By now anyone with half a brain who takes an interest in IP will know that China is on the way to becoming a patent superpower. From having no patent law at all just a quarter of a century ago, within the next two years the country looks set to become the world's number one filer of patent applications. By any standards, that is one great leap forward.

A recent article in The Economist claims that at least some of the reason behind the surge in numbers can be attributed to poor examination standards at SIPO, the Chinese Patent office. Examiners, it says, are paid a bonus every time they make a grant, which makes them more likely to do just that; what's more, there are significant incentives for anyone thinking of submitting an application:

... the Chinese government has created an ecosystem of incentives for its people to file patents ... Professors who do so are more likely to win tenure. Workers and students who file patents are more likely to earn a hukou (residence permit) to live in a desirable city. For some patents the government pays cash bonuses; for others it covers the substantial cost of filing. Corporate income tax can be cut from 25% to 15% for firms that file many patents. They are also more likely to win lucrative government contracts. Many companies therefore offer incentives to their employees to come up with patentable ideas. Huawei, a telecoms-equipment manufacturer that craves both government contracts and global recognition, pays patent-related bonuses of 10,000-100,000 yuan ($1,500-15,000).

Tony Chen, a partner in the Shanghai offices of law firm Jones Day, is quoted as saying: "Gems are hard to find in a mountain of junk." But it was ever thus in every country that has a patent system. The truth is that valuable patents are few and far between - not just in China, but everywhere. This is probably why companies across the world offer incentives to employees who develop patentable ideas: there is a logic, though a flawed one, in the idea that the more patents you file the higher the chances of one hitting the jackpot.

As for quality, the picture may not be so bleak as The Economist paints. The benchmarking survey IAM did with Thomson Reuters last year found that 17% of respondents believed that SIPO grants were of a very good or excellent standard, while close to 60% felt that quality was improving. From a standing start 25 years back, that is not bad at all.

In pure patent terms, there is no point in looking for a Chinese smoking gun; there isn't one. As the country's economy develops, it will inevitably mean more filings and there is no reason to believe that quality standards will also not continue to improve or that the courts will not offer adequate protection. Instead, the real issue is that patents do not equate to innovation. So, just because a country files a lot of patents, it does not make it massively innovative. And it is here that China's real challenge lies.

There is no doubt that R&D spending by Chinese entities - both academic and corporate - is rising rapidly. But whether that will lead to breakthrough inventions and the creation of new kinds of products/treatments/technologies that businesses can be built on remains an open question. In a recent blog, the editor in chief of Information Week quotes Vivek Wadhwa, an academic who specialises in the study of innovation: "China is currently excelling in imitation, not innovation ... It has achieved wonders in modernizing infrastructure and its big R&D facilities are a marvel -- but almost nothing comes out of them." And although the country is producing more engineers and scientists than ever before, Wadhwa says, the skill-sets of most of them are not up to international standards.

Wadhwa was also a member of a panel put together by the New York Times earlier this year which was asked to answer the question:"Will China achieve Science supremacy?" Most answered that it could, but that there were significant obstacles in the way. Not least among them the fact that the Chinese state restricts its citizens' access to information and rights to express themselves freely. In addition, can innovation ever be mandated by government? Doesn't history show that innovation occurs when government creates an infrastructure in which innovation can thrive - education, access to capital, rule of law etc - and then gets out of the way? Getting out of the way is not what the state does in China. Culturally and socially, the panellists stated, the country is still a way away from achieving all that it could.

Sometimes it is tempting for those of us in the developed world just to assume that the Chinese juggernaut will mow us all down as it travels the road to global supremacy. But to my mind there is nothing inevitable about this at all. Future progress will not just depend on filing hundreds of thousands of patent applications and awarding high quality grants. To a much greater extent it will depend on things such as the ability to foster entrepreneurship, open up capital, trust people enough to allow them to think and act freely, as well as an acceptance of risk taking and failure. In all these areas China continues to lag behind. If we could appreciate the advantages we currently have - and understand that politically it is going to be difficult for the Chinese to match them - then there is every chance the current status quo can remain in place for quite a while yet. It is a big "if" though, isn't it?

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IP politics, Patents, IP business