Creating a Bulwark Against Chinese IP Theft.

AuthorLarsen, Christian
PositionNDIA Policy Points

Army Gen. Keith B. Alexander, then-U.S. Cyber Command commander and director of the National Security Agency, once famously--or infamously--stated that the illegal extraction of U.S. technology and intellectual property through cyber intrusion represented the greatest transfer of wealth in history"

That was in 2012.

In 2018, the White House and Congress are finally recognizing China's rampant campaign of state-sponsored cyber hacking and commercial theft of critical U.S. "know-how" and intellectual property. Although the U.S. government cannot undo this extensive knowledge transfer, it can take steps to curb the assault on America's technological advantages.

Recent tariffs levied against China, coupled with Committee on Foreign Investment in the United States (CFIUS) reform efforts, represent positive and necessary steps to significantly limit the damage and allow the United States to maintain its innovation edge.

These steps, however, only offer a partial solution, first because they are insufficient, and second because some level of cooperation and collaboration between the United States and China strengthens economic ties and acts as a stabilizing factor in maintaining security in the Indo-Pacific region.

Over the past few decades, China has become more integrated into the international system the United States and its allies shaped after World War II, particularly in trade, global finance, development and diplomacy, and even co-managing a nuclear North Korea. However, that integration has not been seamless, as evidenced by the complicated, dynamic trade and international security relationship between both countries. Given the cost of conflict --from trade wars to actual wars--U.S. administrations generally ignored the corrosive transfer of critical technologies and theft of U.S. intellectual property in exchange for limited economic gains in the Chinese market, and peace and stability.

While penalizing China through tariffs and trade sanctions may incentivize better behavior, unlimited tariffs and sanctions can impose unwanted harm upon U.S. companies that rely on East Asian capital, suppliers and consumers. Tariffs and sanctions can also incentivize Beijing to act aggressively.

Maintaining our technological advantage requires more than curtailing China through a sanctions regime. The U.S. government will need to implement programs to spur American innovation and to build on and expand our technological superiority over China.

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