US economy

US charges Chinese group with theft of trade secrets

The US ratcheted up its fight against Chinese economic espionage on Thursday, as the justice department filed criminal charges against Fujian Jinhua, a Chinese state-owned company, for the alleged theft of trade secrets from Micron, an American semiconductor manufacturer.

The indictment also named United Microelectronics Corporation (UMC), a Taiwan-based chipmaker, and three individuals as allegedly participating in what Jeff Sessions, the attorney-general, called “a brazen scheme” to steal trade secrets worth up to $8.75bn.

“Chinese espionage against the United States has been increasing, and has been increasing rapidly,” said Mr Sessions at a news conference to announce the charges. “We are here to say that enough is enough.”

Complaints that Chinese state-owned companies are systematically stealing US technology in order to support the country’s shift from a low-wage manufacturing economy to a higher-value economy have been a feature of the trade war between Washington and Beijing this year.

The Trump administration has imposed tariffs on $250bn of Chinese imports, partly to force Beijing to change practices such as intellectual property theft and the forced transfer of technology. 

But critics of the administration’s approach say the proliferation of such episodes is exaggerated, and it is unrealistic for the US to ask China to curb its own innovation. 

The tension over technology secrets is at the heart of the impasse in trade talks between the US and China that has cast a big cloud over the global economic and financial outlook.

On Thursday, President Donald Trump and Xi Jinping, his Chinese counterpart, spoke by phone, in what Mr Trump described as a “very good” conversation that was focused extensively on trade.

However, there were no concrete signs of a breakthrough ahead of the next meeting between the two leaders, which is expected later this month on the sidelines of the G20 summit in Argentina. 

The criminal indictment was unveiled just days after the US commerce department slapped heavy restrictions on American companies exporting technology and other products to Fujian Jinhua, citing national security as the reason.

At stake is Micron’s computer memory technology, specifically a product called dynamic random-access memory or DRAM. Micron is the only US-based company that manufactures DRAM and has a “significant competitive advantage” in the field, according to the justice department.

The Chinese embassy in Washington did not immediately return a request for comment, nor did a spokesperson for UMC. Representatives for Fujian Jinhua could not be immediately reached.

In recent weeks, the justice department has announced three sets of indictments against alleged Chinese agents who the US has accused of engaging in economic espionage.

On Thursday, Mr Sessions said top officials at the justice department would identify Chinese trade theft cases to prioritise and would consider recommending legislation to Congress as part of a new initiative to crack down on China’s alleged activities.

Brian Benczkowski, assistant attorney of the justice department’s criminal division, said his office would “redouble our efforts” in the area. “Chinese actors have stolen wind turbine technology in Wisconsin, agricultural research in Kansas, cancer drug research in Pennsylvania, and software code in New York,” Mr Benczkowski said.

“Wherever we see examples of this kind of criminal behaviour, the department will investigate it and prosecute it to the fullest extent possible,” he added.

In addition to the criminal charges, the justice department filed a civil lawsuit to prevent Fujian Jinhua or UMC from exporting products to the US that were manufactured using the allegedly stolen technology.

Micron cheered the indictment. In a statement, Joel Poppen, senior vice-president of legal affairs, said: “Micron has invested billions of dollars over decades to develop its intellectual property. The actions announced today reinforce that criminal misappropriation will be addressed.”

Additional reporting by Richard Waters in San Francisco


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