The allegations of intellectual property theft by China are contentious in United States–China relations and between the People's Republic of China and several other nations. China is regularly accused of state-organized economic espionage and theft of intellectual property, in violation of international trade agreements. The espionage and theft would not be limited to business, but also include academia and government. China has repeatedly and vigorously denied the allegations, stating that Western companies willingly transfer technology to get access to China's market. China however also state they are taking steps to address the concerns. In 2019, China banned forced technology transfers via the Foreign Investment Law.
Overview
According to Derek Scissors of the American Enterprise Institute, Chinese firms have been able to spend more on production, undercutting the prices of global competitors, by leapfrogging the often costly research and development phase through intellectual property theft. According to James Lewis, senior vice president and director of the Center for Strategic and International Studies’ Technology Policy Program, "Chinese policy is to extract technologies from Western companies; use subsidies and nontariff barriers to competition to build national champions; and then create a protected domestic market for these champions to give them an advantage as they compete globally". After acquiring intellectual property, Chinese government subsidies and regulations helps Chinese companies secure market shares in the global markets at the expense of the U.S.
Japanese and European rail businesses have, for example, stated that Chinese rail companies used technology from shared ventures to become big in high-speed rail. Another example is in wind power, where Spanish wind power producer Gamesa was required to manufacture parts using Chinese domestic producers; within years, the same manufacturers produced parts for domestic producers who soon eclipsed Gamesa through favorable loans and support. Besides recruiting foreign employees to share trade secrets, another method involves cyber espionage and hacking. One of the methods involves massive, broad hacks, such as 2021 Microsoft Exchange Server data breach, before sifting through the acquired data in search of valuable information. According to Microsoft, the large-scale hack was probably sponsored by the Chinese government.
According to William Schneider Jr., "China has institutionalized a system that combines legal and illegal means of technology acquisition from abroad". The issue is not limited to the United States, but is also reported in Europe, and according to William Evanina, director of the National Counterintelligence and Security Center, China directs similar efforts towards other NATO members. According to CNN, some U.S. officials and analysts have pointed to China's Made in China 2025 plan as "a rubric for the types of companies whose data Chinese hackers have targeted".
In 2015, Chinese President Xi Jinping and U.S. President Barack Obama had agreed neither government would "conduct or knowingly support cyber-enabled theft of intellectual property". This led to an 18-month decrease in Chinese hacking, ending with the increased trade conflicts under the Trump administration.
According to Adam Meyers, working for the cyber-security firm CrowdStrike, China's campaign of global cyber-espionage has increasingly targeted big repositories of data, like internet or telecom service providers, making it "more difficult to really pinpoint that they were doing economic espionage". Co-founder of CrowdStrike, Dmitri Alperovitch, stated in 2018 that China appeared to have ramped up its intellectual property espionage, after a decrease during the end of the Obama administration. According to Alperovitch, there has been an increase in hacks by China's Ministry of State Security, which he considers more skilled than the People's Liberation Army, which previously stood for most of the hacking. This shift from the PLA to the Ministry of State Security, as well as an increase in sophistication, has also been noted by U.S. intelligence officials.