China's Intellectual Property Theft

An essay on the impact America faces, a reflection on a hypocritical past and response for future collaboration .

This essay highlights what defines technological innovation. What cases have been alleged against China by the United States. The historical framework for how America achieved its own industrial power. And a call to restore a normative sense of trust but verify diplomacy.

A Call for the Return of Normative Distrustful Diplomacy

It was a normal autumn day in Bondurant, Iowa, until a farmer noticed a suspicious looking man walking through his cornfields. In a 911 call, the trespassing suspect was described as wearing a full business suit and appeared to be of Asian descent. When police arrived on the scene, the man introduced himself as Robert Mo, and claimed he was conducting research for a nearby university. Later, it was discovered Robert Mo was actually a Chinese spy attempting to steal seed samples. So begins the recently published book, The Scientist and the Spy: A True Story of China, the FBI, and Industrial Espionage, written by Mara Hvistendahl. This case is one of many which has sparked a shift in American domestic intelligence as the FBI refocused its attention from issues of domestic terrorism to increasingly monitor Chinese economic espionage. In the book, an interview with former FBI China analyst, Paul Moore, details a theory he developed in the nineties whereby, “China relies on large numbers of people, mostly amateurs to gather intelligence ad hoc”.[1] This theory has, over time, grown into the assertion that China developed a societal approach through the use of intelligence services, state owned enterprises, private companies, academics, researchers and an assortment of various agents to steal American innovation and intellectual property. Propagated mostly by American governmental, security and business leaders, this sentiment has recently spread into a large population of the American public, as evidenced by the concern Americans have for China. Recent surveys conducted by the Pew Research Center indicate that 66% of Americans harbor an unfavorable view of China, with 71% having no confidence in President Xi Jinping, and 62% believing that China’s power and influence is a major threat.[2] Due to the potentially devastating international implications this claim could render, it is necessary to critically evaluate its supporting evidence, and analyze whether this claim should be accepted or rejected based on the objective truth.

In order to properly unpack this claim, it is imperative to first define what innovation is. Not all technology is the same - there are two distinct types of technological innovation: basic innovation and applied innovation. The latter refers to technological goods which are used for practical or purposeful uses and can be implemented to improve upon or recycle previously existing technology. A simple example of applied innovation is the application of Einstein’s equations in the Theory of Relativity to build the essential pieces of a GPS. In this domain of technological manufacturing, China enjoys an economic advantage over the United States. On the other hand, the United States holds and economic advantage in basic innovation. Discovered mostly through complicated scientific research, basic innovations are very abstract and initially appear to have little practical use; case in point, the research Einstein conducted which led to his formulation of the Theory of Relativity is considered basic innovation.

With the differences of technological innovation understood, it is necessary to recognize which state actors are making claims about China’s purported tech theft, and what exactly those claims entail. A report released by the White House Office of Trade and Manufacturing Policy titled, How China’s Economic Aggression Threatens the Technological and Intellectual Property of the United States and the World, claims the, “Chinese government is implementing a comprehensive, long term industrial strategy to ensure its global dominance. Beijing’s ultimate goal is for domestic companies to replace foreign companies as designers and manufacturers of key technology and products first at home, then abroad” (1).[3] Done through imposing high tariffs on American imports, the subsidizing of both Chinese State-Owned Enterprises and manufacturing (typically from cheap energy loans with no health or environmental standards), a lockdown of Chinese natural resources and theft of technology and intellectual property from either cyber-espionage, forced tech transfer or physical theft are all cited as ways China economically cheats in the report (1-2).3 Due to its competitive disadvantage in basic innovation and its ambitions of becoming a technological powerhouse, China certainly has an incentive to steal information. However, unbiased evidence must be gathered and examined in order to prove China’s illicit practices.

Investigations led by the United States have revealed data which shows proof that China has indeed conducted economic espionage, although some statistics have been rejected as faulty evidence. For instance, in the report released by the White House Office of Trade and Manufacturing Policy, it was found in a 2012 study of cyber intrusions that Verizon LTE, in cooperation with 10 contributing private organizations and government agencies, “analyzed over 47,000 security incidents that resulted in 621 confirmed data disclosures and at least 44 million compromised records. Of the data disclosures that focused on economic espionage 96% of the cases were attributable to threat actors in China” (3).3 The inclusion of private organizations in this research strengthen the data’s reliability. However, in another report led by the United States Trade Representative and congress, titled, Findings of the Investigation into China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974, such data reliability is dubious. This report cites a recent US-China Business Council survey, claiming, “19 percent of responding companies stated that in the last year they had been directly asked to transfer technology to China. Of those, 33 percent said the request came from a central government entity and 25 percent that it came from the local government” (22).[4] This statistic was rejected in another report published in the journal China and the World Economy, by Yongding Yu, a Senior Fellow at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. His report, titled A Trade War that is Unwarranted, found, “no hard evidence (e.g. documents, recording or witness testimonies) was provided to support these claims. As we do not know how many companies were surveyed, the result ’19 percent of responding companies’ holds no significance. We can, however, safely assume that those that fail to respond harbor no grievances against China on the issue of forced technology transfer” (46).[5] Although the final inference that companies who failed to respond, “harbor no grievances against China”, is a claim which is not supported with sufficient evidence itself (and is most likely the result of inherent biases Yongding Yu, a Chinese academic, has) the rejection does illuminate valid issues with data gathered by the US-China Business Council. Examining the actual survey conducted by the US-China Business Council reveals that Yongding Yu was correct in his factual analysis. The survey does not provide citations for its sources or data, nor does it provide a list or number of businesses surveyed. It simply states grandiose sounding data, such as, “45% of companies are somewhat concerned about Chinese data flow restrictions and cybersecurity, while 37% of companies are very concerned” (11).[6] None of these statistics are backed with hard evidence in the survey report, rendering them as misleading information. While evidence has been produced which confirms China’s economic espionage, many reports have also been released condoning China yet are based upon unsound research.

Economic espionage is certainly not a new practice in international politics, and it is somewhat hypocritical of the United States to condone China so harshly of spying when much of America’s economic strength came from its industrial theft of Great Britain’s manufacturing prowess. For instance, in an article written by economic journalist Paul Wiseman, titled In Trade Wars of 200 Years Ago, the Pirates were Americans, strong parallels to the Robert Mo case are made. Much like Robert Mo’s disguise as an agricultural researcher, Samuel Slater, after apprenticing for a leading British industrialist, disguised himself as a farmer and sailed to Rhode Island where he revised the machinery necessary for cotton spinning. This revision was based upon his time studying British technology during his apprenticeship. He was later dubbed the ‘father of the American Industrial Revolution’.[7] However, this would certainly be categorized as illegal tech theft today. Another major parallel is between the Thousand Talents Plan and Alexander Hamilton’s authorization of Treasury payments in 1791 which subsidized the living expenses of English weavers who were paid to replicate the British spinning machine for the United States. At the time, America was an agrarian nation lacking in skilled workers. Alexander Hamilton, a founding father who sought to make America a global manufacturing powerhouse, said in 1791 that the United States needed to, “procure all such machines as known in any part of Europe”.7 The American government’s discernible payments to British citizens for technological secrets is perhaps even more egregious than China’s Thousand Talents Plan. Started in 2008, this plan was a Chinese recruitment program which sought to bring Chinese researchers and western scientists to China in order to conduct research in state funded laboratories. This program is quite common - Canada has approximately 150 similar programs. However, the National Institute of Health and other agencies have cited numerous ethical breaches in China’s plan.[8] If global communication was as advanced in 1791 as it is today, Great Britain would certainly have accused America of economic espionage as well.

There is no doubt that China has and is conducting economic espionage against the United States. It is also clear that the United States has made accusations against China based upon unsound evidence. To avoid more international conflict, clearly defined economic practices must be agreed upon and enforced by both countries – this will only happen through peaceful diplomatic practices and a buildup of trust, not the polarizing divisive political narratives which plague both countries today.

[1] French, Howard W. "'The Scientist and the Spy' Review: Agent Running in the Field." The Wall Street Journal. New York, New York, 9 Feb. 2020. Accessed 2 Apr. 2020. [2] Kat Devlin, Laura Silver, Christine Huang. "U.S. Views of China Increasingly Negative amid Coronavirus Outbreak." Pew Research Center. 21 Apr. 2020. Accessed 23 Apr. 2020. [3] White House Office of Trade and Manufacturing Policy. How China's Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World. The Conservative Treehouse. June 2018. Accessed 9 Apr. 2020. [4] United States, Congress, United States Trade Representative. Findings of the Investigation into China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974. 22 Mar. 2018. Accessed 9 Apr. 2020. [5] Yu, Yongding. "A Trade War That Is Unwarranted." China & World Economy, vol. 26, no. 5, 13 Sept. 2018. Wiley Online Library. Accessed 9 Apr. 2020. [6] U.S. - China Business Council 2017 Member Survey. U.S. - China Business Council. Accessed 11 Apr. 2020. [7] Wiseman, Paul. "In Trade Wars of 200 Years Ago, the Pirate Were American." AP News, 28 Mar. 2019. Accessed 9 Apr. 2020. [8] Brumfiel, Geoff. "Harvard Professor's Arrest Raises Questions about Scientific Openness." NPR, 19 Feb. 2020, Accessed 2 Apr. 2020.

Chinese Intellectual Proerty Theft Essay
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