The Science Agreement with China, and IP

By Derek Scissors


August 28, 2023

The Biden administration chose a six-month extension of the US-PRC Science and Technology Agreement. The goal is to improve the terms, but it won’t matter. Beijing doesn’t respect rules when technology gains can be had, and the US pattern is to punish illegal Chinese technology acquisition with speeches. Without better protection of intellectual property (IP), another term for the Science and Technology Agreement will embrace more Chinese leeching off American innovation.

In a shock, the scientific community is not especially mindful of the national interest with regard to China. One reason is naivety. Advocates of the agreement cite openness and principled cooperation, as if their counterparts can defy Xi Jinping’s attacks on transparency and drive for Communist Party supremacy. But the main reason is familiar: cooperation with China makes considerable resources available to advance one’s career, and any harm seems far away.

This is also the view of many US commercial entities. There are benefits to working with China, and costs are someone else’s problem. Perhaps the state-directed work of PRC scientists will be more helpful next time a viral mutation hits. On the commercial side, ask Motorola how that enticing cooperation worked out. Or American Superconductor, robbed by the PRC and whose share price has fallen 98 percent from its peak.

The Center for Strategic and International Studies has compiled over 200 reported cases of Chinese espionage in the US since 2000. The list stops, for the moment, in February 2023. In March, Google disclosed a wave of PRC hacks of American networks. In May, the Department of Justice brought three criminal cases involving Chinese actors. Later that month, Microsoft disclosed a PRC cyber attack on American infrastructure.

There’s more but it seems pointless to document, because the US never does anything. Publicly disclosed sanctions against Chinese beneficiaries of stolen or coerced IP are almost non-existent (Trump administration tariffs were not aimed at beneficiaries and barely tied to IP at all). Naturally, the Chinese state, enterprises, and individuals have long seen this as a green light to continue. And continue they have.

There have been three decades of American failure on IP protection. It seems unfair to pick someone to blame – it’s everyone. Still, a bipartisan bill passed Congress requiring stronger penalties for stealing IP. President Biden signed it in January and . . . nothing. Implementing authority doesn’t seem to have been assigned, much less publication of governing regulations. Even when Congress acts, nothing happens?

The Science and Technology Agreement is no small thing. It’s just dwarfed by larger things. The generational effort by the PRC to acquire foreign innovation by whatever means is one of those. Estimates of American losses at $600 billion annually are too high, but $60 billion as an annual average may be too low. And it’s been going on for a long time. Cumulative losses have certainly breached $1 trillion and very possibly $2 trillion.  

Further, with the replacement of old cumbersome espionage techniques by hacks of entire networks, China has no reason to slow theft. The US has certainly not given China a reason, and our laughable IP “policies” are also much more important than the Science Agreement. Another trillion in American IP losses is on the way. This is the country we should practice open, principled cooperation with?

A major barrier to working with China is China. But another is our unwillingness even to enforce laws. To now, almost no one—policymakers, firms, researchers, and courts—has cared about IP. Given the attitudes of nearly all involved, it’s impossible to believe the Science and Technology Agreement can be improved in way that helps the US. The Biden administration doesn’t have the nerve but, six months from now, it would be better to cut the cord.

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