Donald Trump chose Iowa Gov. Terry Branstad to be our man in Beijing. As U.S. Ambassador to China, Branstad will be Trump’s official messenger to the Chinese.
His first communique should be crystal clear: Beijing must stop cheating or stealing or face real consequences.
Chinese hackers alone steal about $360 billion from U.S. companies every year — more than we buy from China and three times what they buy from us.
If you consider how much China steals with old-fashioned spies buried in U.S. companies, the total theft figure climbs by billions more. Half of the 165 private companies surveyed by the FBI were victims of economic espionage or trade secrets theft. Fully 95 percent of the attacks come from China. And the problem is only getting worse, with industrial spying and sabotage up 53 percent in 2015 over 2014.
Chinese counterfeits and fakes — including knock-off handbags, watches, and DVDs — cost companies in America and around the world another $20 billion a year. Those numbers aren’t just figures on a spreadsheet — real American jobs are at stake.
A few years ago, more than 500 employees lost their jobs at AMSC, an American company that develops wind-turbine technology, after Chinese hackers stole software that helps run the massive turbines and then exported it back to the U.S., installed on Chinese-made machinery. A Department of Commerce study showed that 45 million American jobs rely on intellectual property — including manufacturing workers as well as high-end engineering and design jobs.
According to one recent study, industries that rely on intellectual property pay low-skilled workers 40 percent more than industries that are not reliant on it and hire workers even during economic downturns. Furthermore, Chinese intellectual property theft robs American companies of the incentive to innovate in the first place.
For example, American steel manufacturer U.S. Steel announced in April that it had discovered Chinese-backed hackers stole decades’ worth of research on advanced steel production technologies, and turned those discoveries over to Chinese competitors.
Similarly, in 2014, five hackers affiliated with the Chinese military were indicted in a federal court on charges of stealing documents from U.S. Steel and Alcoa, among others.
So why pour millions into developing them, only to have the Chinese steal them and undercut their prices?
Much more of this outright theft goes unreported and remains unknown to the authorities — let alone the public — because embarrassed and victimized companies have little recourse and only downsides to admitting that they were robbed by the Chinese. Now Branstad and Trump must deliver a stern warning to Beijing that the days of kicking America around by cheating and stealing are finally over.
To do so, we must ensure there are serious consequences if China doesn’t stop.
One smart proposal comes from the American Enterprise Institute’s recent report on cyberspace strategy, which suggests that we impose penalties when the Chinese blackmail U.S. companies into “voluntarily” turning over intellectual property.
The U.S. Treasury and the Department of Commerce should also sanction recipients of stolen intellectual property. Offenders shouldn’t be able to do business with American companies, in the United States or abroad, and barred from importing products to America until they can prove they have been reformed. Beijing must learn that the United States will defend American jobs and businesses from outright theft.
That applies to cyberspace as well. President-elect Trump signaled as much during the campaign saying, the United States “must possess the unquestioned capacity to launch crippling counterattacks.”
He explained, “Cybersecurity is not only a question of developing defensive technologies but offensive technologies as well.” Degrading and disrupting our attackers’ offensive capabilities would show that there’s a cost to attacking American businesses.
In a world where our second-largest trading partner is stealing from us more than it buys from us, we have to be a lot tougher than giving the occasional tongue-lashing. The livelihoods of millions of American workers are on the line. We have to say what we mean and do what we say. With China, Trump and Branstad must be loud and clear: Stop stealing or pay a steep price.
Claudia Tenney is the congresswoman-elect for New York’s 22nd Congressional District. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
