The Global Innovation Index ranked the country fifth - two spots higher than past year - and once again the top in Asia.
A higher ranking in the report means better economic development and richer innovation-prone environments.
Rounding out the overall top ten behind Sweden were the United Kingdom, Singapore, the United States, Finland, Denmark, Germany and Israel.
"China's rapid rise reflects a strategic direction set from the top leadership to developing world-class capacity in innovation and to moving the structural basis of the economy to more knowledge-intensive industries that rely on innovation to maintain competitive advantage", says WIPO Director General Francis Gurry. China climbed to 17th from 22nd place previous year, according to the ranking.
Africa's most innovative economies were able to attract higher foreign direct investments (FDI) that translated into more jobs for the youth and increased revenue streams to support social sectors like education and health, although investments in ICTs and creative industry were behind modernization of economies in sub-Saharan Africa.
South Africa topped the list of the most innovative economies in Africa, followed by Mauritius and Kenya respectively, courtesy of their policy incentives and investments in modern technologies, skills upgrade and scientific research.
Despite being ranked on the lower end, India remains the top performer in the lower middle-income group, where it takes the secured fifth spot.
India ranks well in a number of important indicators: productivity growth, exports of information and communication technology and services.
"Over time, a number of emerging economies stand out for being real movers and shakers in the innovation landscape", stated Soumitra Dutta, Former Dean and Professor of Management at Cornell University.
The report stated that China's rapid rise in the rankings over the last few years had been spectacular and that it showed the way for other middle-income economies - although only Malaysia, now 35th in the rankings, continued to edge closer to the top 25. "Other interesting cases are India, Iran, Mexico, Thailand and Viet Nam which consistently climb in the rankings".
It has also outperformed on innovation relative to its GDP per capita for eight years in a row.