US economy

China is not an intellectual property thief



The writer is associate law professor at Beijing Foreign Studies University and author of ‘The Law and Governance of the Asian Infrastructure Investment Bank’

It has become politically correct in the US to call China a thief, bent on stealing American intellectual property. In 2018, this rhetoric was formalised in a “Section 301” investigation by the US trade representative. President Donald Trump used allegations of state-sponsored IP theft as justification to trigger a prolonged trade war between the countries.

This week, the US and China are due to sign phase one of a trade deal to lessen tensions, under which China will boost imports from the US in return for a reduction in American tariffs. But the allegations of IP theft continue to sow mistrust between the two sides, bringing a long, co-operative relationship to the verge of collapse.

What the US calls theft began as technical co-operation 40 years ago, when the two countries committed to a closer relationship in the form of, for example, joint ventures or equity ownership, subject to governmental licences. Such agreements are reinterpreted today as evidence of the coerced transfer of technology — an act of American duplicity.

In a World Trade Organization case heard last summer, the US made the claim that China’s IP theft violated “public morals” prevailing in US society, while noting that such behaviour “may not offend China’s sense of public morals”. That allegation is both wrong and offensive. IP violations bring about civil, administrative and even criminal penalties in China, as well as in the US. China cherishes a culture of fair competition and respect for innovation. “To steal a book is an elegant offence,” has long been misread as a permissive aphorism peculiar to Chinese culture. But the short story by Lu Xun, if read carefully, has the opposite moral: the scholar is punished for his theft, and cut off by his neighbours.

IP protection is a necessary part of development. When an under-developed country tries to catch up with a developed one, it learns by imitation, by way of reverse engineering. It accumulates professionals and technology, and then starts to invest in research and innovation. When it wants to climb further up the ladder and expand, it may have to step into a technological no man’s land, as the telecoms firm Huawei has in its 5G tech development.

The rise of the US at the turn of the 19th century was essentially a process of rampant IP theft from the UK, including of textile manufacturing tech. Some would argue that the laws governing IP protection then were light, and that the US’s behaviour was thus tolerable.

That is simply not true. Before the American Revolution, England had passed laws to ban the export of textile machinery and tools that might assist in the manufacture of cotton, linen, wool, and silk. Skilled mechanics were forbidden to emigrate upon pain of imprisonment. The US government defied that law, raiding British industrial secrets and wooing knowledgeable British textile managers, as Ron Chernow has described in his biography, Alexander Hamilton. This amounted to state-sanctioned industrial espionage — more evidence of duplicity, given that the US constitution explicitly protected IP.

The story shows how the US has climbed the ladder to tech supremacy only to kick it away now that it has reached the top, just as Britain jealously blocked America’s rise. China’s IP model started from scratch 40 years ago, but its success is no less extraordinary. Former US Treasury secretary Lawrence Summers, once a stern critic of the policy, has said that China’s technological progress comes from its own “terrific entrepreneurs” and “an educational system that’s privileging excellence”, but not from theft.

By prioritising fair competition and innovation, China will only keep enhancing IP protection, including that originally from the US, as its governmental and social governance capabilities improve.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.