China is still stealing intellectual property — but that’s not the biggest problem
China has continued to steal intellectual property from other countries, according to a report out this week — but one cyber security expert says that’s not the real issue.
A report released this week by the Australian Strategic Policy Institute says that China is clearly, or likely to be, in breach of its bilateral cyber espionage agreements.
And it warns that if Australia doesn’t ramp up the pressure, China is unlikely to stop.
The stakes are high
“Essentially, it’s the lifeblood of economies,” said Fergus Hanson, the head of the Institute’s International Cyber Policy Centre.
If ideas from companies or universities are stolen, products can be manufactured by companies in China without the need to pay research and development costs.
*The firms that initially designed those products can be out-priced and killed off.
Mr Hanson said he spoke to a broad selection of government officials and industry while doing the research.
*”Firms that are conducting R&D are basically storing information on computers in their headquarters or around the world, and because it’s connected through the internet to China, China is able to remotely access that.”
The Institute’s report looked at incidents from the United States, Germany and Australia.
“It’s become clear that China is in fact continuing to steal intellectual property, albeit with slightly different tactics from before,” Mr Hanson told The World Today.
“China is narrowing its targets and hitting a smaller number of companies, but still continuing with the activity,” he said.
‘The US Government does the same thing’
But Professor Greg Austin from UNSW Canberra Cyber said the evidence that information was applied in the marketplace for commercial gain was “very thin”.
“The ASPI report puts almost no evidence in the public domain of a significant case where the Chinese Government has stolen commercial information since 2015 and put that to the advantage of a Chinese private sector corporation.”
For example, he noted, the United States Steel Corporation and Westinghouse, two companies named in the US indictments, have not in fact suffered any commercial disadvantage.
“So the picture is not really what ASPI and others are painting — one of decreasing competitive advantage of Western corporations because of what’s happening. That’s not the reality.”
Professor Austin described industrial espionage as just a normal part of international relations — practiced by China, but also by the United States, France and Israel.
“If you look at the CIA organisational chart, you’ll see that two of its four intelligence directorates are involved in scientific, technical and economic espionage,” he said.
“I’m confident that the Chinese Government continues to engage in intellectual property espionage; I’m confident that the United States Government does the same thing.”
Bigger things to worry about
Professor Austin said some of China’s lawful business practices are a more concerning problem.
“The bigger policy issue that the US Government put on the agenda in a special report in March this year … was the Chinese policy of pressuring foreign corporations investing in China to hand over their intellectual property … under Chinese law,” he said.
“This is part of the Chinese government’s indigenisation campaign.
“They’ve decided that they can’t lock out the foreign technology corporations because they need them very much.
“But if they’re going to have to put up with them, then they’re going to insist on regimes that allow more comprehensive transfer of their intellectual property through new partnership agreements and sharing agreements with the Chinese domestic corporations.”
US President Donald Trump has put sanctions on Chinese corporations and companies due to that policy, Professor Austin said.
“And that’s a practice that Australia needs to pay more attention to, not the almost unstoppable practice of Chinese government theft of commercial secrets through espionage,” he said.
ASPI is warning that countries like Australia, the US and Germany need to do more to stop the threat.
Mr Hanson said countries should band together to increase pressure on China.
“We need to start putting this issue onto the international agenda, putting it onto the agenda with China … and if it doesn’t respond, looking to impose costs on China for that behaviour.”
But Professor Austin said the Australian Government would be better off putting its policy effort into protecting companies from coercion by China, rather than focusing on “the hardly proven cases of cyber espionage for commercial gain”.
“I think the Australian Government needs to get behind Australian corporations and protect them from the same pressure that’s coming on US corporations who hand over IP if they want to invest in China,” he said.
“I think we need to shift the conversation a little bit from where ASPI put it today with the release of this report.”
In a statement, a spokesman for the Government said: “Australia condemns cyber-enabled intellectual property theft for commercial gain by any country”.
“As a matter of principle and long-standing practice, the Government does not publicly discuss specific cases, including those outlined in the ASPI Report, which may prejudice national security or compromise commercial confidentiality and privacy of Australian businesses.
“The Coalition Government has strengthened Australia’s cyber security arrangements, including through the consolidation of cyber security policy in the Department of Home Affairs.
“Through actions such as our Cyber Security Strategy and the rollout of Australian Cyber Security Centres nationally, we are working to ensure that businesses and communities are resilient to cyber threats, including to cyber-enabled IP theft.”