Abstract:    It is a well-established theory that capital deepening is inevitably accompanied with a decline in capital return. But for the past few decades, China managed to maintain high capital return in the process of capital deepening. One of the major reasons that are widely believed in the academic world is the occurrence of technological progress. However, China′s capital return has fallen sharply from 14.76% in 2008 to 5.16% in 2016. The rapid decline of the return to capital has dramatically weakened the investment-driven economic growth, which raises concerns among scholars about the sustainability of China′s economic growth. Does it mean technological progress cannot play its role in promoting China′s capital return anymore? What happens to China′s technological innovation? Nowadays, there is still a large gap between China and developed countries in technological innovation. One important reason is the high R&D risk caused by insufficient intellectual property right (IPR) protection. Although China′s IPR protection has been continuously strengthened, especially after the implementation of the Outline of the National Intellectual Property Strategy in 2008, the return to capital in China has been falling rapidly since 2008. Therefore, it raises the question of whether there is a relationship between the increased IPR protection and the decline of China′s capital return. According to the existing literature review, IPR protection has an important impact on technological innovation, and technological innovation is a key driving force for the improvement of the return to capital in China. Then, can IPR protection become a driving force to promote China′s capital return? Does the theory of "optimal IPR protection" hold in China? At present, scholars mainly focus on the impact of IPR protection on technological innovation, and there is still a big dispute over whether IPR protection could bring technological innovation and whether there is an optimal protection intensity.Based on the Chinese patent database, this paper first constructs the index of IPR protection from three aspects of administrative law enforcement, judicial decision and legal system environment, and examines the effect of IPR protection on the return to capital in China using GMM. Then based on the mediation effect model, this paper tests the transmission mechanism by using three mediating variables. We conclude that the impact of IPR protection on China′s return to capital presents an inverted U-shaped relationship, which is more significant after the financial crisis while the regional heterogeneity is not obvious; China′s IPR protection has unexpectedly passed the optimal intensity and has a restraining effect on the return to capital; IPR protection acts on the return to capital mainly by affecting technology transactions while the transmission mechanisms of R&D investment and technology quality fail; lacking of indigenous innovation has prematurely pushed China into the downward interval of the inverted U-shaped curve when China′s IPR protection is still loose. In fact, China may have the risk of falling into the "IPR protection trap".The above conclusions not only explain the causes of the decline of China′s capital return in recent years from the perspective of IPR protection, but also have important policy implications: First, China needs to accelerate the transformation from imitative innovation to independent innovation, to achieve key technology breakthrough that affects industrial development, which is not only the key to overcome the "IPR protection trap", but also an important measure to increase the capital return in China; Second, Chinese government needs to put emphasis on the promotion effect of the development of the technology market on the return to capital, continuously improve the legal system for technology transactions, give play to the leading role of the market in the allocation of technology resources, and effectively stimulate the vitality of innovative factors; Finally, the formulation of IPR protection policies should aim at promoting independent innovation and improving technological quality. In different development periods, the IPR protection policies should be dynamically adjusted and optimized according to the characteristics of economic development to accelerate the formation of a "quality-oriented" innovation evaluation system, so as to realize the maximization of the promotion effect of IPR protection on the return to capital.This paper may contribute to the literature in the following aspects: First, this paper constructs the indicators to measure the IPR protection intensity of provinces in China based on administrative law enforcement and court law enforcement, respectively, which avoids the defect of GP index that only measures IPR protection from the legislative level; Second, many literatures have studied the driving force of the return to capital from the perspective of economic factors, while our study provides a new institutional angle to explain the causes of the changes of China′s capital return; Third, by using mediation effect model to verify whether IPR protection could influence China′s capital return through R&D investment, technology transaction and technology quality, this paper finds that in addition to paying attention to technology importation, China should also improve the efficiency of R&D investment and implement quality-oriented technology innovation policies to effectively improve the return to capital; Finally, our conclusions have strong practical significance. The judgement that China may fall into the "IPR protection trap" not only contributes to the in-depth understanding of the "optimal IPR protection intensity", but also provides new enlightenment for the improvement of the IPR protection system.

Key words:  capital return, intellectual property right protection, technology quality, technology transaction, R&D investment