For China to innovate, it must protect intellectual property rights

PUBLISHED : Tuesday, 26 May, 2015, 3:30am
UPDATED : Tuesday, 26 May, 2015, 9:38am

The charging of six Chinese with economic espionage against the United States is not unusual, even if the circumstances are. The six, including three professors, allegedly stole mobile phone technology with military applications from two American firms for the Chinese government - and then some of them set up a company in Tianjin to make money out of stolen trade secrets.

The brazen enterprise aside, we can expect to hear of many more cases following the unveiling last week of visionary plans to globalise China's economy.

One is to create a batch of competitive Chinese multinational companies. The other is to invest US$70 billion in the export of the mainland's industrial spare capacity for deployment in international ventures like infrastructure.

Such announcements often focus on the big picture while overlooking an important issue. In this case the missing detail is turning into a major point of friction in Sino-US relations as China strives to consolidate its economic rise.

There is a need for China to respect intellectual property rights and laws as it upgrades and globalises its equipment manufacturing and industrial capacity to support sustainable growth amid a slowing domestic economy.

Intellectual property, piracy and industrial espionage are already issues in Sino-US relations. China's plans to upgrade its high-end manufacturing include 10 areas from robotics to transport to biomedicine that are hi-tech and bound to be fraught with intellectual property issues.

A major industrial upgrade takes time. The innovation needed to drive it tends not to yield quick results. The temptation to take shortcuts by copying or stealing industrial or technological secrets is strong. This is not uncommon on the mainland, although a domestic technology copyright case launched by smartphone maker ZTE against larger rival Huawei was a welcome sign, because respect for intellectual property rights must begin at home.

Beijing is trying to change the mindset, as evidenced by the establishment of special courts to hear IP disputes, but there needs to be a greater sense of urgency.

The lesson for China in friction over IP rights is that it will need to protect its own if innovation is to play a key role in upgrading the economy. Without IP protection, who will want to innovate?