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This paper explores key features of China’s patent system, embedding them in a growth model that allows us to explore their consequences for longrun innovation, economic growth, and welfare. We first show that China’s system is characterized by narrow patent protection, reflecting three key features: a strong bias towards incremental innovation, weak patent enforcement, and a decline in the quality of patent examination. Based on these stylized facts, we build a growth-theoretic model to show how narrow patent protection distorts innovation incentives. By skewing R&D efforts toward “incremental” innovation, China’s patent system slows technological progress and lowers national economic growth. These results suggest that strengthening patent infringement damage awards and raising patent application fees could significantly accelerate China’s economic and technological progress.