How China’s IP Theft Costs the U.S. $5 Trillion

Last week, President Donald Trump announced the U.S. would be making a “very big move” by starting an investigation into China’s alleged theft of U.S. intellectual property.

U.S. Trade Rep. Robert Lighthizer will be leading an official investigation into China’ trade policies on intellectual property and how it has negatively impacted the U.S. 

The Trump administration has estimated that the theft of intellectual property from China could be up to $600 billion.

Sadly, this is old news. In 2015, Epoch Times completed a two-year investigation into China’s IP Theft. Experts cited in this report believe that the U.S. loses about $5 trillion to China’s cyber-espionage stealing efforts. 

“Specifically, the report argues that Chinese state-sponsored operatives steal trade and military secrets, after which they are sent into a nationwide network of transfer centers where they are reverse engineered,” writes Info Security Magazine. “The resulting products either serve the Chinese military or are sold back to markets like the US at a fraction of the price of the original.”

According to the report, China is willing to go to tremendous lengths to steal intellectual property.

“Crucially, rather than try to reverse engineer a product straight from stolen designs, the Chinese system requires researchers to first find publicly available info on earlier generations of the product and learn how to build those first,” writes Info Security Magazine. “Then they send students abroad to study and work in the targeted industry to give them a broad base of knowledge which enables them ultimately to reverse engineer the targeted product – a much quicker process, according to the report.” 

The Chinese People’s Liberation Army (PLA) allegedly is also behind a massive percentage of IP theft. PLA is believed to operate 3,000+ front companies with teams of hackers that solely exist to steal and copy U.S. technologies. 

So why do U.S. companies let China get away with it?

Businesses tend to underestimate the damage of IP theft to try to avoid hurting their relationships with Chinese officials

Not to mention, if the investors of publicly traded companies knew really how much the Chinese was stealing from the company, they would not be happy. Often these companies only report their losses from hacking, not from IP theft from copycat Chinese businesses for that reason.  

Although it’s difficult to estimate the total that IP theft is costing the U.S., it’s safe to say it’s likely being underestimated.

But stealing technology isn’t only China’s forte. When other companies (like India) see how China steals American IP without consequences, nothing stops them from doing so also. China and other countries are only benefiting from this shady practice.

Author’s note: China’s booming economy is very much at the expense of the U.S. and this has been going on for a long time. Although there were rumors that President Obama had prepped a set of economic sanctions against Chinese companies to combat this IP theft, nothing was ever done. It looks like Trump isn’t afraid to put China on blast and to put America first.