The best answer to commercial cybertheft

The US-China summit last week produced an agreement on tackling commercial cyberespionage. The pact will only succeed if Chinese leaders now understand their people are quite capable of generating creative ideas, more so than stealing from others.

Microsoft President Brad Smith (L), Chinese President Xi Jinping, University of Washington Interim President Ana Mari Cauce, and Tsinghua University President Qiu Yong, pose for a photo during Xi's visit to Microsoft's main campus in Redmond, Washington Sept. 23. The four were marking the establishment of the Global Innovation Exchange, a partnership established jointly by the University of Washington and Tsinghua University, with a new facility in the Seattle metropolitan area.

A world so worried about cybertheft – of credit cards, passwords, even identity – will want to keep an eye on an agreement forged at the US-China summit last week. The two largest economies agreed to work together to fight the theft of commercial secrets in cyberspace. The pact not only lays down a new international norm for honest and transparent competition. It also signals to countries, companies, and individuals that they must develop their own creativity – rather than steal ideas and technology from others.

The agreement itself is quite one-sided as it was forced on Chinese President Xi Jinping under threat of sanctions by President Obama. It must also be sustained by such threats. The United States is fed up with cybercriminals in China who burrow into the digital networks of innovative American companies to get a quick leg-up in the global race to produce the most advanced products.

Mr. Obama has called commercial cyberattacks “an act of aggression.” Last year, the US indicted five Chinese military officials with crimes associated with corporate cyberespionage. Such electronic larceny, according to Gen. Keith Alexander, the former head of the National Security Agency, is “the greatest transfer of wealth in human history.”

Even with the threat of sanctions, Mr. Xi may be sincere in wanting to persuade the Chinese that they are quite capable of coming up with fresh ideas for the global market. Unless China gets rid of its reputation as Grand Theft Country, it will not win over the foreign investors it needs or be welcomed as an honest trader. Since 2006, the ruling Communist Party has tried to boost “indigenous innovation” to help industries make a transition from their reliance on cheap labor and foreign intellectual property.

The test for the agreement lies in whether a new bilateral forum, comprised of top security officials from the US and China, can resolve specific charges of cybertheft. To provide results in real time, a special hot line will be used to alert either side to a problem.

The US has become better at the difficult task of identifying the origins of a cyberattack. It was able to pin the 2014 attack on Sony computers on North Korea, for example, a feat that startled many in China. Both the quality of US evidence and the willingness of China to crack down on cyberthieves will determine whether the agreement is a success.

At the same time, Xi must also continue to boost Chinese confidence. The party still operates under the Mao Zedong slogan of “foreign things for China’s use.” During his US trip, Xi said the Chinese “have always held American entrepreneurship and creativity in high regard.” To many in China, copying the work of others is often not seen as theft but flattery.

One hint of Xi’s attitude on illegal commercial imitation can be found in a speech he gave last year to Chinese artists. They are heirs to one of humanity’s richest veins of creativity – in pottery, painting, opera, etc. Yet Xi admonished them for plagiarism and producing art that is derivative of other’s work. And also last year, Prime Minister Li Keqiang warned his government to protect the intellectual property rights of Chinese scientists so they can be innovative without worrying about being plagiarized.

The first instinct of a true discoverer is that one is capable of original thought. Perhaps Confucius said something like that. If so, Xi’s attempt to revive the teachings of Confucius to inspire young Chinese will go far to elevate original ideas in China.

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