China’s Theft of Intellectual Property

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I seek the social ownership of property, the abolition of the propertied class, and the sole control of those who produce wealth. 

Communism is the goal. ~ Roger Nash Baldwin

One has to remember that the Chinese are our Communist friends and, as such, they believe what is yours is theirs and what is theirs is yours. The example in my picture of counterfeited property is the tip of the iceberg. They steal our movies, music, ideas and technology in every industry. China’s theft is so serious, and at such unprecedented levels, that it threatens the global economy.

There are too many examples to mention, but one quick example is China’s telecom giant, Huawei Technologies, which grew into a multibillion-dollar competitor by stealing technology as its rivals stood by outraged and helpless.

Mark Anderson on China’s Intellectual Theft

Wolf Blitzer interview on the subject

Trade with China is beneficial for our country as well as China, but the theft is seriously problematic. They are stealing our technology, our patents, hacking into Google, and stealing intellectual property. It’s getting worse because we are doing nothing to stop it or even slow it down.

Our Commerce Secretary,  Gary Locke,wants the trade between China and the U.S.to be equalized. The types of violations and inequalities that need adjusting are numerous. I deal with a few of them here.

Larry Kudlow describes three free trade violations: A new Chinese requirement for joint ventures with the U.S. — where China gets 51 percent, and our companies only 49 percent — looks like another attempt to snake our technology. Chinese local-content prescriptions prevent our firms from doing business with China’s state and local governments. The China curb on rare-earth materials, important both for U.S. technology and defense security, is yet another free-trade violation.

Kudlow doesn’t believe trade barriers work because they limit access to reasonably priced Chinese goods that our consumers and businesses need.

Bad trade agreements might be one of the problems. William Jones of Cummins-Allison Technology, said …that when the U.S. government tries to open markets around the world, such as when they pushed for China to be given membership in the World Trade Organization, intellectual property is one area where agreements are cumbersome and weak in practice.

In fact, we aid and abet them in the theft. China has a so-called CCC safety requirement which includes a process requiring the foreign manufacturer to give Chinese officials full access to engineering drawings and schematics and to provide a complete finished product for evaluation. In addition, the applicant companies must pay for Chinese officials to visit and inspect their factories outside of China…

China has been a member of the World Trade Organization for ten years and the problem has not improved, quite the opposite. They are attempting to dominate renewable energy technology. It discriminates against foreign competitors. China does this by requiring the use of domestic suppliers and production for green and renewable technology.

China is trying to have it both ways: protecting its home market while exporting most of its production. The New York Times reported that China protects its domestic producers by requiring that 80 percent of the equipment used in Chinese solar power plants be made in China. At the same time, over 95 percent of China’s solar panel production is exported to the United States and Europe.

Copied goods undercut the competition by 20% – 99%. American companies are paying top dollar for products while the Chinese are paying nothing.

In addition to the theft of ideas, they have near no-cost labor. American companies cannot compete.

Stronger trade agreements and the will to enforce them could make the difference according to William Jones.

Larry Kudlow suggests patent reciprocity. If you leave the USA with your invention, you lose patent protection. If patents were reciprocal, automatic patent rights would follow one from one country to another. The U.S. has some recent patent rulings by our courts that are seriously harming the progress of our businesses by requiring cumbersome processes and by allowing frivolous lawsuits to damage companies.We have strict, almost impossible regulations, governing our countries businesse,s but nothing governing trade with China.

Protecting IP’s could be a crucial step through a government compliance program would help solve the problem. From Inc.com, …First, IP protection would chip away at China’s low-cost manufacturing advantage. Second, it would create a large market for America’s high-value technology and entertainment products. Third, it could also work to convince the Chinese to revise their currency policies, which today economists widely believe keep the Chinese yuan below its presumptive market value against the dollar. If China were to find that it had to pay to import technology it now simply takes, it might also have incentive to increase the value of its money and make the world’s capital goods more affordable to Chinese buyers.

In the end, a combination of actions need to be taken and, so far, none are being implemented.

 

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