November 19, 2012
Chinese Economic Espionage Is Hurting the Case for Free Trade

by Derek Scissors

Trade and investment with China benefits the U.S. This is evident in choices made by individuals and companies every day to buy Chinese goods and work with Chinese partners. Indeed, American business has been the chief proponent of a sound U.S.–China economic relationship.

The context makes intense Chinese economic espionage all the more regrettable. Chinese entities are targeting the very companies that are most interested in doing business and maintaining a good relationship across the Pacific. The situation is bad and may be deteriorating further.

It is time for a more pointed U.S. policy response that addresses the issue while maintaining or even improving bilateral economic relations. As always, the first requirement is information: American firms that are subject to Chinese cyber and other espionage activities should disclose them to the government on a confidential basis. If the results of these disclosures show a serious problem, the Obama Administration should consider making commercial espionage its top economic priority in talks with China. Failing progress in such discussions, it may be necessary to take certain actions against particular Chinese enterprises engaged in or benefitting from espionage.

Imports from the People's Republic of China (PRC) help support American jobs. Chinese investment in the U.S. has accelerated sharply this year because American firms want more Chinese investment. Chinese purchases are aiding the struggling American property market.[1]

The PRC's government and companies insist that they want to continue to trade with the U.S. and want more two-way investment. This is welcome. However, the value of the relationship to the U.S. is being undermined by Chinese economic espionage, another word for which is "theft."

Espionage is no longer cloaks and daggers. It has spread in terms of both targets (embracing economics as well as security) and methods, with computers now more dangerous than people. The national security dimension is important to the U.S. in general and the U.S.–China relationship. Even putting national security aside, though, there is a problem.

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