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https://www.theatlantic.com/ideas/archive/2019/04/us-trade-hawks-exaggerate-chinas-threat/587536/

I was reading this article and read that China is not any different in regards to other developing countries in terms of IP protection and government subsidies, and that tech transfer is encouraged to happen between developed countries and developing countries.

But here, too, China isn’t doing anything exceptional. According to the U.S. Chamber of Commerce, which last year ranked countries on how well they protect the intellectual property of foreign companies, China scored fairly well among developing nations: just below Mexico and Malaysia but above Turkey, Brazil, South Africa, and the Philippines. A 2017 study of cases in which foreign companies sued for patent infringement in Chinese courts by Renjun Bian of the University of California at Berkeley School of Law found that foreign companies actually prevailed at higher rates than did Chinese litigants.

Other critics focus on the way the Chinese government subsidizes its industries, thus giving them an unfair advantage. There’s a germ of truth here: Beijing pours money into promising companies in ways the United States and most European governments do not. But this isn’t unusual among developing economies either. According to the Heritage Foundation’s annual index of “economic freedom,” which measures state intervention in the economy, China actually intervenes less than India, Vietnam, and Brazil, some of America’s best friends in the developing world.

So why is this idea that China is a cheat unlike other developing countries pushed by the current U.S. administration?

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  • I don't think this question can be answered without opining on the motivation(s) of "trade hawks" or current US administration, consequentially this question appears to invite speculation. Worthwhile question, but perhaps not suitable for this site
    – BobE
    Commented May 16, 2019 at 17:52
  • It's worth noting that the narrative is not just pushed by the current US administration, although they are acting much further on it. And using a rediculoualy wide measure ofgovernment intervention is a red herring, which makes the article suspect.
    – user19831
    Commented May 16, 2019 at 18:51
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    Even if you agree with everything written in that article, it already gives you a reason: "China’s economy is so massive—and its disruptive effects on the United States and other competitors are so large—that China can’t act like other developing nations. It must move rapidly toward the kind of openness to foreign trade and investment typical of Europe and the United States." Of course the article (then) disagrees that Trump's strategy for achieving that is any good.
    – 264 champagne bottles on ice
    Commented May 16, 2019 at 20:35
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    A higher percent of successful court cases might mean a more favorable environment for bringing court cases, or it might mean that things are so obviously lopsided that only the most egregious cases with overwhelming evidence are ever brought to court. It really says nothing about how favorable or unfavorable the country is to foreign IP. (I did not read the study, I can't tell just from the abstract whether they did any subtler analysis)
    – Emilio M Bumachar
    Commented Jun 17, 2019 at 12:30

1 Answer 1

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One reason is that they disagree with Mr. Beinart (the writer of that article). Several things that he presents as facts are disputable.

  1. That other countries do the same things.
  2. That China is at the same level of development.

One could easily argue that China is no longer a developing country in the same sense as Vietnam or the Philippines. Its per capita Gross Domestic Product is much higher.

There are also some additional reasons:

  1. China has a massive trade surplus. As a country, it can afford to pay for intellectual property in a way that poorer countries cannot.
  2. China is huge (in population). Only India is close. It has more than four times as much population as the United States (which is third). And more than twice the population of the European Union (which is not a country but still measurable).
  3. For most countries poorer than it, it doesn't really matter whether they protect IP as they aren't big enough to matter. But China's economy is the largest in the world as measured by Purchasing Power Parity GDP, bigger than the US or the EU.

Looking specifically at Brazil, India, and Vietnam, only Brazil is comparable in PPP GDP per capita.

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    As I understand "forced tech transfer", if a US business wants to manufacture in China, they are "forced" to reveal proprietary IP to the Chinese Govt. Is that correct?
    – BobE
    Commented May 17, 2019 at 3:18
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    continued: Doesn't the US business have the option to manufacture elsewhere, thereby avoiding the release of such info to the Chinese? Sounds like the US business accepts (grudgingly) those conditions. That doesn't sound like "stealing", rather a business decision to reveal info.
    – BobE
    Commented May 17, 2019 at 3:25
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    If a US business elects to "sell" in China, isn't that also business decision, wherein the business accepts the conditions? BTW, thanks for clarifying (for me).
    – BobE
    Commented May 17, 2019 at 13:40
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    @BobE Those sound more like arguments then questions. On the flip side, if the US government doesn't like the Chinese conditions, isn't it their right to object to them?
    – prosfilaes
    Commented Feb 7, 2022 at 16:33
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    Also: Big companies wanting to enter the chinese market are often forced to go into joit ventures with chinese companies. A luxury that poorer countries could never afford in terms of political/market force capital.
    – Hobbamok
    Commented Feb 9, 2022 at 9:44

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