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May 30, 2015

The Case of U.S. Against Chinese Trade Spies

By Frank Li

The alleged stolen technology helps to block out unwanted frequencies on mobile phones
Graphic Source: BBC, May 2015
This post was triggered by this recent news story: US charges six Chinese nationals for stealing trade secrets.

Here is an excerpt:
The US has charged six Chinese nationals over the alleged theft of technology used in mobile phones.
The six, including three university professors, are accused of using the technology to benefit universities and companies controlled by Beijing.
One of the group, Tianjin University professor Hao Zhang, has been arrested but the rest are believed to be in China.
The story even made its way to the front page of The Wall Street Journal (May 20, 2015), under the title of U.S. Says Chinese Professors Stole Tech, with the second part (page A14) simply titled under "Spying".

What a malicious "Spying" designation in WSJ!

I do not know the details of the case. So I will only comment in general terms, based on the information publicly available, so as to give you a different perspective, at least.

1. My take of the story

I do not think these Chinese folks are spies per se, as KGB spies. Rather, this is more likely the case: they came to the U.S. as students, graduated with advanced degrees, worked at some U.S. companies as engineers, saw better opportunities in China, and went back to pursue them. They might have taken with them some technologies from their former employers, as most former employees do everywhere in the world, including the U.S.

The key question is who has the right to these technologies? An engineer might think he owns them, as he developed them. But the company might think it owns everything, including the engineer's brain.

So there may be a legal case here. But going an extra mile to make it a sensational international spying case? Give me a break!

This appears to be a simple IP (intellectual property) rights case - calling it spying is not worthy of even a second tier media outlet. Is WSJ still one of the premier business and financial news publications in the world?

2. How will China respond?

Here are three basic questions:

  1. Will China defend Professor Zhang? 
  2. Will Professor Zhang win the case?  
  3. Will China retaliate?

Let me answer them one by one.

2.1. Will China defend Professor Zhang?

Yes, very likely!

Unlike America, China will not try to save every Chinese citizen abroad, such as an aid worker somewhere in the Middle East, at the expense of a national strategy. But this case is different: a professor of a highly prestigious public university (comparable to the University of Illinois) was arrested in America under charges which are "bogus" by Chinese standards!

It's national honor at stake! So China is likely to respond, with a few million Dollars out of its trillion-Dollar national treasure chest!

2.2. Will Professor Zhang win his case?

Yes and no.

Yes, he will win the case by having the best support from the Chinese government, which means he can afford to, and will, have the best lawyers in America!

No, he will lose because by the time this case is settled, he is likely to have served time while in custody.

He will eventually return to China as a hero!

2.3. Will China retaliate?

No! China is too smart to retaliate against such a stupid incident! Once again, this is an IP rights case at best, a nuance in the Sino-American relationship.

3. Discussion

Overall, I think the U.S. has gone too far against China on IP theft in general and this spy case in specific!

To keep it simple, let me support my thought from two perspectives: entrepreneurship and humanity.

3.1 Entrepreneurship

Why join the Navy when you can be a pirate  ~ Steve Jobs

The accused Chinese professors are somehow like Steve Jobs in entrepreneurship, but not to his extreme, either in youthful recklessness or in ultimate greatness!

3.2 Humanity  

For those who get it, no explanation is necessary. For those who don't, no explanation is possible!

4. Closing

Let's compete with China in the political systems, not via various guerrilla battles, such as this "spy" case!

Courtesy Frank Li via Global Economic Intersection (Article Archive Here)

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle
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