Michael Auslin

Technology theft goes both ways – as China is discovering

Technology theft goes both ways – as China is discovering
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Beijing is starting to worry that the rest of the world will steal its advanced technology. The Chinese military is calling for stronger protection of the country’s intellectual property, particularly in sensitive defence areas. Supercomputers, drones, rocket launchers and the like, were singled out as areas where 'generations' of Chinese research cannot be allowed to be put at risk.

Give China credit where it’s due: not in its technology, but in its gall.

China is the world’s largest or second-largest economy (depending on how you count) because of its size, its hard-working labor force, its focus on STEM education, its relentless government policy, etc, etc.

But also because it cheats. China has been robbing the West blind for decades, stealing everything from private business innovations to nearly every US defence program. Wonder why Chinese companies undercut American solar panel businesses? Surprised at how China’s next-generation stealth fighter looks exactly like the F-22 Raptor? Because the intellectual property has been stolen. Terrabytes, petabytes of material has been siphoned off for years, from the US and every major country. Much, if not a majority, of this theft is supported directly by the Chinese government, and special units of the People’s Liberation Army have been turned into cyber shock battalions which target Western businesses.

Even when the Chinese don’t steal, they use other means to gain every edge necessary to supplant American businesses. US companies that do business in China are pressured to give up their intellectual property (and if they don’t, then the stealing often comes in). The innocuous-sounding 'Made in China 2025' policy is a government plan to make China a manufacturing leader and the dominant producer in a range of economic sectors, most notably next-generation information technology and high-end numerical control machinery and robots, but also aerospace and aviation equipment, 'smart' energy technologies, new materials, and biomedicine and high-performance medical devices. How much progress in these sectors is based on stolen intellectual property can only be guessed at, but any realistic assessment of China’s strengths has to acknowledge the enormous benefits it receives from skipping at least some, if not a great deal, of the basic research and development that costs so much money and requires so much expertise.

The US-based Commission on the Theft of American Intellectual property estimates the annual cost to the US economy of IP theft is as high as $600 billion, and not less than $200 billion. The US Office of the Director of National Intelligence has calculated the cost of economic espionage by hacking to be $400 billion a year. By far, the majority of that pilfering is due to China, and despite public promises by President Xi Jinping to end such practices, public and private observers alike see no reduction in Chinese hacking.

Now, however, China is getting serious about hacking, but as the hackee, not the hacker. Suddenly they have something they want to protect, and realise that it’s a lot harder to be the leader than it is a follower who can cut corners to get ahead.

The West should do everything it can to keep the Chinese worried about their secrets. After all, turnabout is fair play. Washington and London would do well to keep a close cyber eye on just how advanced China is getting in supercomputers, artificial intelligence, and the like. There might be some tidbits that can find their way over to our laboratories and research centres that save us a million pounds here and a million dollars there. The Chinese may well decide it wasn’t such a great idea to try and steal anything they could get their hands on – it gives other people ideas. What’s the word for chutzpah in Chinese?