US Needs More Tools to Counter China on IP Transfers, Congress Told

September 27, 2018 Updated: September 27, 2018

WASHINGTON—The United States needs more tools to counter China’s aggressive efforts to acquire American intellectual property through legal and illegal means, experts told a congressional hearing

“For more than 40 years, the U.S. has encouraged China to develop its own economy, and to take its place alongside with the U. S. as a central and responsible player on the world stage,” Rep. William Hurd (R-Texas), chairman of the subcommittee on Information Technology, said in his opening remarks on the topic of “Countering China” on Sept. 26, 2018. “But China doesn’t want to join us. They want to replace us. More importantly, China has not been playing fair.”

Hurd said that China coerces American companies into entering into joint ventures with Chinese companies, and that has meant huge losses for U.S. firms.

“The U.S. trade representative, who led a seven-month investigation into China’s intellectual property (IP) theft, recently found that the cost of Chinese theft of American IP is $225 billion to $600 billion annually,” Hurd said.

Robert Atkinson, president of the Information Technology and Innovation Foundation, who testified during the hearing, said that the world has never before seen a country like China.

“It’s not a country constrained by global norms of acceptable economic and trade behavior,” Atikinson said. “It’s a country where the government is concerned with one, and only one, economic goal: winning in advanced technology industries by any means possible.”

Atkinson recommended that the Congress should enact a system whereby if Chinese entities seek licenses in the United States, then the Chinese enterprise must obtain a license on the same terms by which foreigners are required to license into China. He also suggested tightening the process of issuing student visas to students coming from China and strengthening FBI-university partnerships to limit inappropriate IP transfer.

Sarah Cook, senior research analyst of Freedom House, said that China’s purpose for becoming a “cyber superpower” is to increase internet controls to ensure authoritarian longevity. It’s also expanding information controls beyond China’s borders, she said.

The direct and indirect costs of internet controls are huge; ironically, the companies that help the Chinese regime to control the internet, are also victims of the regime’s repressive measures, according to Cook.

Cook said that “the United States should be proactive in developing its own capabilities and upholding international free speech and privacy standards, developing a comprehensive national strategy on artificial intelligence, and dedicating diplomatic resources to upholding internet freedom.”

The United States should also fund counter-censorship efforts specific to China, support groups that develop and disseminate tools to enable Chinese users on a large scale to access blocked websites, and expand funding for applications that enhance access to uncensored information and digital security on mobile devices, Cook said.

Furthermore, the United States should “create an emergency fund that can be activated quickly during moments of crisis or political turmoil to rapidly enhance the server capacity of circumvention tools facing increased demand from China,” she said.

The China Media Bulletin project of Freedom House has been working with partners who run circumvention tools such GreatFire’s FreeBrowser or overseas Chinese outlets who gain traffic via tools like FreeGate and Ultrasurf, Cook said. These channels garner millions of visits each month and bring tens of thousands of readers from inside China, and have proven to be very effective.

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