003: 148). Introducing Sino-capitalism as an analytical

perspective to a different debate is not a form of theory building but fits in the same line of thinking. This thesis introduces a new theoretical perspective on a theoretical problem. The theoretical problem is that the existing perspectives do not capture all possible drivers of IP institutional change (as will be argued in chapter 4). What a new theoretical perspective does is that it overcomes the analytical blind spots of the yet existing theories, thereby discovering different potential drivers of IP. This different way of analysing IP is the added value of the Sino-capitalist perspective. Discovering the added value of a capitalist approach tells us what Sino-capitalism can capture, what the existing perspectives do not capture. This added

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value can serve as the groundwork for new theories about IPR change in China because it brings new theoretical insights to the debate.

3.2 Research method and case selection

To discover the added value of the Sino-capitalist perspective and to generate new theoretical insight about China's IPR, this thesis employs a method that contrasts the existing perspectives to the newly introduced perspective and argues what part of the IPR is captured by this new perspective.

Chapter 2.2.2 contains the specific debate to which this thesis contributes. It extracted three different perspectives from the literature that all have a different take on institutional change in China's IPR. The problem in the literature is that on a theoretical level, the existing perspectives that try to explain change in China's IPR have some analytical blind spots. Therefore there is a need for a new theory of change in China's IPR that overcomes these analytical blind spots. Consequently, the forthcoming chapter will introduce a Sino-capitalist perspective that might overcome these analytical blind spots.

The problem is that Sino-capitalism is not a theory that is suitable to apply to IPR directly. Therefore it is necessary to translate Sino-capitalism into a tool through which the IPR can be analysed. Because Sino-capitalism as a concept cannot be applied to IPR, chapter 4.3 extracts three focuses of analysis from the Sino-capitalist theory. These focus of analysis represent the three most critical institutional spheres that Sino-capitalism considers.

Chapter 5 is divided according to these three foci of analyses generated in chapter 4.3. This chapter aims to find the added value of Sino-capitalism by

contrasting Sino-capitalism to the yet existing perspectives. It is necessary to discuss how all 'four' perspectives (Sino-capitalism included) interpret the same

'phenomenon', to contrast these interpretations to each other. By doing this, it becomes apparent how a Sino-capitalist perspective interprets things differently than the other perspectives. After contrasting these interpretations to each other, the sections will continue to explore the difference in the interpretation further. It is

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necessary to analyse the difference further to generate a more specific picture of what the added value is. To accomplish this analysis, the sections will make use of cases (the selection of these cases will be discussed below). Consequently, every section will argue what the added value of the Sino-capitalist approach is and provide an argument about what this added value translates to in analysing the IPR. Chapter 6 contains the discussion. The specific goal of this thesis is to analyse the added value of Sino-capitalism in analysing an IPR. By doing so, it aimed to create theoretical insight. The discussion will be used to generate the theoretical insights that can be derived from the added value that was found. By doing so, it will generate a complete picture of the added value of a Sino-capitalist perspective in analysing China's IPR.

Lastly, it is necessary to discuss the selection of cases in chapter 5. In the analysis of the added value, the thesis will introduce several small ‘cases' that are in essence fragments of China's IPR. These cases are selected on the basis that they problematize the different interpretations of the yet current perspective, thereby presenting the opportunity to demonstrate what the Sino-capitalist perspective adds. This is not to say that the cases are unexplained by the yet existing

perspectives, it simply serves to explore the added value of Sino-capitalism further to analyse IPR change and to make this value more concrete. The cases help

transcend the bigger discussion about institutional change, and they help make the added value more concrete. Therefore the justification for picking these ‘fragments' of the IPR is the fact that they function to further uncover the added value of Sino-capitalism and make this added value more concrete.

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Chapter 4: Theory and the theoretical argument

In chapter 2.2, the debate regarding China's future compliance was divided into three branches that explain change in China's IP institutions. This chapter is devoted to introducing a fourth perspective that sheds a different light on institutional change in China's IP institutions.

Consequently, the chapter offers a conceptualisation of China's Intellectual Property Regime that considers the variety of IP institutions in China. This section is informed by the debate in chapter 2.1. Secondly, it will introduce a Sino-capitalist perspective and argue why this introduction is valuable. Thirdly, it will further elaborate on how Sino-capitalism will be used as an analytical perspective for an IP regime.

4.1 Conceptualization

It is essential to question the exact formation of ‘concepts' (Mair 2008 180-185). Mair follows Sartori's classic 1970's piece by stating that it is important to look at the level of abstraction of a concept. The concept is the ‘basic unit of thinking', before measuring or comparing a concept we need to define what the concept exactly is (Mair, 2008: 179). In this thesis, the concept that is most important is ‘Intellectual Property Regime', as the thesis aims to produce knowledge and understanding of this concept via a new theoretical perspective. However, before discussing the IPR, it is necessary to establish what IP is.

In its broadest sense, Intellectual Property can be defined as ‘creations of the mind’ (e.g. inventions, artistic works, brands) that are protected by the law (e.g. patent, copyright, trademark) (WIPO, 2018). This definition is based upon article 27 (2) of the Universal Declaration of Human Rights, which stipulates that: “Everyone

has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author”. IP creates a right

for the holder of the right, but it also involves a duty for the rest of the world to abstain from using the right (Pagano, 2007). Intellectual Property is essentially a way of ‘controlling knowledge’. This means that the way in which this knowledge is

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controlled and allocated contains a package of ‘political interests’, as it decides who can control what knowledge (Xu Xuan, 2013: 139). Therefore besides the legal meaning of IP, we also have to consider its political meaning.

The conceptualization of IP regime rests on the idea that IPR's are not merely a number of laws or policies, they are an institutional framework: "A country’s IP law

is the main element of a basic institutional environment for IPR; however, IP law itself cannot guarantee effective legal enforcement if legal, economic, political, social, and cultural institutions are not correctly positioned" (Cao, 2015: 42). This is consistent

with how the existing perspectives discussed in chapter 2; see the concept ‘IP regime’.

4.2 The introduction of Sino-capitalism

This section will introduce the Sino-capitalist perspective and argue why this introduction is valuable. Firstly it will argue why Sino-capitalism can be used to analyse Intellectual Property. Secondly, it will argue why it might possess added value in contrast to the existing perspectives.

4.2.1 Sino-capitalism as a tool to analyse Intellectual Property

Sino-capitalism (McNally, 2012) finds its origins in the works of Hall and Soskice (2001) concerning the ‘varieties of capitalism’. Hall and Soskice take an institutional perspective that supposes that a certain type of capitalism sorts an effect on

economic policy. Economic policy is therefore dependent on the certain type of capitalism in a market: the same policy works differently in different capitalisms. Therefore successful policy is different in every country (Hall & Soskice, 2001: 53). Furthermore, they argue that firm strategies follow 'culture', instead of purely developing it (Hall & Soskice, 2001: 12-15).

McNally (2012) extended these varieties of capitalism to create 'Sino-capitalism'. Where the original work of Hall & Soskice portrayed two ideal types (liberal and coordinated market economy), McNally introduces the Sino-capitalist

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economy. Multiple scholars tried to incorporate China into the varieties of capitalism literature (e.g. Peck & Zhang, 2013). For example, Michael Witt (2010) finds that China resembles a Liberal Market Economy in multiple sectors: "In several spheres,

China has the formal trappings of a CME paired with actual practices that are more reminiscent of an LME” (Witt, 2010: 12). Instead of trying to place China on the

CME/LME ‘spectrum', McNally examines: “the basic elements of China’s domestic

political economy by proposing the concept of Sino-capitalism.” (McNally, 2012: 744).

McNally furthermore argues that adopting a political economic approach allows us to capture the ‘logic’ of China’s domestic economy, thereby creating a better understanding of China’s international influence (McNally, 2012: 743).

As discussed in the conceptualisation, the IPR is to be seen as a number of political, legal, economic and social institutions. Furthermore, IP has a significant political and economic meaning that focuses on the fact that it is a means of controlling knowledge. Knowledge is an essential means of production in the ‘knowledge economy' (Gurpinar, 2013). Intellectual Property policy is a means of regulating knowledge, thereby regulating economic activity. The argument by Hall & Soskice is based on the idea that economic policy works differently in different varieties of capitalism due to the different institutional arrangements. It is therefore interesting to look at whether IP policy also works differently in China’s

Sino-capitalist economy.

4.2.2 How Sino-capitalism overcomes the analytical blind spots

This section will argue that the currently existing perspectives have certain analytical blind spots that can be overcome by introducing the Sino-capitalist perspective. To do so, it will firstly discuss the question of the relationship between firms and institutions. By doing so, it will demonstrate that the existing perspectives make certain assumptions about this relation. Secondly, it will argue that (partially based on the assumptions about firms and institutions), the existing perspectives have certain analytical blind spots. Thirdly, it will be arguing that a Sino-capitalist perspective will be successful in overcoming these blind spots.

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An essential component of the varieties of capitalism literature is the question of the dynamic between market actors (firms) and institutions (the rules of the game). Hall & Soskice argue that firm strategies follow institutions; they follow the culture of institutions (Hall & Soskice, 2001: 12-15). These institutions are shaped by the logic of the certain capitalism, as institutions are also complementary to each other. Therefore firms act upon the rules that institutions set. Hall & Soskice discuss that other scholars make different assumptions about this relationship between firms and institutions.

The perspectives that were extracted from the existing literature also make assumptions about the relationship between firms and institutions. Nevertheless, they are not explicit about the assumptions that underlie their analysis of China's IPR. These underlying assumptions need to be discussed, to make clear that they matter.

The economic perspective's argument is based upon the idea that that the IP regime will change when firms become IP producers. Therefore it is based upon the assumption that firms shape institutions. Firms are in need of different IP policy (better IP protection); therefore the institutions will change accordingly. This means that institutions follow the needs of firms.

The social perspective's' argument is based upon the same logic. The

argument rests on the assumption that institutions follow popular acceptance of IP. This popular acceptance is dependent on whether IP is deemed to be beneficial. Therefore the argument is similar: when the needs of firms change due to their changing capabilities, the attitudes of the population become more favourable towards IP, which makes that the institutions change accordingly. Consequently, institutions follow the needs firms.

The static perspective is based upon the idea that China has a distinctive institutional framework that does not support a strict IPR regime, this institutional framework shapes firm behaviour (they make the 'rules of the game'); therefore Chinese firms will continue to infringe IP. This argument, therefore, presumes that firms follow institutions.

So what can be concluded is that these visions of the future of IP policy have different conceptions of how institutions are shaped and how they sort their effect

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on the 'rules' of the game that are followed by firms, while all perspectives do agree that institutions should be the focus of analysis and that these institutions are path-dependent.

Table 2: oversight of the existing perspectives

Perspective Why not

compliant?

Will be compliant? Firms and institutions Economic perspective The institutional IP framework is not compliant because of the stage of economic development China will be compliant when its economy develops further and

Chinese firms start producing more IP than they consume

The needs of firms can alter the institutional framework. Firms are more than recipients. Therefore institutions change when firm-preferences change. Static perspective China's distinctive

institutions are the reason for non-compliance

China will not be compliant with global IP laws in the near future since its IP institutions are path-dependent

Institutions are the rules of the game that shape firm behaviour.

Social perspective China’s institutions foster

non-compliance

China will be compliant when the social norms in society favour IP

The success of shapes these social norms. Therefore firms shape institutions.

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What do the yet existing perspectives lack?

The table above demonstrates that these three visions that are described offer different pictures of what changes IP institutions and about the relationship

between firms and institutions. However, the next section demonstrates that these visions have some analytical blind spots

Both the economic and the social perspective assume that institutions follow the needs of firms. Therefore they do not acknowledge the possibility that the relationship between firms and institutions can be different in every society. However, this argument supposes that institutions will always behave according to what earns the most money for firms. This might be the case in a Liberal Market Economy in which institutions focus on the function of facilitating market

transactions, but that might be different in a Sino-capitalist economy. This stands in contrast to the varieties of capitalism perspective that stresses that economic incentives work differently in different types of capitalism. They do not consider the fact that institutions are complementary to each other and might have a different dynamic that creates different incentives.

That the economic and social perspectives do not consider the differences in domestic economies debouches into the fact that they do not consider the

possibility of different IP trajectories. This seems like a paradox: They do suppose that institutions matter, they think that institutions are path-dependent, but all these paths lead to the same destination. The core of their argument is that

institutions will always deviate from their paths under economic growth/social norm changes to follow the path to a strong IPR.

In conclusion, the economic and social perspectives do not take into account two important considerations. Firstly the fact that economic incentive might work differently in different economies that are guided by a different logic. Secondly, they do not consider that there might be different IP trajectories: all countries will

ultimately follow the same path.

The static perspective does consider the possibility of different IP institutional arrangements: it is the core of their argument. The point of these scholars is that China's institutions are different from those in Western countries; therefore they will not change and foster compliance. The primary driver of change

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in these institutions is foreign pressure. Foreign pressure might affect the incentives for institutions, which changes their behaviour, thereby changing the rules of the game for firms. Nevertheless, the perspective does not consider how institutions change.

Therefore the static perspective lacks an explanation for two things. Firstly it does not consider the fact that there are domestic drivers that cause institutional change. Secondly, it does not consider the possibility that even though institutions are distinctive, they might change towards more compliance with global IP laws under economic growth. The fact that there is more than one trajectory (as

proposed by social and economic perspective) is considered, but on the other hand, the assumption is made that the trajectory will always involve IP infringement by firms.

Table 3: The existing perspectives' analytical blind spots

Perspective What are the analytical blind spots?

Economic perspective Reflection on the fact that institutions might not always follow firms;

consideration of possibility of different trajectories of development with a different ending

Social perspective Reflection on the fact that institutional change might be caused by multiple factors; consideration of possibility of different ending trajectory of IP development

Static perspective Explanation for change in institutions beyond foreign pressure; consideration of the fact that economic growth might have an effect on institutions

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How does the Sino-capitalist perspective overcome the analytical blind spots?

The added value of the Sino-capitalist perspective can be found by analysing how it overcomes the blind spots of the existing perspectives; as it captures something that the other perspectives do not capture.

The economic perspective does not consider different IP trajectories. Furthermore, it does not consider the fact that institutions might not always follow the needs of firms. Sino-capitalism, being part of the comparative capitalism literature, has an opposite view on this. It supposes that institutions shape firm behaviour; and that China has an economy that works distinctively different than other economies. The theoretical lens of Sino-capitalism sheds light on the question of whether the 'Sino-capitalist logic might influence China's IPR'. This creates the possibility to consider whether the Chinese IPR might be on a different trajectory of development, which also possibly leads to a different 'end-game'. The Sino-capitalist perspective does not deny the existence of the relation between economic growth and institutional change, but it allows us to evaluate how China’s institutions respond to this potential driver of change.

The social perspective also doesn't consider different IP trajectories. Furthermore, it does not consider the fact that social norms might not always depend on the needs of firms, or at least that the way in which social norms change differ in every economy. From the Sino-capitalist perspective, social norms and institutions are part of the institutional make-up. Institutions are complementary to each other, in the sense that they follow a similar logic. Therefore, the IPR needs to be analysed by looking at all institutions; therefore the changes in these institutions also need to be analysed through an approach that captures a more complete picture. A political economic approach such as Sino-capitalism analyses how different institutions in the economy complement each other.

The need for the consideration of different trajectories is supported by the fact that this consideration prevails in the literature on China's economic rise. For example, Fligstein & Zhang (2010:9) divide the literature on Chinese (economic) development into eight different classes. Another critique on the ‘institutions follow firms’ assumption is that for example, Peng focuses on the behaviour of firms. However, as argued by Witt & Redding (2014): China has multiple ‘types' of firms

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with different ownership structures. A Chinese ‘firm' might respond differently to the same incentive than an American ‘firm'. Therefore both perspectives miss the fact that they do not consider the possibility that economic incentives and societal pressures have a different impact on institutions, firms and their dynamic.

The static perspective does acknowledge different IP trajectories, but fails to consider incentives for institutional change besides ‘foreign pressure'. It does not deal with the fact that institutional IP change might occur, and that it might be caused by domestic incentives or changing incentives under economic growth. The Sino-capitalist perspective has a similar view of firms and institutions: institutions set the rules for firms. However, Sino-capitalism offers a lens that is also able to capture the dynamics of institutions; and how these institutions influence each other. The Sino-capitalist lens examines institutional changes and analyses how these were affected by economic growth. Therefore Sino-capitalism is better equipped to analyse how China's IPR has been changing over time.

In conclusion, this section argued why it is necessary to explore China’s IPR from a Sino-capitalist perspective; to create more understanding about this regime. What this section demonstrated is that Sino-capitalism might help us grasp a 'richer' and 'completer' picture of what drives change in China's IP institutions. The most important contribution is the fact that it considers how institutional frameworks (e.g. an IPR) might respond differently to the drivers of change. It does not deny the importance of social norms and economic growth as drivers of change, but it a way of analysing how the effect of these drivers is mediated by the distinctive

institutional setting. It takes into consideration the two important drivers of IP change mentioned in the literature, but from a perspective that represents the other (static) side of the debate: namely institutions matter and even though they are path-dependent, they might be on a different path. Therefore it evaluates the possibility of a different IP trajectory that considers the institutional

complementarities in the economy.

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Perspective What is lacking? Added value of the Sino-capitalist perspective?

Economic perspective

Reflection on the fact that institutions might not always follow firms; consideration of possibility of different

trajectories of development with a different ending

Sino-capitalism allows us to analyse how institutions are affected differently in China by ‘economic growth', thereby creating a possibility to see different trajectories. Social

perspective

Reflection on the fact that institutional change might be caused by multiple factors; consideration of the

possibility of different ending trajectory of IP development

Sino-capitalism allows us to look for a more vibrant picture of institutional change in China's IPR that considers the

complementary institutions in China's political economy and considers different possible trajectories of IP

Static perspective

Explanation for change in institutions beyond foreign pressure; consideration of the fact that economic growth might have an effect on institutions

Sino-capitalism takes a similar stance in the fact that China's distinct institutions might matter but allows us to

evaluate how these institutions have changed and whether they sort an effect on IP policy.

4.3 Sino-capitalism as a tool for IPR analysis

This section discusses how Sino-capitalism will be used as a tool for the analysis of China's IPR. It is important to emphasise that this is not an operationalisation, as the goal is not to test the ‘effect' of Sino-capitalism. This section aims to establish the focus of analysis that is to be used in the analytical part of this thesis.

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Previous attempts to stretch the varieties of capitalism are (to the best of the author's knowledge) limited to one attempt made by Asheim (2009), who argues that there are differences between LME's and CME's in the ownership of inventions at research institutes. Nevertheless, Asheim's piece does not evaluate the entire IPR. Therefore it does not guide the focus of analysis when using Sino-capitalism as an analytical tool for the IPR.

Furthermore, there is relatively little literature that offers guidance regarding the analysis of institutional IP frameworks. As discussed in the literature review: IPR comparing is focused on indexes that are based on quantitative measurement. The best piece of guidance is an article by Brousseau & Rossi called "Intellectual Property Regimes: a comparative institutional framework".8_{Brousseau & Rossi state that}

there are three functions of an IP regime: definition, allocation and enforcement. These three functions of an IP regime will serve to inform the focus of analysis. To analyse the IPR from a Sino-capitalist perspective, it is necessary to establish what the focus of analysis will be. McNally’s Sino-capitalism is a concept that represents the basic characteristics of China’s political economy. This section will discuss the specific characteristics of the Chinese economy, which McNally calls ‘institutional spheres’, and extract a ‘focus of analysis’ from each of these spheres. McNally (2012) finds three institutional spheres that are particularly

important: Firstly: rather than relying purely on well-defined and enforced legal

codes, Sino-capitalism makes heavy use of interpersonal relationships utilising Chinese cultural norms that cultivate long-term reciprocal personal relationships, known as Guanxi in Chinese (McNally, 2012: 750). Considering this characteristic, the

importance of Guanxi in China's IP regime will be the focus of analysis.

Secondly, McNally argues that as a result of China’s late development, the state has gained a leading role in fostering and guiding the economy (McNally, 2012: 752-753). Considering this characteristic, the role of the state in China's IPR will be the focus of analysis. By doing so it will focus on the role of the state in enforcing IP rights, but also in allocating IP rights (Bourdieu & Rossi).

8_{This article has not been officially published in an academic journal. Nevertheless, their}

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Thirdly, McNally states that China's rise has happened in a highly globalised world economy. Therefore it absorbed multiple ‘Anglo-American' institutional arrangements as it integrated into the world economy. Considering this characteristic, the focus of analysis will be on how China’s IPR has taken shape during the integration into the world economy.

Beside these institutional spheres, McNally describes three institutional sub-logics in Sino-capitalism. Firstly, the central logic of reproducing a structurally somewhat stable dialectic of counterbalancing institutional spheres: “The best way

to understand Sino-capitalism’s dialectical logic is to focus on how private capital accumulation put pressures on the state to reform and adapt” (McNally, 2017).

Secondly, a deliberately cautious pace of change that avoids radical departures from the past and tries to assure comprehensive state control over the reform process. Thirdly, the interplay of state-centric development planning with local initiatives and policy trials bottom-up. This process generated political space for economic

experimentation and institutional innovation. These sub-logics will serve to further inform the focus of analysis in the three institutional spheres. They are not treated separately in the analysis, as these sub-logics should be visible in the particular institutional spheres as they guide institutional behaviour. The three sub-logics generate the following focuses within the three institutional spheres.

Table 5: foci of analysis

Sino-capitalist characteristic Focus of analysis

The usage of informal business networks

The role of Guanxi in IP

State-led or state-guided capitalism

The role of the state in the IPR

Absorption of globalised institutional arrangements

Hybridization of neoliberal institutional arrangements in the formation of China’s IPR

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Sub-logics of institutions The dialectic between state and private sector, gradual reform pace and the use of policy experiments

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Chapter 5: Analysis of Sino-capitalism's added value

This chapter further explores the added value of Sino-capitalism. Where chapter 4 introduced Sino-capitalism and argued why this approach might matter, this chapter serves to explore the added value in analysing China's IPR. Therefore it considers whether Sino-capitalism captures certain aspects of China's IPR, or specific drivers of change in this IPR, that the existing approaches do not capture. Following chapter 4.3, this chapter is divided into three sections that all discuss one of the institutional spheres.

The chapter commences by discussing the third Sino-capitalist institutional sphere. This section uses the development of China's IPR is as a case. This particular case will simultaneously serve as an introduction to China's IPR. Therefore, the third institutional sphere is discussed first.

Chapter 5.1: Hybridization of liberal institutional arrangements

This section analyses the added value of Sino-capitalist perspective regarding the institutional sphere of hybridization of global institutional arrangements, thereby focusing on the hybridization of neoliberal institutional arrangements in the formation of China’s IPR as in accordance with chapter 4.3.

It firstly discusses the development of the Chinese IPR. Secondly, it will discuss how the perspectives interpret this development. Thirdly it will argue what the added value of the Sino-capitalist perspective is.

5.1.1: Introduction to the development of the Chinese IPR.

From the birth of the PRC in 1949, till the start of the Open Door Policy in 1978, Intellectual Property was utterly absent in China (Mercurio, 2012: 24) (Bruun & Zhang, 2016: 47). From 1978 on the ideology of the government was keener on opening China's economy up to the outside world. There was an internal demand in China to create an IP system to support that would reward creative activities and inventions (Bruun & Zhang, 2016: 45-46). The creation of an IP system was part of a broader political strategy that included signing trade agreements. An important

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trade agreement was the Sino-US trade agreement of 1979. The US delayed the finalisation of this trade agreement because it wanted insurances for better IPR protection in China (Mercurio, 2012: 24). This trade-agreement forced China to grant mutual protection for IP rights; while the country did not even have a proper IP framework (Yu, 2016: 24). More US pressure in market access negotiations

persuaded China to sign the Paris convention in 1985 and the Madrid agreement in 1989. (Yu, 2016: 24-25). Besides these agreements mentioned above, China needed to implement domestic laws to comply with the agreements. In this period China built a legal framework upon four principal laws. The Trademark Law of 1982, the Patent Law of 1984, the Copyright law of (1990) and the Anti-Unfair-Competition Law of 1993 (Shen & Wen, 2016: 70)9_{. These laws are still in place today (Lee, 2016:}

26).

Starting in the late 1990's, China rapidly strengthened all of its IP laws and added regulations regarding IP on plant varieties. (Sheng & Wu, 2017: 70). Shen & Wen argue that there are two primary drivers behind these rapid developments in intellectual property. The first driver was the pressure by the international

community and the US in particular. To be able to join the WTO China needed to amend its IP laws (Bruun & Zhang, 2016: 45). Secondly, China's economy started to modernise during this period, which generated demand for IP measures to facilitate innovation (Shen & Wen, 2016: 71). China recognised that it needed to embrace commercial laws to attract foreign investment and start with its economic transformation (Stoianoff, 2012: 69). These updates of the different IP laws

drastically increased IP protection (Li & Yu, 2014: 406). Therefore besides the foreign pressure, it is also widely accepted that China used this as a strategy to standardise its domestic IP laws (Yu, 2016: 26).

In 2006 President Hu Jintao stressed the need for China to become more innovative; which also entailed the improvement of the IPR (Shen & Wen, 2016: 71). This focus on innovation was necessary in order to facilitate the continuation of economic growth, thereby escaping the middle-income trap: "China also sought to

avoid what policymakers and commentators have described as the ‘middle-income

9_{The Anti-Unfair-Competition law can also be considered to be part of the IP framework as}

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trap’ – the proverbial state of development at which a country is stuck after it has attained a certain level of wealth, but has yet to catch up with its more developed counterparts" (Yu, 2016: 27). In order to facilitate the escape from the

middle-income trap, the state produced the: 'Outline of National Intellectual Property

Strategy' in 2008, which focused on revising the current framework to comply with

TRIPS, harmonising the law and at improving the protection of IP (Shen & Wen, 2016: 71). Furthermore, the Strategy emphasised the need for self-controlled IP, which China calls: "zìzhŭ zhīshì chănquán". (Shen & Wen, 2016: 71) American policymakers have translated this term to 'indigenous intellectual property', which suggests that China aims to develop local technologies at the cost of foreign technologies. Yu (2016: 36) argues that it should be translated as 'independent' IP, which would suggest that the term is focused on creating IP that is 'controlled' by Chinese individuals, firms or government. To facilitate this, China amended its patent law for the third time in 2008. The difference between the two earlier amendments, in 1992 and 2002, was that the Patent law was already compliant with the global IP laws laid down in TRIPS. Therefore, Yu (2016:28) argues that this amendment was the first one that was driven by the domestic need to change the law.

In August of 2013 China amended its trademark law for the third time. The country is still in the process of amending the Copyright law (Yu, 2016: 28).

Nevertheless, China did make a smaller amendment to the copyright law in 2013, on behalf of the WTO dispute settlement body (Li, 2016: 66). With these last changes, China improved its IP laws up until a level that rivals that of the most developed countries, which resulted in the current situation: "On the one hand, advanced

legislation has been completed while the judicial system was still immature and imperfect."(Shen & Wen, 2016: 73).

5.1.2: How to interpret these developments from the different perspectives?

The economic perspective sees institutions as rules of the game on which firms base their rational actions. What emerges from this perspective is that the development of China's IP has gone accompanied by a slightly increased level of IP protection over the years. From the first IP laws in the 1980's to compliance with the TRIPS treaty to

An intellectual property regime with Chinese characteristics? : researching the added value of a Sino-capitalist perspective towards analyzing China's IPR