Dear Readers, Strategists and Game-Changers,
Hope you are doing great!
Following our discussion on the Chinese Quantum IP Landscape (see dedicated articles here and here), I want to share with you valuable insights regarding the strategies and management of Intangible Assets in China.
So buckle up and enjoy!
Intangible assets – e.g. patents, trade-secrets, software, data, R&D, designs, brands, organizational know-how, human talent, etc... – have become critical drivers of value and growth in today’s knowledge economy[1]. In fact, across major economies intangible investment now makes up a larger share of GDP than traditional tangible investment: about 13.6% of GDP in 2024, overtaking tangible capital formation at ~11.1%[2]. This reflects a long-run surge in intangibles, which grew over 3.7× faster than physical assets from 2008–2024[3]. As the Director General of WIPO recently noted, we are “at the threshold of an IP-driven economy where intangible assets are becoming the primary source of value creation.”[4] In short, although invisible, intangibles (intellectual property, knowledge, and innovation-based assets) now fuel competitive advantage, high-value jobs, and productivity gains in modern economies[5].
China’s Intangible Asset Landscape in 2025
Rapid gains in innovation intangibles:
China has dramatically ramped up its investment in innovation and knowledge assets over the past decade. By 2024, China’s annual R&D expenditure reached ¥3.6 trillion (≈$506 billion), growing ~8.9% YoY and bringing R&D intensity to 2.69% of GDP[6][7]. This makes China the world’s second-largest R&D investor (with one of the fastest growth rates among major economies)[8].
A direct outcome is China’s emergence as an intellectual property powerhouse: in 2024 China’s patent office received 1.8 million patent applications – over three times the number filed in the US[9]. China has led the world in patent filings for several years, and also dominates trademarks and industrial design filings, reflecting an intangibles boom. In the cultural and entertainment arena, a vibrant “IP economy” has taken shape, converting intangible cultural assets (stories, characters, brands) into commercial products.
For example, the Chinese toymaker Pop Mart’s character Labubu went viral globally, driving the company’s revenue up ~170% in early 2025, and a single rare Labubu doll auctioned for over ¥1 million[10][11]. Such cases illustrate how China is monetizing creative IP and tech-driven content, from blockbuster films and video games to collectibles, as new intangible assets in its economy.
Intangible investment patterns and gaps:
Despite these advances, China’s intangible investment profile still differs from that of more developed economies. Research shows that Chinese firms allocate heavily to certain intangibles (like software and ICT-related R&D), often alongside big hardware investments, but under-invest in areas like brand development, organizational capital, and training[12].
For instance, China’s industrial sector was already spending a substantial 14% of its value added on intangibles by 2013 – roughly 70% of the US level in industry and even slightly above the UK’s share[13]. However, much of this was skewed toward computer software and tech, suggesting limited accumulation of brand equity, proprietary design, and managerial know-how[12].
In contrast, services in China have lagged on intangible investment. As of 2013, China’s service industries spent only about half as much on intangibles (as a share of output) as the US or UK[14]. A striking example is the retail and wholesale sector: US companies invest around 5.7% of their value added into intangibles (especially branding and customer insights), whereas Chinese firms invest a mere 1.21%[15]. The gap is almost entirely in brand equity – U.S. retailers devote ~5.1% to brand-building versus just 0.2% in China[15]. This paucity of brand investment means Chinese consumer businesses often compete on low price rather than intangible value, highlighting room for improvement.
Macroeconomic contribution:
Overall, China’s intangible investment has grown to a significant scale in absolute terms – high even relative to some advanced economies – yet remains proportionally lower than in the wealthiest economies. Analysts note that China “has spent a much larger amount on intangibles (as % of GDP) than other countries at similar development levels… but still far less than some of the wealthiest countries.” Moreover, China’s spending pattern “still relies mostly on conventional fixed asset investment,” resembling a developing economy[16].
In other words, despite rapid increases in knowledge investment, China’s growth model is still catching up in the shift from tangible-heavy expansion (factories, infrastructure) to an intangible-rich economy. This transition is crucial: after decades of labor-intensive growth, China is now facing rising wages and slowing industrial productivity, so future growth will depend on boosting total factor productivity via intangibles[17][18]. Better leveraging intangible assets – from indigenous innovation to stronger brands and service quality – is seen as key to China’s goal of higher-quality, innovation-driven development.
Strategic Management of Intangible Assets in China
National strategies and policies:
The Chinese government has recognized the strategic importance of intangibles and integrated them into national plans. Since the National IP Strategy Outline of 2008, China has encouraged enterprises to create and commercialize intellectual property, including through IP transfers, licensing, and using IP as loan collateral[19].
Under the current 14th Five-Year Plan (2021–2025), Beijing explicitly calls for improving the intangible asset valuation system and establishing management mechanisms that combine incentives with supervision[20]. The plan also mandates building public service platforms to strengthen IP protection and utilization, signaling a top-down commitment to nurturing intangible assets[20].
A flagship industrial policy, Made in China 2025, places technological innovation at its core, aiming to upgrade manufacturing via investment in R&D, talent, and intellectual property in strategic sectors[21]. These policies reflect China’s state-led approach to intangibles: setting targets for innovation, funding R&D (including basic research which saw 10–17% growth in 2024)[22], and incentivizing patents and standards in cutting-edge fields (AI, 5G, biotech, etc.).
Strengthening IP protections:
In tandem, China has moved to fortify its legal and regulatory framework for IP – a critical aspect of managing intangible assets. In recent years, specialized IP courts have been established in major cities, trademark and patent laws were amended to impose stricter penalties for infringement, and enforcement campaigns against counterfeiting have intensified[23].
These steps address long-standing concerns (China has been cited in USTR Special 301 reports for IP enforcement gaps[24]) and also serve China’s own interest as its firms develop valuable IP. However, geopolitical frictions (e.g. U.S.–China trade tensions) risk complicating progress: a full trade war could undermine cooperation on IP enforcement, potentially prompting China to relax IP crackdowns or even threaten foreign IP rights in retaliation[25][26]. By and large though, China’s trajectory has been toward stronger IP regime domestically – an essential foundation for an innovation-driven economy.
Intangible asset financing and valuation:
A notable area of progress is in monetizing and financing intangibles. China has promoted IP-backed financing to help companies leverage their patents and trademarks for capital. This effort is yielding impressive growth: in 2023, Chinese enterprises obtained ¥853.99 billion (+$120 billion) in loans via patent and trademark pledges, a 75.4% increase from the prior year[27]. And in 2024, banks issued another ¥255.6 billion in IP-backed loans (up 33% YoY)[28].
Thousands of firms – many of them innovative SMEs – have benefited from this infusion of credit using intangibles as collateral. That said, challenges remain in how to accurately value IP assets and manage default risks (i.e. disposing of specialized IP if a loan goes bad)[29]. To address this, China is working with international experts on developing robust valuation methodologies and registries. The overarching goal is clear: turn dormant IP into financial assets that can fuel business growth. By improving the valuation, transparency, and market trading of intangibles, China aims to unlock more economic value from its innovation output.
Data as a new intangible asset:
In the digital era, data itself has become a strategic intangible resource, and China is pioneering approaches to manage and capitalize on it. In 2025, China began piloting a legal framework to treat processed data as a form of IP asset that can be registered, licensed, and traded under state oversight[30][31]. New regulations (first trialed in Beijing, Shanghai, Shenzhen, and other regions) allow companies to register certain anonymized, structured datasets with IP authorities, obtaining certificates that confer usage and commercialization rights[32][31].
This state-led data property rights regime – supported by the new National Data Administration and CNIPA – is unique globally. It seeks to encourage businesses to invest in data collection and cleaning (knowing they can monetize it), while still enforcing stringent data security and privacy rules[33][34].
By formally recognizing processed data as an intangible asset, China is attempting to balance innovation with control, and to create markets for data trading and data-driven services. In comparison, the US lacks a unified data-as-property system, relying on sectoral laws and private contracts[35]. China’s approach, therefore, highlights a strategic willingness to use law and pilot programs to convert frontier intangibles (like big data and AI training sets) into economic assets under governance[36].
The “IP economy” and brand-building:
China is also actively cultivating an ecosystem to develop homegrown brands, content, and cultural IP – areas that have historically been weaker intangible assets for China. Industries such as film, TV, gaming, and publishing are now seen as critical avenues for intangible asset creation (sometimes called the “IP economy” in China)[10]. With government support, companies are transforming literature and folklore into intellectual property for modern audiences, often using advanced technology. A case in point is the hit video game Black Myth: Wukong, which reimagines a classic Chinese myth using cutting-edge graphics and became a global bestseller in 2023[37][38]. Successes like Ne Zha 2 (China’s highest-grossing film) are spawning entire chains of merchandise, toys, and spinoff products, multiplying the value of the original creative IP[39].
Analysts note that China is trying to build a full industrial chain around original IP – from online literature to cinema to retail – emulating models like Disney/Marvel’s unified universe to maximize IP value across platforms[40][41]. The government’s cultural development plans explicitly promote the “creative transformation” of traditional culture and better protection of intangible cultural heritage, turning these into economic assets in tourism and entertainment[42].
All of these efforts reflect a strategic intent to boost China’s soft power and brand capital, so that Chinese intangible assets (be it a tech patent, a consumer brand, or a fictional character) can hold their own in global markets.
The US Intangible Economy: A Comparison
The United States provides a useful benchmark for understanding China’s intangible asset trajectory. The US is currently the world’s most intangible-asset-intensive economy, with roughly 90% of the value of its top 15 listed companies consisting of intangible assets[43]. (Think of firms like Apple, Microsoft and Google – whose market valuations overwhelmingly derive from software, patents, brands, and other IP rather than physical factories). American businesses and investors have long recognized that intangibles drive profitability – a fact underscored by S&P 500 companies’ market capitalization being largely tied to intellectual capital.
On a macro level, U.S. intangible investment as a share of GDP is among the highest globally (Sweden slightly leads in intensity, but the U.S. far outstrips others in absolute spending)[44][45]. By 2024 U.S. firms invested over $2.3 trillion in intangibles (roughly 15% of GDP, per available data), helping the U.S. maintain leadership in fields from software and pharmaceuticals to entertainment[44][46]. Notably, U.S. intangible investment surged over 5× faster than tangible investment from 2020–2024, as companies doubled down on R&D, software, and data even during the pandemic recovery[47][48]. This has meant that intangibles largely drove U.S. capital formation in recent years – cushioning overall investment growth despite slowdowns in brick-and-mortar projects[49][50].
Several factors differentiate the U.S. approach:
First, American firms place heavy emphasis on marketing, design, and organizational innovation – areas of intangible capital that Chinese firms are only beginning to develop. For example, U.S. retail, finance, and tech companies spend heavily on branding, user experience design, supply-chain know-how, and other non-technical intangibles, which has translated into strong customer loyalty and premium pricing power. The stark contrast in retail brand investment (5%+ of value added in the US vs ~0.2% in China) was noted earlier[15]. This contributes to higher productivity in U.S. service sectors, whereas China’s services productivity remains lower partially due to weaker intangibles[51][15]. Second, the U.S. benefits from a mature IP protection regime and market-based commercialization system.
Decades ago, the U.S. championed high global IP standards (through treaties like TRIPS) to protect its innovations[52]. Domestic laws provide strong enforcement and the court system (e.g. specialized federal courts for patents) gives confidence to IP owners. This legal infrastructure, combined with deep capital markets, allows American innovators to monetize IP via licensing, tech transfer, or attracting venture investment. By contrast, China until recently had a reputation for weak IP enforcement and has only lately built comparable legal mechanisms[24][23].
Another contrast is market orientation vs. state orientation:
U.S. intangible asset growth has largely been driven by private sector initiatives – entrepreneurs, universities, and companies in a competitive market – with the government setting broad rules and funding basic science but not directly steering specific outcomes. China’s model has been more state-guided, with targets for patent counts, subsidies for R&D in strategic industries, and government orchestrating collaboration (for instance, state-backed labs or incubation programs).
Each model has strengths: the U.S. approach excels at producing world-class brands and breakthrough startups in a free-market system, while China’s approach can mobilize massive resources quickly for priority fields (e.g. Quantum, AI or renewable energy) and build domestic intangible capacity (often via technology transfer or indigenous innovation campaigns).
However, China’s quantitative gains in IP sometimes outpace qualitative gains – for example, Chinese inventors file far more patents in areas like AI than Americans, but U.S. patents still tend to be cited more frequently on average (indicating higher global impact per patent)[53].
Chinese brands, likewise, are rising in value (companies like Tencent, Alibaba, Huawei have become globally recognized), yet they still trail the global brand rankings dominated by U.S. and European firms.
In summary, the U.S. enjoys an incumbency advantage in the intangible economy: a culture of innovation and brand-building, strong institutions for protecting IP, and a large base of intangible-rich industries. China is rapidly catching up by scaling its innovation output and instituting reforms, but it faces a learning curve in maximizing the productivity of intangibles – i.e. turning patents into truly market-leading technologies, or turning creative ideas into global franchises. The two countries’ approaches also increasingly intersect: as IP has become a geo-economic battleground, both are racing to secure leadership in critical intangible assets (from semiconductor designs to blockbuster movies). Indeed, control over the “intangibles that drive modern economies” – patents, know-how, brands, and data – lies at the heart of U.S.–China economic competition today[54][55].
Strategic Recommendations and Outlook
For China to fully capitalize on intangible assets and propel sustainable growth, several strategic steps are advisable:
Broaden and Deepen Intangible Investment: Chinese firms (especially in services and consumer sectors) should increase spending on high-value intangibles like brand development, design, and employee training. Greater investment in these areas will help move industries up the value chain – shifting competition from price-cutting to differentiation and innovation. The massive gap in brand equity investment between Chinese and U.S. companies[15] is a clear opportunity: by building stronger domestic brands and marketing capabilities, Chinese businesses can capture more value both at home and internationally.
Focus on Quality and Impact of IP: Rather than just aiming for sheer numbers of patents or trademarks, China should incentivize higher-quality innovation that yields globally competitive technologies and products. This includes improving R&D efficiency, protecting trade secrets and know-how, and fostering a culture of creativity in addition to technical invention. Aligning patent incentives with real commercial outcomes (e.g. encouraging patents that are highly cited or core to standards) can ensure China’s burgeoning IP portfolio translates into economic gains. It also means continuing to support basic research and “moonshot” projects that can lead to truly novel breakthroughs, not only incremental improvements.
Enhance Intellectual Property Protection: Sustained improvements in the IP regime are essential. China should continue strengthening enforcement against infringement and piracy – through stricter penalties, more resources for IP courts and customs, and better legal mechanisms for patent disputes. A robust IP environment will boost investor confidence in Chinese innovations and attract foreign technology investment as well. It will also encourage domestic entrepreneurs to invest in intangibles if they trust that their IP can be defended. Recent steps (new laws and courts) are positive[23], and should be followed through with consistent enforcement across all regions.
Improve Intangible Asset Valuation and Financing Mechanisms: To integrate intangibles fully into the economy, China needs mature markets and institutions around them. This means developing standardized methods to value IP and data assets, expanding IP exchange platforms, and training financial institutions in lending against intangibles. Ongoing pilots in IP-backed lending should be scaled up, while addressing challenges like information asymmetry in IP value[29]. An improved intangible asset evaluation system (as outlined in the 14th Plan) will help companies realize the market value of their IP and attract capital[20]. Over time, China can aim for a situation where a tech startup in Shenzhen can as readily borrow against its patents or data sets as a factory in Ningbo can against its land and equipment.
Leverage Data and AI Intangibles with Balanced Regulation: China’s innovative approach to treating data as an IP-like asset should be refined and possibly standardized nationwide if pilots prove successful. Clear definitions of data rights, along with privacy safeguards, will encourage businesses to invest in big data analytics and AI, knowing they can own and monetize the resulting datasets[31]. At the same time, China should remain mindful of global norms and interoperability – aligning its data governance (where feasible) with international standards will facilitate cross-border data flows and trade. Given China’s huge data-generating population and AI industry, excelling in data-driven intangible assets could be a major competitive edge if managed wisely.
Cultivate Human Capital and Organizational Know-How: Intangible assets ultimately depend on human skills and institutional quality. China should continue to upgrade its education and vocational training systems to produce the creative talent needed for an innovation economy. Equally, Chinese firms (especially those emerging from a state-owned legacy) can benefit from adopting international best practices in management, corporate governance, and R&D portfolio management – essentially building their organizational capital. This often overlooked intangible (the efficiency of a company’s processes and culture) can contribute one-third or more of total intangible investment in advanced economies[56][57]. Chinese companies that invest in management systems, agile organizational structures, and employee know-how will likely see payoffs in productivity.
Foster Global Collaboration and IP Ecosystem Integration: Finally, as China rises in the intangible economy, it should actively participate in global innovation networks. This means both learning from abroad (e.g. studying how U.S. firms successfully build global brands or monetize research) and contributing to international standards and research collaborations. Chinese and American interests need not always clash in intangibles – there are areas for win-win cooperation such as joint research on climate tech or mutually recognized IP protections. Embracing global best practices will also help Chinese intangible assets gain wider acceptance. For instance, Chinese media franchises drawing on cultural heritage could follow the Marvel model of cross-platform development[41], and Chinese tech firms can engage in international patent pools or open-source projects to boost their credibility.
In conclusion, intangible assets are increasingly the battleground on which economic prosperity and national competitiveness are decided. China has made impressive strides in building its intangible asset base – from world-leading patent filings to a booming digital innovation sector – and it is steadily narrowing the intangible gap with the United States.
Yet important challenges remain in shifting from an investment-heavy, tangible model to a more innovation-driven, intangible-rich economy. By implementing strategic reforms and investments as outlined above, China can unlock the full potential of its intangibles. This will not only support its domestic goal of higher-quality growth and productivity, but will also shape the landscape of global competition. The U.S.–China rivalry in technology and IP will likely intensify, but it also spurs both nations to elevate their game.
For businesses and policymakers, the clear lesson of 2025 is that intangible assets are no longer “intangible” to the economy – they are concrete determinants of success, and effectively managing them is now at the heart of economic strategy[54][43].
