Chinese theft of valuable US trade secrets, often obtained by sophisticated cyberattacks, is becoming a more serious problem, US industry officials said on Wednesday.
“This matter requires more attention,” Jeremie Waterman, head of the US Chamber of Commerce’s China division, told a US government panel hosted by the US Trade Representative’s office.
It “has risen substantially in importance over the last year, year and a half,” Waterman said at an annual hearing on China’s compliance with WTO rules.
In one recent case, two Chinese citizens in Kansas City, Missouri, were charged with attempting to pay US$100,000 for stolen trade secrets from Pittsburgh Corning Corp, an affiliate of PPG Industries Inc and Corning Inc, at its Sedalia, Missouri, facility. The Justice Department said the pair were trying to purchase the trade secrets so a rival plant could be opened in China.
US chemicals giant Dupont also is in the midst of a legal battle over allegations that China-based Pangang Group Steel Vanadium & Titanium Co (攀鋼集團鋼鐵釩鈦) conspired to steal its trade secrets.
Earlier this year, the New York Times reported that an Austrian-based employee of the Massachusetts wind-energy company American Superconductor stole intellectual property from the firm and sold it to Chinese wind-turbine manufacturer Sinovel (華銳風電) for US$1.5 million.
Peter Dent, a vice president at Electron Energy Corp, told the government panel that both large and small US companies face “persistent and increasingly complex cyberattacks [from China] in an effort to steal intellectual property from company computer networks.”
Defending trade secrets against the attacks was “very difficult” and a costly drain on resources, he said.
Companies need the US government to take action, which could include suspending “trade benefits to countries sponsoring these actions,” Dent said.
The DuPont, Pittsburgh Corning and American Superconductor cases are “just the tip of the iceberg,” a US industry official said.
US companies are dealing with rampant “state-supported theft of trade secrets,” he said.
The hearing on Wednesday was part of USTR’s annual evaluation of how well China is meeting the commitments it made to join the WTO in 2001. A report is usually released on Dec. 11, the anniversary of Beijing’s accession to the WTO.
US exports to China have soared since China joined the WTO in 2001 and the country is now the third-largest foreign market for US goods. However, business groups told the USTR-led panel that China maintains an extensive web of discriminatory policies that prevent US companies from making additional sales and investments in the world’s second-largest economy.
Both the US Chamber of Commerce and the US-China Business Council called on Wednesday for a “bilateral investment treaty” that would open up areas of the Chinese economy to investments by US companies.
China maintains foreign ownership restrictions in nearly 100 business sectors, the business groups said.
Industry officials also complained about continuing Chinese piracy and counterfeiting of US goods, and urged the US government to aggressively challenge Chinese government subsidies that undermine US competitiveness.