Once Again, China Is About To Use The US's Obsession With 'Intellectual Property' Against Us

You've heard the narrative of course: China is supposedly terrible on intellectual property, always copying the US and swiping our secrets. This has been the popular narrative over the last few decades, with politicians and other folks continuously insisting in strong terms about how we need to get China to "respect our intellectual property." Early on we warned folks that this wouldn't end well, and so far we've been exactly right. Unlike many supporters of our patent and copyright systems, China actually recognizes that those systems are mercantilist forms of monopoly protectionism, and if there's a country out there that knows how to leverage such protectionism, it's China. And here's the ridiculous gift that the US has handed China: in demanding that it better "respect" patents and copyright, it gifted China the key to being protectionist in a manner that the US can't really complain about. It's a tremendous self-own by US policymakers, but it keeps happening.

We warned about this a decade ago when we pointed out that China was rapidly patenting stuff, and using all those patents to make a giant public display about how it was now "respecting patents." But, in practice, it was using those patents to block American competitors and to even block US companies in other countries. To China, its patent strategy is not about greater innovation, it's about using the monopoly-powers that (inexplicably) Americans are demanding China "respect" as an economic weapon against non-Chinese companies.

That's why it's astoundingly short-sighted that the USTR continues to target China in its silly Special 301 report. We've talked about this report for years. It's the report that the USTR comes out with every year, based solely on anecdotes and industry associations whining about this or that country -- and putting them on a "list" that has no practical impact other than that US diplomats are supposed to whine to the governments of those countries. While the list is sometimes used to browbeat smaller countries into changing their local copyright or patent laws, larger companies literally laugh it off. Canada, for years, has publicly explained that it completely rejects the USTR's methodology in the Special 301 report, and thus doesn't consider its findings to be legitimate. And Canada is less of an economic powerhouse than China.

All that is prelude to China now going on the attack against the US (one of many attacks, thanks to our President kicking off what he promised would be an "easy" trade war), claiming that the USTR's naming of China on the Special 301 Report is a political attack on China:

Chinese state media on Monday criticized the United States for its complaints about intellectual property theft, calling them a "political tool" intended to suppress China's economic development.

Yeah, because in China, intellectual property totally is a "political tool," so why wouldn't they expect the same to be true in the US?

An op-ed article in the People's Daily targeted the Section 301 report Washington issued in March 2018, saying the authors fabricated the claim that China stole hundreds of billions of dollars worth of intellectual property from the U.S.

"If the report is based on imagined or selective data, it's a kind of science fiction novel," it said.

"Intellectual property rights should be a bridge for innovation and cooperation among countries. In the hands of the U.S. it has become a political tool, a weapon to contain other countries, and a veil for bullying the world."

First off, the "science fiction novel" line is pretty good (and possibly a nod towards the growing success of science fiction in China with Liu Cixin's books and movies based on his books becoming a cultural phenomenon there).

But, more importantly, all that the US has done over the past few decades is to teach China how to use patent and copyright law for political purposes, and now that Trump is so focused on this ridiculous trade war, watch out for China to leverage our own demands about intellectual property against the US.