In this dissertation, I provide a detailed analysis of patenting activity in China and its regions from 1985 to 2004. Chinese domestic patents are used to analyze China's patenting activity by technological fields and by industrial sectors. Spatial distributions of China's innovative activity are also examined. I find that China's overall technological development in the past twenty years is modest and the regional disparity in technological development is severe. Technological strengths of China are mainly in the low and traditional technological fields, however, China has built up its technological strengths in some key areas, such as biotechnology and organic chemistry. The technological gap between China and industrialized countries is mainly in the hi-tech sectors. I further estimate a patent production function and a knowledge production function at the provincial level. I find that the patents-R&D relationship is well established at the Chinese provincial level and technology contributes positively to industrial growth. In addition, I examine the effects of inter-regional knowledge spillovers on both patenting activity and value added industrial output. I find that there are positive inter-regional knowledge spillovers among the Chinese provinces, but the effects of knowledge spillovers are small and weak, compared to those of more industrialized countries.