Analysis of the Correlation Between Intellectual Property Trade and Indigenous Innovation in China

Developing intellectual property (IP) trade helps enhance the level of opening-up, promotes synergy between international supply chains and industrial chains, facilitates integration into global innovation and industrial chains, and fosters open innovation. As an important growth driver for international trade and the world economy, leveraging IP trade to better propel Chinese enterprises to occupy the commanding heights of the global innovation chain holds significant importance for accelerating China's process of building an innovative nation. To explore the correlation and dynamic equilibrium between IP imports, IP exports, and indigenous innovation, this study employs data on China's intellectual property imports, exports, and indigenous innovation from 1995 to 2021 as its sample, selecting annual IP royalties imports, IP exports, and patent application volumes as proxy indicators for endogenous variables. A vector autoregressive (VAR) model is constructed for impulse response and variance decomposition analysis. The results show a stable, long-term relationship between China's IP trade and indigenous innovation. IP imports are a significant factor influencing China’s indigenous innovation, and this impact is growing. Meanwhile, indigenous innovation in China also promotes IP imports and exports to a certain extent, with a stronger effect on exports. IP imports and exports influence each other, especially with imports impacting exports. These findings provide insights for China to formulate differentiated innovation strategies and trade measures for different periods.