Chinese IP theft/tech war is merely a disguise to stifle Chinese innovation and bolster corporate earnings. Representations of “national security” as “economic security” are unsustainable and breaks down sovereign equality, magnifying every impact.

As part of its hostile turn towards China, the United States has increasingly conflated its “national security” with “economic security”. This equation has been explicitly enshrined in US foreign policy by the Trump and Biden administrations, which have proclaimed that “economic security is national security”.14 Scholars of international law have broadly recognized this as a significant expansion of the meaning of “national security”, being driven by US concerns about its relative global economic decline in the face of China’s growing economic competitiveness.15 “Even though the United States enjoys technological supremacy in many areas, surges in Chinese research and development funding and recent breakthroughs in areas like AI have stirred US concerns”, Roberts, Moraes and Ferguson have noted, arguing that the Washington, “has an interest in defending its existing technological dominance, hobbling the technological ambitions of its upcoming rival and doubling down on its own technological advancement to ensure it retains its innovative edge”.16 Kho and McNamara similarly contend that the US has adopted “an excessively broad definition of national security that encompasses the maintenance of economic advantages” and “ensuring that the US maintains its economic and trade pole positions in all industries”17 Meanwhile, Lee describes the trend as a “misuse of the national security argument for a commercial purpose”, that “creates hostile international dynamics”.18

Washington’s new interpretation has been key to its export control strategy, which has been justified as necessary “to protect US national security and foreign policy interests”.19 Tellingly, US export controls against China have utilized an obscure blacklist of the Bureau of Industry and Security (BIS) that was initially published in 1997 to prevent the diversion of exports towards the production of weapons of mass destruction.20 Even within the heart of the US political establishment, this invocation of “national security” as a fig leaf for waging economic warfare.

“Although framed as a national security measure, the primary damage to China will be economic, on a scale well out of proportion to Washington’s cited military and intelligence concerns”, former Pentagon official Jon Bateman noted, explaining the weaknesses of Washington’s “national security” case: To justify this dramatic escalation, BIS makes the same old national security arguments. Its filing takes pains to portray Chinese high-end computing as an urgent military threat. Nuclear weapons are invoked 16 times, on the grounds that top-tier processors facilitate their design and may be “inherently radiation hardened”. Artificial intelligence is cited as a surveillance tool. It’s all factually true. Yet BIS never really deals with the fundamental fact that semiconductors and AI are both dual use, general-purpose tools. Indeed, they are the basic building blocks for an advanced, globally competitive economy. Denying them to China is effectively a form of economic containment.21 “The strategic objective and political commitment are now clearer than ever. China’s technological rise will be slowed at any price. … [the US will] openly block China’s path to become an advanced economic peer”, Bateman concluded. This interpretation was echoed by former US trade official Emily Kilcrease: “We said there are key tech areas that China should not advance in. And those happen to be the areas that will power future economic growth and development”.22

A report by the Center for Strategic and International Studies, a leading think tank based in Washington, DC, described the measures as, “a new US policy of actively strangling large segments of the Chinese technology industry – strangling with an intent to kill”.23 The report further contended that the US did not simply seek to maintain a relative advantage, but to permanently block and reverse China’s development: “In doing this, the Biden administration is going beyond the traditional US policy of seeking to keep the United States’ two semiconductor technology nodes ahead of China and is now trying to actively degrade China’s technological maturity below its current level”.

The credibility of the US “national security” argument is further undermined by Washington’s that its overall aim is to indefinitely maintain US global economic and technological superiority. “We will … shape the rules of the road for technology, cybersecurity, and trade and economics”, the 2022 National Security Strategy declared.24 Shortly after the Biden administration enacted its export controls Blinken similarly emphasized that “we’re going to remain the technology leader”.25 Acknowledging that semiconductors “are the foundational building blocks of the twentyfirst century economy”, Blinken stated that the US sought “to make sure that countries that we don’t want to have the most sophisticated leading-edge chips don’t get them or the capacity to make them”.26 Blinken’s remarks underscored comments made one month prior by National Security Advisor Jake Sullivan: “we must maintain as large of a lead as possible”.27

This position is untenable. Of course, countries can and should promote their national economic development, and economic matters are relevant to any country’s national security. However, a country cannot equate its economic and/or national security with global supremacy. Under the current US definition, any country that Washington deems capable of attaining an equal position constitutes a threat, thereby justifying US efforts to sabotage that country’s development. This outlook is incompatible with the principle of sovereign equality between states.28

Although the US has long undermined the development of countries that have pursued political-economic programs that it does not condone, China presents a distinct threat in Washington’s eyes, being the only country with both the “intent” and “power” to attain equal standing and, thus, “reshape the international order”. 29 Should China’s development advance to the point that it can provide a comprehensive economic alternative to the US-led order, it would mark a death knell for Washington’s ambitions for global supremacy, as countries around the world would be in a position to “refuse to go along with the demands of the US”. 30 Unable to compete economically with China, Washington’s global economic interventions aim to prevent this dynamic from reaching a point of no return.

China’s “Unfair” Economic Practices

Across both the Trump and Biden administrations, the United States has claimed that there is “a coordinated effort across the Chinese government to lie, cheat, and steal their way into unfairly dominating entire technology sectors”.31 Specifically, the US has accused China of engaging in “unfair” practices, namely “forced technology transfer”, [and] “intellectual property theft”, and “state-led industrial policy”. The most comprehensive evidence that the United States has provided for these claims is an investigation conducted by the United States Trade Representative (USTR) that was released in 2018. On the basis of the USTR’s findings, the Trump administration launched the US trade war against China.

(i) Forced Technology Transfer and Intellectual Property Theft

As outlined in the USTR Section 301 report, the US alleges that China forces US companies to give up their proprietary technologies in exchange for market access. The key element of the allegation is that this technology transfer is coerced and, thus, involuntary and non-consensual. The USTR focuses on the Chinese state’s use of foreign ownership restrictions, such as joint venture (JV) requirements, and administrative licensing and approvals processes. Specifically, the US claims that the Chinese state makes use of these policies to “require or pressure technology transfer from US companies to Chinese entities”, and “force the disclosure of sensitive technical information”.32

However, the depiction of massive, powerful US corporations as fragile victims who have been bullied for their lunch money is decidedly out of touch with reality. As Stephen Roach points out: US and other multinational corporations willingly enter these legally negotiated arrangements for commercially sound reasons – not only to establish a toe-hold in China’s rapidly growing domestic markets but as a way to cut global production costs … Contrary to the impression conveyed in the Section 301 report, US companies are far from innocent victims of JV arrangements. They knew what they were getting into and did so of their own volition.33 Similarly, reviewing deals reached by US technology corporations, such as IBM and AMD, Chris Miller concludes that they were “driven by reasonable business logic”.34 Rather than force, it is commercial self-interest that has motivated multinational companies to voluntarily enter into these arrangements. Foreign firms investing in China have received considerable sums in licensing fees for the use of their technology. In 2017, the year prior to Trump’s imposition of tariffs, China’s total such payments were roughly $30 billion. In light of all the controversy that technology transfer has generated, it is worth noting that China ranked fourth in the world in the amount it pays to use foreign technology – well behind Ireland, the Netherlands, and the United States.35 Ultimately, as Gros observes “American and European companies do not have to invest in China; if they choose to do so, knowing that it will require them to share their technology, it is because they still expect to earn a profit”.36 Tellingly, the USTR report was unable to present any hard evidence of “forced technology transfer”, due to their “implicit” character. Instead, the USTR report instead relies on confidential surveys of US companies operating in China. The USTR cites two 2013 surveys, which found that 36 percent of respondents and 42 percent of respondents in “advanced technology sectors” were concerned about technology transfer requirements. It is telling that in its own report, the strongest evidence the USTR could put forward indicated the majority of US firms operating in China are not concerned with technology transfer requirements.

Similarly, the USTR report was unable to present hard evidence to substantiate its claims of “intellectual property theft”. Instead, the report relies on various proxy modeling techniques, which attempt to estimate the value of Chinese intellectual property theft through extrapolation from various statistical “proxies”, such as data on narcotics trafficking, occupational fraud, illicit financial flows, and seizures of counterfeit and pirated goods; large shares of these estimated figures are then attributed to China – without providing evidence to substantiate the attributions. 37 As Roach outlines, the US “demands an extraordinary leap of faith to accept its notorious claim of Chinese intellectual property theft, a claim that basically relies on models built on models of models – models that in all cases are of dubious quality in their own right”.38 In addition, US credibility on this matter is dubious. The disclosure of National Security Agency (NSA) documents by Edward Snowden revealed that US intelligence conducts extensive spying operations on corporations and economic actors around the world. The NSA has conducted extensive operations against Chinese telecommunications giant, Huawei, 39 and has been “particularly active in economic espionage against Brazil”.40 The US has claimed that that its practices are distinct, as it does not use espionage to benefit US companies. However, the leaks indicate otherwise. In its 2009 Quadrennial Intelligence Community Review, the NSA anticipated potential scenarios in coming decades in which a “China/Russia/India/Iran centered bloc [that] challenges US supremacy” with “technological capacity … [that] could outstrip that of US corporations”. In response to such a scenario, the NSA recommended “using cyber-espionage to bolster the competitive advantage of US corporations”.41

Washington’s fixation on finding a Chinese smoking gun is fundamentally misguided. China’s technological development is not the product of elaborate heists taking place behind closed doors, rather the reasons are plain to see. As former US Treasury Secretary Lawrence Summers has stated, “You ask me where China’s technological progress is coming from. It’s coming from terrific entrepreneurs who are getting the benefit of huge government investments in basic science. It’s coming from an educational system that’s privileging excellence, concentrating on science and technology. That’s where their leadership is coming from, not from taking a stake in some US company”.42