Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Public money, private plans: MPs demand Post Office transparency

      13 June 2025

      Coal to cash: South Africa gets major boost for energy shift

      13 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      10 red flags for Apple investors

      13 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » In-depth » China’s a tough US rival, but is it really cheating?

    China’s a tough US rival, but is it really cheating?

    By Agency Staff16 January 2019
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Repetition breeds reality. Such is the case with allegations the US has levelled at China in their budding economic Cold War. Across the American political spectrum, it’s now taken for granted that China forces US companies to transfer critical technology in order to do business on the mainland, engages in rampant hacking and theft of intellectual property, and massively and unfairly subsidises its high-tech industries — all of which contributes to fears that the country poses an existential threat to America’s prosperity.

    Like many longtime observers of China, I’ve been getting more than my fair share of airtime over the past several months. Typically, the interview starts with a false premise followed by a loaded question: “Everyone knows that China is stealing hundreds of billions of dollars a year in US intellectual property. Isn’t it high time for America to stand up to its greatest economic threat?”

    But what exactly does “everybody” really know? This assertion is drawn from the findings of the “IP Commission Report” co-chaired by two renowned public servants, former US director of national intelligence Dennis Blair and former Utah governor Jon Huntsman Jr, now ambassador to Russia. In 2017, the commission estimated that IP theft cost the US economy somewhere between US$225-billion and $600-billion annually, an exceptionally broad range. Stolen trade secrets are thought to account for 80-90% of the total, the remainder being counterfeit and pirated hardware and software. 

    When it comes to stolen trade secrets, there’s a problem. There’s no hard data to support the estimates

    When it comes to stolen trade secrets, though, there’s a problem. There’s no hard data to support the estimates. The IP Commission rests its case on a 2014 study by PricewaterhouseCoopers and the Center for Responsible Enterprise and Trade, which itself relies on dubious “proxy modelling” — in essence, coming up with statistical guesstimates using available data on nefarious activities such as narcotics trafficking, corruption, occupational fraud and illicit financial flows. While these are problematic features of any nation, it takes a rather large leap of faith to convert this information into the 1-3% of GDP that the IP Commission claims is lost to theft of intellectual property.

    Dubious

    The commission’s estimates of how much of this loss to attribute to China are even more dubious. They come from the US Customs and Border Patrol, which reported $1.35-billion in seizures of counterfeit and pirated goods in 2015. Another model — this one constructed by researchers at the OECD — was used to convert this to a US total. Then, 87% of that was attributed to China — 52% from the mainland and 35% from Hong Kong. With no direct tally available for pirated software, once again a “model” (from the Business Software Alliance) was used to impute 61% of that total to Asia-Pacific. 

    Meanwhile, no attempt was made to quantify the Chinese share of stolen trade secrets, which, as noted above, accounts for the bulk of the overall estimate of America’s IP losses. The bottom line: the only thing “everybody knows” about China’s alleged IP theft from the US comes from flimsy evidence derived from highly dubious models.

    Unfortunately, an equally suspicious approach was used to support the case levelled by the US Trade Representative (USTR) in the so-called Section 301 report published last March and used to justify America’s tariff war against China. The heart of the USTR’s case is that companies are forced to transfer technology when they enter into mainland joint ventures.

    Within the JV structure, a voluntary contract between two parties, it’s hardly shocking that US and Chinese partners share talent, strategies, operating systems, process designs and, yes, production technologies in their collective efforts to build a new business.

    America’s case against China is based on anecdotes and shaky evidence that don’t stand up to serious scrutiny

    But, even the USTR confesses it has no hard evidence to prove that this sharing is forced — the essence of the allegation. Buried on page 19 of the 182-page USTR report is the admission that “transfer policies and practices have become more implicit, often carried out through oral instructions and ‘behind closed doors’”. Here, following the highly questionable precedent of the IP Commission, the USTR also rests its case on proxy surveys conducted by the US-China Business Council, in which 19% of respondents claim they’ve been forced to transfer technology to their Chinese partners. Curiously, in the council’s latest survey (conducted in 2018), 99% of respondents saw no deterioration in IP protection over the past year.

    Bias even creeps into the evidence on cyberattacks presented by the USTR. While there have been reports of very recent cyber incursions by state-sponsored Chinese hackers, most of the allegations documented by the USTR predate a September 2015 cyber accord signed by Presidents Barack Obama and Xi Jinping.

    Far from perfect

    Finally, while state-sponsored industrial policies (such as “Made in China 2025”) are alleged to be a unique and unfair effort by China to dominate leading-edge industries such as artificial intelligence, little mention is made of similar industrial policies long supported by Japan, Germany, and even the US through its Pentagon-centric R&D programme. Nor is there any effort to provide serious economic analysis of the outsize US-China bilateral trade imbalance — the political lightning rod in the trade battle — as but one piece of America’s multilateral deficits with 102 nations that have long afflicted a savings-short US economy.

    China is far from perfect and must be held accountable for verifiable economic transgressions. But America’s case against China is based on anecdotes and shaky evidence that don’t stand up to serious scrutiny. As a trade war now morphs into a cold war, the current US administration would be wise to stop relying on such “alternative facts” to wage its battles.  — Written by Stephen Roach, (c) 2019 Bloomberg LP



    Stephen Roach
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleApple releases battery cases for latest iPhones
    Next Article VO₂max: the gold standard for measuring fitness explained
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.