Neg - China Theft - CNDI 2024

China Theft Case Neg
Also read T-Domestic ;)
Inherency Answers
Chinese IP theft inevitable
Ghosh 23 Bobby Ghosh is a Bloomberg Opinion columnist covering foreign affairs. Previously, he was editor in chief at Hindustan Times, managing editor at Quartz and international editor at Time. [5 September 2023 “China’s New Chip Is Revenge for Centuries of Western IP Theft” https://www.bloomberg.com/opinion/articles/2023-09-05/chinese-history-is-a-testament-to-the-inevitability-of-ip-theft-lm6pimf8?leadSource=uverify%20wall] - KP
Through much of history, the Western world took — by stealth or strength — Chinese knowhow. The secrets of making paper, silk, porcelain and other staples of modern life leaked out of the Middle Kingdom, despite rigorous attempts by emperors and mandarins to preserve the intellectual property rights. Why then, asks Howard Chua-Eoan, should we now be surprised if the process is reversed? In a sign that Beijing is making progress in circumventing US efforts to contain semiconductor technology, Huawei Technologies Co. and China’s top chipmaker have built an advanced 7-nanometer processor for the Mate 60 Pro smartphone. The Kirin 9000s chip was fabricated in China by Semiconductor Manufacturing International Corp., according to a teardown of the handset that TechInsights conducted for Bloomberg News. And this may only be the thin end of the wedge: With the Chinese government raising $40 billion to support homegrown manufacturing, better (and thinner) chips are inevitable. This will raise eyebrows at Apple, which would like to maintain its substantial technological edge over Huawei. But it also poses a challenge to the Joe Biden administration, which has made a priority of keeping cutting-edge technology from getting into Chinese hands, driven in large part by fears it could be used to boost Beijing’s military capabilities. History suggests this is a fool’s errand. The US “can always tighten its sanctions regimes and strengthen the safeguards to slow the proliferation,” says Chua-Eoan. “But commerce will almost always force out technological secrets.” Think of that when you drink your next cup (porcelain, natch) of tea. (Free read!) Climate Policy Hovers Over Auto Tensions The impending showdown between America’s Big Three carmakers and the United Auto Workers is about profit margins, salaries and benefits. It is also, Liam Denning points out, about Biden’s signature legislative achievement, the Inflation Reduction Act. The IRA is designed to push the auto industry to remake itself entirely, switching from gasoline-powered cars and trucks to electric vehicles in roughly a decade. To this end, the administration aims to reshore the supply chain, loosening China’s grip on clean technologies. (The West still craves some Chinese knowhow.) The White House will subsidize companies for domestic content and manufacturing, and reward them for paying workers federally defined prevailing wages. As Denning puts it: “While the IRA is often dubbed climate policy, it is more accurately described as green industrial policy with a notable labor component.” But it creates some anxieties for carmakers and the UAW alike. For the union, electrification promises some new jobs — in reshored battery factories, for example. But many of the battery and EV plants that have been announced since the IRA was passed are in states where unions are hamstrung by right-to-work laws. Electrification will also make obsolete gasoline and diesel engines and transmissions, which account for roughly half of current vehicle manufacturing capacity. Carmakers, for their part, face the prospect of investing billions to build EVs which are, at least for now, loss-making. At the same time, the unions and manufacturers need each other in order to overcome the so-called “messy middle” of the energy transition, during which the industry must wind down the manufacturing of profitable legacy products while simultaneously investing heavily in new ones that won’t make money for a while yet. Can the two sides get along? Crash Course “We are witnesses to violent extremities that are often unpredictable and difficult to manage. We are the authors of the disasters and victims of the consequences.” On the latest episode of Crash Course, Timothy L. O'Brien spoke with Mark Gongloff, a Bloomberg Opinion columnist who specializes in covering the environment and climate change. Telltale Charts To judge by the performance of real estate investment trusts, the office market hysteria is easing. But, warns Jonathan Levin, it “isn’t out of the woods yet, and risks could loom over the market for years to come if interest rates stay anywhere near current levels.” From dizzying highs after the banking crisis, dividend yield spreads on office property REITs have dropped closer to historical norms. The spread was 1.74 percentage points at the end of last month. But that doesn’t mean we should forget the risks posed by the office market. Borrowing costs remain high, and the mortgage rate is around 7.2%. If interest rate expectations “become anchored at current levels, maybe out of long-term inflation fears or concerns about sustainably high government deficits. If that happens and regional banks remain shy about extending new credit, the wave of refinancings over the next year could easily get ugly in a hurry.”
Chinese IP Theft being actually dangerous is just GOP Propaganda and claims are dubious at best
Vigilante 24 (Richard Vigilante is a Vice President and Editorial Director at Gilder Publishing, along with being a B.A. in philosophy, “The Mirage of China's I.P. Theft”, https://reason.com/2024/06/02/the-mirage-of-chinas-i-p-theft/, 7/14/2024)
Republican China hawks have a problem. They're eager to sell us on the notion that China is, as old GOP hand Newt Gingrich puts it, "the greatest threat to a free America that we have faced in our lifetime." Gingrich pins China's ascendancy on its "totalitarian system, extraordinary organization, and immense population," brushing aside the economic liberalization and market reforms initiated by former leader Deng Xiaoping—which ushered China out of Maoist isolation and into the global market—as mere smoke and mirrors, a "40-year-long propaganda campaign" masking the "real China." This presents a quandary for the hawks. If they argue that China's meteoric rise is indeed the fruit of its "totalitarian system and extraordinary organization," does that mean they'll have to eat their words on the virtues of free enterprise and stop scoffing at socialist economies? Could it be that China has cracked the code on making a centrally planned economy thrive, a feat unseen elsewhere? Fortunately for the Republican hawks, a more politically palatable theory has taken root: China's ascent to becoming the world's second-largest economy and a tech behemoth wasn't a result of economic reforms or strategic planning but rather stealing. Behind the Numbers In a landscape where political rhetoric often blurs reality, the narrative spun by America First Republicans and echoed by institutions from the FBI to the Organization for Economic Cooperation and Development (OECD) portrays China's remarkable growth as the grand larceny of intellectual property (I.P.). Claims that China has siphoned off $200 billion to $600 billion annually in I.P. have found a home in numerous reports, with some hawkish voices now inflating that estimate to trillions. These reports, echoed through the media and in the halls of Congress, have one goal, perfectly captured by Trump-era Trade Representative Robert Lighthizer. "My objective was to convince people that China is a problem, an existential threat to the U.S.," Lighthizer told The Wall Street Journal. "I think we convinced people." Indeed they did. A recent Gallup poll reported that 50 percent of Americans now view China as America's "greatest enemy"—four times as many as in 2018. (Russia took second place, despite its war with Ukraine.) The campaign to make Americans hate and envy China has been so successful that American media and politicians now openly urge us to prepare for war with China. Sen. Ted Cruz (R–Texas) has claimed that "China is waging a thousand-year war against the United States." Washington Times foreign policy correspondent Bill Gertz recently posted on X that China clearly sees war with the United States as "inevitable." And in 2023, four-star Air Force general and head of Air Mobility Command Mike Minihan sent a memo to the officers he commands predicting that in two years, the U.S. will be at war with China. "I hope I am wrong," Minihan's memo read. "My gut tells me we will fight in 2025." Beneath this crescendo of warnings, however, lie some questionable assertions. Central to the argument are two reports, one by the U.S. International Trade Commission (USITC) and another by the OECD, which have become the linchpins of the fearmongering campaign against China. A closer examination reveals that these reports, and the staggering figures they tout, are little more than sloppy guesswork grounded in speculative modeling rather than solid evidence. The USITC study, China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy, was published in 2011. The OECD study, Trade in Counterfeit and Pirated Goods, wasfirst issued in 2008 and updated in 2016. Nearly every other report on the theme ultimately cites these two studies. The OECD's bold assertion that China's I.P. theft tallied up to a whopping $200 billion to $600 billion annually throughout the 2010s hinges on a dubious concoction known as the General Trade-Related Index of Counterfeiting (GTRIC) for products. This algorithm supposedly crunches customs data to gauge the global counterfeit trade, attributing a significant chunk of it to China. Delve into the mechanics of the GTRIC and you'll find it operates on a blend of educated guesses and less educated assumptions. Modelers assign two "propensities": the propensity of a given country to export counterfeits, and the propensity for certain product types—like sneakers or watches—to be counterfeited. Comparing these figures with data on all international trade, the model generates estimates of the total volume of counterfeit goods from various source nations. The critical moment in the model's calculations, and the place where the methodology raises eyebrows, is the determination of a "fixed point"—essentially, a guess at what percentage of goods in a specific category are fake. Depending on which number you pull out of the hat, the scale of counterfeiting can swing wildly from mere billions to an eye-watering trillion dollars annually. Therefore, determining the most accurate fixed point to use is vital for the results of the study to be trustworthy. So how did the OECD wizards arrive at their fixed point? They took a stab in the dark. Initially setting their sights on a 20 percent figure for "counterfeit or pirated apparel, leather articles, and tobacco products exported from Asian economies," they dialed it back to 5 percent after deciding 20 percent "appeared excessive." Noting that the amount "could be higher" and needing to establish a "credible ceiling" for counterfeit trade, they picked 10 percent as their high fixed point. This manifestly arbitrary methodology was then glorified in various reports as "rigorous." Further guesswork was needed to factor in how much counterfeit merchandise customs actually seize—a variable that drastically swings the estimated total of counterfeit trade from less than $40 billion to over $200 billion. Ultimately, the OECD planted its flag on a $200 billion estimate for 2005's counterfeit trade, with the caveat that it could be much more. Thus, a figure of legend was born. Fast forward to 2016, when the OECD unveiled a headline-grabbing figure: "In 2013, international trade in [counterfeit] products represented up to 2.5 percent of world trade, or as much as USD $461 billion. This is the equivalent of the GDP of Austria, or the combined GDP of Ireland and the Czech Republic." This 2.5 percent figure has since become a talisman for anyone keen to substantiate claims of rampant I.P. theft by China, despite the foundation of these claims being as solid as quicksand. Even with all of this guesswork at play in the OECD reports, the 2011 USITC report makes them look like high scholarship. Focusing on I.P.-intensive U.S. firms operating in China in 2009, the report claims these firms "reported losses of approximately $48.2 billion in sales, royalties, or license fees" due to I.P. infringement. Yet a closer look reveals the range of estimated losses, stretching from $14.2 billion to $90.5 billion, was based not on direct reports from companies but on third-party guesstimates from industry associations. Essentially, these firms were parroting back guesses fed to them by industry groups with a vested interest in painting the grimmest picture possible to grab government attention. The claim that the oft-cited USITC report was based on accounts by victim companies is a fraud. We're Talking About Sneakers But the plot thickens—or rather, the truth thins out. Though these two reports are wielded in accusations that China's tech ascendancy is owed to stolen I.P., neither has anything to do with high tech. The "I.P." allegedly stolen mostly consists of trademarks affixed to faux high-fashion sneakers (a perennial leader), watches, handbags, and other accessories, or copyrights on pirated music. Most shipments intercepted are in retail quantities, often fewer than 10 items. Most come by mail. Somewhere in China, Mom and Pop are ripping off Rolex, Louis Vuitton, and probably Taylor Swift. They may have some bad karma coming their way, but they are not the reason China is rich. Yet that is what we are meant to believe. Nearly every commentary on the subject promotes itself as evidence that China stole its way to technological prowess and then cites these irrelevant numbers as the sole quantitative evidence. Again and again, we are told "China steals hundreds of billions or trillions in intellectual property," with no mention that we're talking about sneakers.
China has been declining in the amount of IP theft and will continue to decline as the country develops
Graham and Leffel 19 [John L. Graham and Benjamin Leffel, 11/8/19, “Is China Actually Stealing American Jobs and Wealth?”, https://hbr.org/2019/11/is-china-actually-stealing-american-jobs-and-wealth, John L. Graham has traveled the world and conducted systematic research on negotiation behaviors in twenty-two countries and cultures including Russia, China, Iran, and Cuba and he is Professor Emeritus of International Business, University of California, Irvine. He has a PhD from UC Berkeley Haas School of Business. Ben Leffel is an Assistant Professor in the School of Public Policy and Leadership at the University of Nevada. He has served as Postdoctoral Research Fellow at the University of Michigan’s Erb Institute for Global Sustainable Enterprise, and earned his doctoral degree at the University of California Irvine.]
The current U.S. administration sees China as the United States’s principal global rival, and it has effectively declared economic war on the country. Its justification for this is largely that China is (1) stealing American jobs and (2) pirating American intellectual property. Data collected by the Long US-China Institute suggest that China is far less guilty of these crimes than many policymakers and commentators would have us believe. As the exhibit just below shows, consumer incomes in both countries have enjoyed continuous growth in purchasing power since 1985. Only two years of decline are discernable in the U.S. trendline: 2008 and 2009, coinciding with the 2008/9 recession. During the period covered in the exhibit, two major trading agreements were struck. The United States granted Permanent Normalized Trade Relations (PNTR) to China in 2000 and, in the following year, China joined the World Trade Organization (WTO). Neither event hampered the steady growth in purchasing power for Americans, whose per capita GNP rose from $37,900 to $62,600. The story on jobs is less clear, but it’s hard to argue that trade with China has had much impact on U.S. payrolls. As the next exhibit shows, the U.S. unemployment rate had reached a 30-year nadir of 4.0% in 2000, just before the China’s admission as a PNTR and WTO member. It did rise to 6% in in 2002, which could be attributed to trade with China, but the 9/11 terrorist attacks and the dot.com bust make this an uncertain conclusion at best. The unemployment spike we see in 2009 is probably best explained by the 2008/9 recession, and since then, unemployment has steadily declined to a rate (3.9%) lower than that reached in 2000. Few would conclude from this that trade with China has damaged US incomes or jobs.
What about intellectual property theft and corruption? To be sure, China has offended on these fronts. There have been well-documented cases of IP theft and bribery, so the concern is valid. But the data shows that Chinese practices are improving. Transparency International ranks more than 180 countries according to the prevalence of bribery of government officials. As the exhibit below shows, marginal improvements can be seen in mainland China since 2000 – and Hong Kong’s number is actually superior to that of the United States. On this front, therefore, there’s certainly no evidence to suggest that China is getting more corrupt. In terms of IP theft, there’s actually a clear improvement. The Business Software Alliance reports the extent of losses to American software producers in 116 countries. As the exhibit below shows, these losses are declining in the United States, China, and Hong Kong. It’s worth noting also that while piracy measured by percentage of unlicensed use in China is far higher than in the U.S. (as the exhibit shows), the position is reversed when you calculate theft by value. In fact, more money is lost to software piracy in the U.S. than in any other country. The 2016 losses in the U.S. were $8.6 billion, compared with China’s $6.8 billion, and Hong Kong’s $277 million. On a per capita basis that is about $5 in China and $26 in the United States. In assessing the significance of property theft numbers in China, we should take an historical perspective. Some readers may be surprised to learn that Americans in the 19th century cheerfully copied European and British intellectual property. But as the country developed economically, socially, and technologically, piracy vis-à-vis other nations diminished. Since then, Japan, South Korea, and Taiwan and others have traveled the same road, with IP theft declining as they developed. It’s highly likely that the pattern will be repeated in China. As per capita income rises, more and more people will be able to afford to pay reasonable prices for books, music, movies, and so forth. And as Chinese companies begin to develop new technologies, they themselves will need IP protections in order to maintain their profits and growth. The next exhibit supports that argument. Growth in U.S. patents granted to Chinese inventors and teams of Chinese and American inventors are both rising even as piracy has declined, at least in software. There are, of course, concerns that some Chinese firms are weaponizing the U.S. patent system in order to hobble U.S. innovation in key technologies — notably Huawei, which boasts an impressive 56,492 patents worldwide. But a breakdown of comparisons of U.S. patents granted to individuals by country provides a reassuring empirical context for interpreting the headlines. What’s more, on a per company basis, the 1,628 US patents granted to Huawei in 2018 is hugely overshadowed by Samsung’s 9,245, IBM’s 9,100, and more than 2,000 each for Intel, Microsoft, Qualcomm, Apple, Ford, Google, and Amazon. While Huawei is focused on telecoms and i

Preview shortened. Download the file for the full document.