Secretary of Commerce Wilbur Ross warned Tuesday that China is waging war on American intellectual property.
“Today the American patent system and the American genius it protects are under serious attack,” Ross explained in a commentary for the Financial Times. “Intellectual property theft and expropriation costs US businesses as much as $600bn a year,” he adds, citing reports from the Commission on the Theft of American Intellectual Property.
He explained more than three percent of America’s gross domestic product is stolen through aggressive acts of theft, piracy, and espionage. Ross identifies China as the “primary culprit.”
President Donald Trump ordered an investigation into Chinese theft of American intellectual property Monday, the first punitive measure taken by this administration against China, America’s largest trading partner.
“We will protect our intellectual property first, but will also lead in restoring the rules-based free and fair economic system,” Ross wrote in response.
China has condemned the U.S. move, asserting that it will retaliate to protect its interests.
“If the US takes actions that impair trade relations, disregards the facts and disrespects multilateral trade rules,” China’s Ministry of Commerce saidTuesday, “China will not sit idle but take necessary measures to safeguard our legitimate rights.”
China previously engaged in state-sponsored corporate espionage, relying on military units and government entities, to boost give Chinese companies the advantage while crippling American businesses. China dismantled many of its original cyberespionage divisions after indictments were issued for several Chinese military officers, but observers assess that China merely changed its tactics and is still stealing American intellectual property on a regular basis.
Ross outlines several ways China gets its hands on U.S. intellectual property.
China makes joint ventures and, sometimes, technology transfers prerequisites for entry into the Chinese market, and Chinese companies backed by Beijing will invest in pioneering start-up enterprises to secure access to their technology. For a few million dollars on the front end, China gains control of intellectual property that may eventually be worth billions. Chinese lawyers also initiate anti-trust lawsuits to invalidate patents.
“China is willing to go to great lengths to capture American technologies,” Ross said in his commentary.
The tough rhetoric on trade with China from the administration in recent days signals a return to the president’s harsh stance on the campaign trail. When Trump met Chinese President Xi Jinping at Mar-a-Lago in April, he promised China better trade deals for assistance on North Korea, but the president has grown frustrated with Beijing’s inaction and unwillingness to put the kind of pressure on North Korea needed to change the situation. As Trump’s disappointment grows, his administration has increasingly targeted China’s national interests.
The memorandum signed by the president on Monday will give Robert Lighthizer, the US trade representative, one year to investigate and decided whether to pursue more aggressive punitive actions against China to better protect American interests.
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