In the past two decades, China has been heavily criticized for its inadequate protection of intellectual property rights. Every year, US industries are estimated to have lost billions of dollars due to piracy and counterfeiting in the country. As the International Intellectual Property Alliance (IIPA) stated in its recent Special 301 Report, copyright piracy in China resulted in US$ 3.5 billion of US trade losses in 2008 alone (IIPA, 2009). Of particular concern is the considerable quantity of infringing products that have been exported to other foreign markets. To protect its industries, the United States recently requested the Dispute Settlement Body of the World Trade Organization (WTO) to establish a panel to determine whether China has failed to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).2 The panel report, however, yielded only mixed results. Although China was fittingly criticized for its piracy and counterfeiting problems, it is important to recognize and appreciate the considerable amount of intellectual property reforms the country has undertaken in the past two decades. Since the reopening of its market to foreign trade in the late 1970s, China introduced its first modern copyright, patent, and trademark laws (IIPA, 2007). A decade later, China revamped its intellectual property system in response to US pressure and did so again in preparation for its accession to the WTO (Yu, 2000; 2006a). ... To illustrate the complexity of China's piracy and counterfeiting problems, and the futility of the one-size-fits-all harmonization approach, this chapter begins by highlighting the enormous region-wide and sector-wide disparities within the country and the consequent uneven development of intellectual property protection. It then examines the country's lack of an enabling environment for effective intellectual property protection and points out that many of the existing intellectual property reforms in China have overlooked the importance of factors outside the intellectual property regime. To end on an optimistic note, the chapter documents the significant progress China has recently made in the intellectual property area, in particular those found at the microscopic and quantitative levels.
