"Intellectual Property Theft" and the "China Threat" Narrative

China is often accused of IP theft and forced technology transfer. What does this mean?

First the easy one. What's wrong with forced technology transfer? If a multinational corporation wants to do business in China in order to gain access to its vast markets, then it can decide for itself whether it's worth it or not to transfer technology. It's not forced in the coercive sense. American corporate profits have been soaring over the last 40 years to the delight of shareholders. In addition, Chinese manufacturers in conjunction with e-commerce wholesalers like Alibaba and AliExpress allowed the west to take advantage of dropshipping which effectively created the "millionaire" and "side hustle" economy you see today. During this time, China has been the engine of global economic growth. Go China.

If a multinational corporation wants to do business in China in order to gain access to its vast markets, then it can decide for itself whether it's worth it or not to transfer technology.

Photo from Researchgate.net

Above: Global GDP and economic growth according to groups of countries 1960 to 2018 in trillion current USD

Now IP theft. What is the purpose of IP? IP is essentially "monopoly pricing rights" designed to maximize profits for their owners. Instead of being freely shared, IP is monopolized by one company which ends up stifling innovation. Who benefits from the high price of drugs and MS Windows? Not the average consumer. Compare this to science and medicine and academia where collaboration is the norm in the pursuit of advancement and progress.

IP did not become widespread until the late 20th century, a time when China was still extremely backward and poor. The Cultural Revolution had purged the intellectual and scientific class so China was basically starting from zero when Deng Xiaoping began reforms in the late 70s. What's a desperately poor country to do?

Is IP theft justified when it helps lift 800 million people out of poverty? Is it justified when you steal from the wealthiest Western MNCs (Multi-National Corporations) the world has ever known and whose profits are record-breaking?

How about when it was the West and Japan that had pillaged, exploited, and stolen from China for 100 years including forcing China to buy opium at gunpoint? It’s worth pointing out here that the West stole from entire continents, North and South America, Africa, and Asia for 500 years on their way to getting rich. I don't feel sorry for these MNCs or that Bill Gates is one or two billion dollars poorer (someone who also crossed many ethical lines on his way to the top).

It's worth pointing out here that the West stole from entire continents, North and South America, Africa, and Asia for 500 years on their way to getting rich.

Photo from Wikimedia Commons

Above: Troops of the Eight nations alliance when the west subjugated and colonized China in its own territory. From left to right: British solider, US soldier, Australian colonial from British Empire, Indian soldier from British Empire, German soldier, Austro-Hungarian marine, Italian soldier, and Japanese soldier.

Photo from nytimes.com Bettmann, via Getty Images

Above: After almost a century of humiliation the masses of China rises against both foreign and domestic threats. Although at a high cost, the people of China have finally secured their sovereignty saving what we see as the 1.4 billion people that we see today.

Well where is China now?

China's IP regime has come a long way. Given that China itself now leads the world in number of patent grants, it makes sense to protect IP. In some ways, China's IP regime is preferable for IP-intensive businesses, e.g. (Non-Compete Agreements that are allowed in China but not in some US states). Business methods are easier to patent in China, there is faster invention patent pendency, and invention patent examination appears to be of higher quality than in some European offices. There are lower attorney and court costs for IP litigation and there are faster IP trials. Finally, foreigners win most of the IP infringement cases they bring in China. (Taken from a Harvard article "3 Myths About China's IP Regime.")

foreigners win most of the IP infringement cases they bring in China.

About 40 years ago, China was at the bottom. Today China is a leader in almost all categories of scientific pursuit. According to SCImago Journal Rank, the Chinese Academy of Sciences is the top research institute in the world. In terms of universities, China has 4 in the top 10. In 2020, China had the most patents granted at 530,127, about 50% more than the US coming in at 351,993. And China now leads the world in both quantity and quality of research papers.

Photo: from Sci Mago Institutions Rankings

Above: Chinese Academy of Sciences rank #1

Does China still steal? Probably on a level comparable to the US. Interestingly, the US has 253 claims against it vs China at 55 at the WTO.

Photo from Statista

Above: The total number of cases and complaints against China.

Photo from Sci Mago Institutions Rankings

Above: The total number of cases and complaints against the US.

So what exactly is the China threat that you hear about everywhere all the time? Is it China's one overseas military base in Djibouti? The US has 800 overseas military bases, hundreds of which surround China. China's most recent conflict was with India 2 years ago when troops engaged in hand-to-hand combat. Fistfights. That is truly an exhibit of restraint between two large and relatively power countries. Before that, China fought Vietnam for ONE month along the border in 1979 when Vietnam invaded Cambodia. Compare this to the American record.

China is not the military threat.

The US has 800 overseas military bases, hundreds of which surround China.

Photo from Base Nation

Above: U.S. military bases all surrounding China.

Rather, it is simply the meteoric rise of China over the last 40 years that is a threat. China modernizing and developing and improving the lives of its 1.4 billion people is threatening US dominance of the world. The question is, can the US tolerate a peer competitor? It sure as heck doesn't want to, that's obvious. The US has proven it is willing to risk thermonuclear war and the end of the world in its proxy war with Russia. How far will they go with China?