China sharpens economic espionage penalties in ‘tit-for-tat provision’ against US accusations of trade secret theft
- Proposed section of criminal code targets theft of trade secrets by foreign entities, as US cases against Chinese nationals soar
- Draft of the law, which is out for review until August 16, has flown under the radar until now
China is amending its criminal code to cover trade secrets theft by foreign businesses, a change that could give Beijing a tool to retaliate against the United States for alleged economic espionage.
The proposed new section on economic espionage by foreign firms, which has flown under the radar of many foreign intellectual property lawyers, is part of a wider amendment to the country’s criminal code.
A draft of the law has been released for public review until August 16. If passed, the punishment for stealing Chinese trade secrets to benefit a foreign entity will be much more severe than the current three-year jail sentence for general trade secret theft.
The new clause will target any person or company that “steals, spies, buys, or illegally provides trade secrets to foreign institutions, organisations, and personnel”.
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Strong penalties can help China resist “raging attacks” by foreign economic agents to capture trade secrets and better protect China’s national interests, said a joint report by procuratorial departments in Shanghai earlier this year.
Some lawyers have said the new clause in China’s criminal code is a clear response to US espionage cases against Chinese entities.
“Given the deteriorating relations between China and the US, I expect there to be a surge of US legal proceedings on Chinese-related economic espionage cases, so the intention of this amendment is self-evident, that is, it is reciprocal and a tit-for-tat provision against the US,” said a Beijing-based trade lawyer, who asked to be identified only by his surname Xu due to the sensitivity of this topic.