In their first official summit, President Obama and Chinese President Xi Jinping will meet next month in California and talk informally for two days, trying to hash out their differences. If the latest White House concern about China is on the table, the two men will spend a lot of time on intellectual property theft.
Only in recent months has the United States officially singled out China as the origin for much of the cybertheft of American industrial secrets. The effects of this stealing have been huge – a loss of nearly 1 million jobs in 2009 alone and annual losses in income that are comparable to current US exports to Asia. On Wednesday, a bipartisan commission set up to assess the problem offered remedies that suggest the US needs to go beyond persuasion and take action.
One of the panel’s more drastic recommendations is to slap tariffs on Chinese-made imports as a way to make up for all the US losses. Another is to bar any foreign company from joining a US stock exchange if it has used stolen intellectual property.
The panel, led by a former ambassador to China, Jon Huntsman Jr., and a former director of national intelligence, Dennis Blair, even debated the idea that American companies be allowed to counterattack against hackers by damaging their computer capability. Such tit-for-tat private warfare has too many unforeseen consequences to be taken seriously.
It’s unclear whether Mr. Obama will threaten such steps in his meeting with Mr. Xi. The US still needs to balance all its interests with China. One crystal-clear signal to give Chinese leaders is to show them that Chinese companies are being targeted by business rivals and hacking thieves in China itself.
In a major paper last year, three Chinese researchers estimated that about 90,000 people are involved in online crime of various sorts, affecting about 1 in 12 Chinese. The damage to the country’s economy in 2011 was estimated to be nearly $1 billion a year, and growing at a rapid rate.
The researchers, Zhuge Jianwei and Duan Haixin of Tsinghua University and Gu Liang of Trend Micro Inc., also charge that this underground economy on the Internet “does not attract enough concern from Chinese security community and law enforcement agencies.”
“The priority of law enforcement agencies should be to establish legal protection of individuals’ private information and network assets by means of legislation,” they wrote. “The rapid growth of the Chinese online underground economy must be abated.”
Reports of Chinese companies spying on each other’s computer networks have emerged in recent years, echoing the complaints of foreign firms that cite similar corporate espionage. China’s economy is now too well developed to grow by grand theft of copyrights, patents, and trademarks.
Chinese leaders need to know the boomerang consequences of their tolerance of cybercrime. Many wrongdoers only shape up when they themselves feel the effects of a wrong. At the US-China summit in early June, Obama needs to lay out the facts about this global problem. Sometimes a mirror is the best weapon.