Patent and Trademark Protection in China’s Trade: Some Evidence from PPML Local Projections

Abstract This paper examines the link between the usage of intellectual property and China’s international trade. We consider the number of foreign patents registered in China, the patents registered abroad, and the number of foreign and Chinese registered trademarks. We apply PPML regression in the context of the local projections method to estimate the responses of trade flows to changes in the number of registered patents and trademarks over an 8-year horizon. Finally, we use the International Property Rights Index, which is probably the first usage in the empirical literature on the relationship between IPR and trade. We find that: (i) the number of foreign patents registered in China has a negative impact on both imports and exports; (ii) the number of Chinese patents registered abroad exhibit a negative impact on imports decreasing over the horizon of the response, and a negative impact on exports only in the longer run; (iii) the number of foreign trademarks registered in China has an initial negative and then a positive effect on imports in the longer run; (iv) the number of Chinese trademarks registered abroad has no effect on exports and a weak negative effect for imports, but only for long horizons of response. JEL codes: F14, F62, K33, O34