Beg, borrow or steal: How some say China takes technology
Published 12:00 am Sunday, March 25, 2018
Arranged marriages. Whispered warnings. Outright theft.
For years, American companies have complained that the Chinese government finds ways to get them to hand over their most valuable trade secrets.
American trade officials on Thursday cited those practices as a major motivation for their plans to levy tariffs and penalties on $60 billion in Chinese imports and to take a tougher stance on the vast and lucrative trade relationship between the two countries. The report outlines in blunt terms how intellectual property — everything from product designs and sensitive data to general know-how — has become a point of contention in global trade relations, joining long-standing areas of dispute like steel.
Arranged marriages
In some industries, like car production, China has long required foreign companies to team up with local partners. Auto giants like General Motors and Ford, for example, make cars in Chinese factories that are jointly owned by Chinese partners.
Foreign companies have long complained that they are simply training future rivals. Japanese and European businesses say Chinese rail companies used technology from joint ventures to become giants in high-speed rail.
Trade rules limit how much technology the Chinese partner can get from a joint venture. But some American businesses say Chinese officials often demand technology under the table.
The joint venture requirements have spread to other fields. China is pressuring foreign companies to share knowledge with local partners if they want to make electric cars in China — an industry in which China has plans to become a major player. Companies like Qualcomm, Hewlett Packard Enterprise and Microsoft have also struck up Chinese partnerships in recent years to avoid political pressure or regulatory tangles.
License to share
The Trump administration said that Chinese officials used bureaucratic licensing and approvals to gain control over sensitive data.
Take cloud computing. New Chinese rules require companies running cloud-computing operations to be locally controlled. To comply, Apple and Amazon have handed stewardship of their Chinese data to local companies.
Companies like Apple and Amazon have set up ventures with local partners to handle data in China — a requirement that Chinese officials say is driven by security and privacy concerns. Chinese officials have pressured foreign companies to give them access to sensitive technology as part of a review process to make sure those products are safe for Chinese consumers.
The foreign companies involved, like Apple, argue that the sensitive data remains safeguarded. Technology companies say the reviews they submit to are not thorough enough to expose their deepest secrets. Chinese officials say many foreign companies voluntarily hand over technology.
Some American companies say their Chinese rivals get secrets the old-fashioned way.
American companies and their Washington backers contend that Chinese companies have stolen secrets to help build up businesses in areas like wind turbines, often through hacking. The complaint is a long-standing one. Under the Obama administration, the government indicted in absentia five Chinese military officers for engaging in commercial espionage.