China faces a new threat as US cracks down on economic espionage

US crackdown on economic espionage could hurt research and innovation

Espionage, the world’s second oldest profession, has long been a central tool of statecraft. In the post-war era, however, where countries have revised national priorities to defend their technological and economic prowess, espionage has taken new forms. Economic espionage —a crime under the US’ 1996 Economic Espionage Act (EEA) —refers to targeting or acquiring trade secrets to benefit a foreign government or company.

The EEA makes a clear connection between the need to protect intellectual property and trade secrets and the US’ economic security. It anchors Washington’s commitment to guard innovation, technology and scientific advancements — a key component to securing its eponymous role as the global superpower. 

For long, Washington has accused China of being the largest perpetrator of economic espionage. It is used as a tool to “rob, replicate and replace” American technology and support China’s strategic goals to promote domestic manufacturing in new technologies and conquer global markets. 

More than 90 per cent of US economic espionage and 67 per cent trade secrets cases are connected to China, and cause an annual loss of roughly $320 billion to the US economy. These numbers make for a compelling case against Beijing at a time when geopolitical, technological and economic rivalry has reached new heights between the US and China. 

In many investigations, however, what is peculiar to observe is that the individuals who are indicted are not traditional spies, and include both foreign and American students, scientists and researchers. While the US acknowledges the contribution of international talent in producing advanced research and cutting-edge technology, it argues that Beijing exploits this collaborative academic environment for its own benefit. 

Some Chinese students and professors working in science, technology, engineering, and mathematics (STEM) courses, wittingly or unwittingly, serve as “non-traditional collectors” of economic, scientific, and technological intelligence. Other foreign academics are often enrolled in Chinese talent recruitment programmes — such as the Thousand Talents Plan(TTP) — through promises of competitive salaries, state-of-the art research facilities, and honorific titles.

Given the diffused nature of the threat, Washington has launched a robust mechanism to tackle such cases. In 2010, the Federal Bureau of Investigation’s counter intelligence division set up the economic espionage unit, while in 2018, the Department of Justice launched the China Initiative to pursue high priority economic espionage and trade secret cases.

Resultantly, there has been a crackdown on such transgressions. Researchers and professors have been indicted on charges of stealing wind turbine technology, chemical formulations for bisphenol-A-free, and film bulk acoustic resonator technology. Additionally, lesser charges, such as making false statements can also lead to legal action. In January 2020, Harvard University Professor Charles Lieber, a prominent chemist and nanotechnology pioneer, was arrested for denying his involvement with the TTP and the Wuhan University of Technology. 

The US claims that Chinese talent recruitment plans encourage the transfer of original ideas and intellectual property, and may result in violation of espionage laws. The message from Washington is clear: If Beijing will use covert methods to achieve its strategic goals, the US will not hold back in combating the same. 

On the flipside, Washington’s methods in prosecuting cases have come under scrutiny for a variety of reasons. Apart from larger implications of chilling academic freedom and inhibiting research collaboration, existing data points towards racial bias against those of Asian heritage.  

A 2018 research paper analysed 136 economic espionage cases and came to the conclusion that Chinese and other Asian-Americans are disproportionately charged under the EEA and are significantly more likely to be innocent than defendants of other races. 

Apart from the US, economic espionage is treated as a crime in Canada and New Zealand; most nations treat it as a civil offence. This is perhaps directly related to Washington’s singular role in spearheading innovation and cutting-edge research, and its traditional position on strict protection of intellectual property rights. The narratives around Chinese funding and talent recruitment programmes also differ. A 2019 article argues that such programmes help reverse “brain drain”  by attracting overseas Chinese talent back home. Further, the EU and the UK consider Chinese funding and collaboration as an important supplement for domestic research enterprises.

The biggest impact of the ongoing geopolitical rivalry will perhaps be faced by the US education sector and Chinese students. Out of the 800,000 international students enrolled in higher education, more than 200,000 come from China. However, due to unfavourable visa policy changes for Chinese STEM students, Beijing’s Ministry of Education issued a statement urging its scholars to “raise its risk assessment” of American study programmes. The US education sector is the country’s fifth largest services export and international students generate $39 billion in annual revenues. Should Beijing attempt to dissuade Chinese students from studying in the US, universities may stand to lose on future enrolments. 

There is, thus, a real concern that the current activities of the Trump administration will lead to possible decline in Chinese students and scholars, stifle future academic collaboration and research, and may even impact the US'’own position as a leader in innovation and research.

The trade war, the Huawei ban, and now, the targeting of scholars in economic espionage cases, have underscored the growing challenges emanating from the worsening geopolitical contestation between the US and China. The consequences of China’s troubling behaviour — from its aggressive foreign policy, to its methods to gain and acquire technology — are palpable. However, Washington’s methods to tackle the problem of economic espionage could have long-term implications for the movement of professionals, academics, innovation, technology and knowledge. Given the importance of knowledge sharing and global scientific enterprise, for the rest of the world, it is critical to insulate this sector from the blowback of the ongoing geopolitical rivalry between the US and China.

The writers are with the Observer Research Foundation, New Delhi