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Xi Pledges To Crack Down On IP Theft

Apr 12, 2018
Originally published on April 12, 2018 6:29 am
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China's President Xi Jinping said a couple of really important things this week. He indicated that he's willing to open up China's economy a bit more and to protect the intellectual property of foreign companies that are doing business in China. Now, President Trump often complains that stolen trade secrets cost the U.S. economy billions of dollars every year. NPR's Jim Zarroli has the story.

JIM ZARROLI, BYLINE: It's not like other presidents haven't tried to do something about intellectual property theft by China. Trade negotiators in the Bush and Obama administrations spent a lot of time and energy in behind the scenes talks with Beijing officials. They tried carrots. They tried sticks. Sometimes there appeared to be breakthroughs. In September 2015, Obama said he'd reached an agreement with Chinese President Xi to address the problem.

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BARACK OBAMA: I raised once again our very serious concerns about growing cyber threats to American companies and American citizens. I indicated that it has to stop.

ZARROLI: And for a while afterward, it looked like theft by Chinese companies slowed down says Samm Sacks, a senior fellow at the Center for Strategic and International Studies. But Sacks says it didn't last.

SAMM SACKS: And I think that in some ways, that agreement was largely a symbolic political win.

ZARROLI: At one time, this dispute was mainly about pirated DVDs and movies, but Sacks says the last few years have seen a ratcheting up of Chinese ambitions to dominate certain fields such as robotics and artificial intelligence.

SACKS: What that means is they're doubling down on efforts to acquire advanced technology, proprietary trade secrets. And they're doing it at a time when the administration of President Xi Jinping has consolidated power in the bureaucracy.

ZARROLI: Today, foreign companies are more likely to complain that their software has been stolen by a Chinese competitor or that they were forced to give up trade secrets in exchange for access to China's lucrative and fast-growing markets. Wendy Cutler is former acting deputy at the U.S. Trade Representative's office. Cutler says U.S. officials have often complained to Beijing about these practices.

WENDY CUTLER: They would say, well, you know, give us examples and we'll take care of them. And many of our companies were, you know, very reluctant to give that information in fear of retribution.

ZARROLI: And she says when U.S. companies were willing to go on the record with complaints, Beijing would often brush them aside. For his part, President Trump has promised a much more confrontational approach to China. Here he was last year announcing an investigation into Chinese trade practices.

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PRESIDENT DONALD TRUMP: For too long, this wealth has been drained from our country while Washington has done nothing. They have never done anything about it. But Washington will turn a blind eye no longer.

ZARROLI: To Wendy Cutler, the administration's tough approach to China makes a certain amount of sense.

CUTLER: I applaud them for taking this issue very seriously, and I think our approach needed some shaking up.

ZARROLI: But Cutler also says Trump's approach to trade disputes is probably the wrong strategy right now. Trump has imposed tariffs on imports of steel and aluminum and is renegotiating trade pacts like NAFTA. And Cutler says some key U.S. trading partners have been angered by the administration's actions.

CUTLER: They're not really in a position to really entice other countries to be very enthusiastic about working with us on China issues.

ZARROLI: That matters because a lot of other industrialized nations, including Japan and the countries of Europe, also express anger about China's trade practices. Cutler says a multilateral approach could be the best way to address IP theft, but Trump's go-it-alone approach to trade makes that a lot harder to pull off. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.