Biden appears no better able than his predecessors to stop Beijing’s technology theft

America and China have long had a contentious trade relationship. Besides the ever-present trade imbalances, a major source of tension arises from China’s continued efforts to acquire American technology and trade secrets, sometimes by harassment, sometimes by more illicit means. For decades, American business has complained to Washington about this, and every president since Ronald Reagan has made efforts to change Beijing’s practices. All these efforts failed. The Biden administration looks set to follow that pattern. In fact, this White House has made almost no effort to fix things.

Every nation, every business tries to obtain the trade secrets and technological advantage of its competitors. This is why governments and international agreements enforce patents and copyrights, as well as recognized trademarks. Because Beijing has largely ignored these international norms and laws, businesses have turned to Washington for help instead of courts and international agencies.

Beijing’s most visible means of acquiring technology and secrets is its insistence that any foreign firm operating anywhere in China must have a Chinese partner to whom it must transfer its trade secrets and technology. Although not strictly illegal, Beijing’s insistence goes against international norms. Even more disadvantageous for American businesses is the tendency for these secrets and techniques to leak from their partners, so that other Chinese firms, including state-owned enterprises, as well as the designated partner, often use these secrets and techniques to overtake the original American innovator.

The U.S. Trade Representative has documented how Chinese firms will buy high-tech American equipment and, despite patent protections, reproduce it for use in China and elsewhere outside the United States. Over the years, cyber theft incidents have added to these practices. In 2010, for example, Google described a “highly sophisticated and targeted attack against its corporate infrastructure.” This attack, called Operation Aurora, went beyond stealing technology to break into the Gmail accounts of Chinese human rights defenders. Since then, at least 34 US firms have reported similar attacks, including Yahoo, Adobe, Northrup Grumman, Dow Chemical and McAfee. In 2014, evidence emerged that hackers from China’s Ministry of State Security had been running a cyber theft operation called Cloudhopper for years. It compromised IBM and Hewlett Packard, among others, and through them their customers, including the federal bureaucracy. Other Chinese operations targeted the AFL-CIO.

Beijing has also lured or coerced Chinese citizens working and studying in the United States into more old-fashioned espionage efforts. The Bureau of Immigration and Naturalization records numerous cases of Chinese living in the United States as students when in fact they had commissions in the People’s Liberation Army and were tasked with spying on academic research, especially when it supported industry and defense. Other Chinese nationals legally working in the country have been coerced or tricked into spying on their employers. China’s “Thousand Talent Plan” uses all kinds of incentives to get people of all nationalities to turn to Beijing’s technology and other valuable pieces of intellectual property, sometimes even when those people are working with subsidies from the US government. The most famous example is the case of Harvard professor Charles Lieber, who was convicted of exactly this type of activity in 2021.

Arrests by the FBI and indictments by the Department of Justice (DOJ) document that the many reports and complaints coming from the business are neither fabricated nor exaggerated. The Justice Department has said outright that about 80 percent of all its economic espionage prosecutions are related to China. Just a few months ago, FBI Director Christopher Wray gloated in a speech at the Ronald Reagan Presidential Library that his bureau had more than 2,000 open cases of Chinese espionage and opened a new case every 12 hours. He stated bluntly, “There is simply no country that poses a greater threat to our ideas, our innovation, and our economic security than China.” Effectively calculating the damage that Director Ray alludes to, Michael Orlando, acting director of the National Center for Counterintelligence and Security Council (NCSC), estimates that China’s theft of technology and other intellectual property costs American businesses at least $200 billion annually. This is just the market value of what was lost. Adding in the associated sales losses, the Center’s estimate rises to $600 billion annually.

As already stated, this is an old story. Every president for nearly 40 years has responded to business complaints and tried to get Beijing to change its behavior. Records over the decades show that none have had much success. Reagan made the first attempt in 1986. His efforts to stop Chinese patent and copyright theft went under the auspices of the World Trade Organization (WTO) and led to the so-called Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). . Although lauded at the time, the agreement apparently failed to change Beijing, because less than ten years later in 1995, the Clinton White House had to revisit the issue. His efforts are believed to have strengthened WTO arrangements. A testament to Clinton’s lack of success, however, was the need for George W. Bush to revisit the issue in 2006.

The Bush White House tried a different approach. Bush initiated the so-called “Strategic Economic Dialogue” with Chinese President Hu Jintao. The White House claims that regular meetings between the two national leaders will stop the theft of intellectual property. But the theft and coercion of business partners continued, forcing Barack Obama to revisit the issue in 2015, when he and Chinese President Xi Jinping agreed to rename the agreement the US-China Strategic and Economic Dialogue. This action added five syllables to the name, but did not change anything. Just months after the two presidents made their respective statements, the first signs of the massive Cloudhopper campaign revealed just how widespread Chinese hacking had been.

Trump has responded differently to continuing evidence of Chinese harassment and outright theft. His White House is citing a Section 301 investigation into the matter. This section of the US Trade Act gives the USTR authority to investigate and take action to enforce US rights under trade agreements, but also with respect to other trade violations. This was the basis on which the Trump White House in 2019 imposed a wide range of tariffs on Chinese imports. Under the so-called “Phase 1” of the subsequent agreement between Washington and Beijing, China promised, among other things, to streamline procedures for Americans to protect their patent rights from Chinese infringements.

By the time Joe Biden took office, it was again clear that despite the Phase 1 agreement, China had continued as it had been for years. Deputy US Trade Representative Sarah Bianchi said bluntly that China has not fulfilled the promise it made in Phase 1 of the agreement. That fact, she said, was “clear,” and for that reason she announced that Trump’s tariffs would remain in place. But at the same time, she said USTR and the Biden White House had no desire to “escalate” the dispute.

Since she made these points earlier this year, no new efforts have emerged to stop the theft of technology and intellectual property. Nothing appears on either the White House or the USTR website, where any initiative would surely appear. Far from new efforts to stop the theft, the Justice Department recently decided to shut down its so-called “China Initiative,” which was aimed specifically at combating Chinese espionage and cyber threats. More recently, the White House floated the idea of ​​eliminating tariffs on Chinese goods. The move is intended to ease inflationary pressures but will also remove any pressure on Beijing to comply with US demands. Perhaps in response to the tariff issue and the DOJ ruling, a Chinese court recently declared that no Chinese firm can be sued for defamation for stealing technology anywhere in the world. The White House has not yet commented on this new violation of international norms and the clear threat to the interests of American business.

After so many years of bipartisan failure on this issue, it has never been realistic to expect much from any new administration. What is strange, given this history of continuous, if ineffective, efforts is how the White House seems unwilling to even try to influence Beijing. Congress lost patience and advanced the legislation, but this bill would only protect American industry from harm by limiting its ability to interact with China. This approach can only help marginally, if at all. When new evidence of theft arrives—perhaps from some of the thousands of cases that Director Ray mentioned—the president can deflect blame by pointing to the failures of his predecessors. It would be fair, but one would think that the White House would at least try to stop the loss of billions.

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