For once, China does not have time on its side. The country’s attempt to let the passing of time bring its validation is looking murky at best. China continues to be unable to establish itself as a model system: its economic strength is feared but not appreciated, as if its success is being recognized but not celebrated. Its alleged involvement in commercial hacking, the general acceptance of which is so widespread that proof of the fact is virtually unnecessary, is beginning to alienate China from the business world. This time the rift is not over noble causes like human rights or environmental protection, which often gave rise to incoherent approaches in the name of pragmatism. Foreign companies by now are convinced that Beijing’s commitments to the protection of intellectual property will remain solely in the realm of good intentions. It is becoming increasingly difficult for them to continue believing the announcements of the Chinese leadership; recent events contradict their statements, and nobody is bringing their latest technology into China anymore.
Intellectual property violations have become a key deterrent for foreign companies in China, who have been deploying countermeasures for some time. At this point they have given up on defending themselves in court, and have resorted to their own strategies: research and development labs that are being opened in China today are only tasked with specific projects tied to the local market. The fear of “idea theft” and computer break-ins is too great for them to allow the establishment of an R&D base in China. Cyber theft of corporate secrets has increased in pace and scope. Industrial espionage via computer, a sophistication of the traditional methods of product imitation or industrial drawing theft, is now afflicting multinational corporations where it hurts most, in their manufacturing know-how, built up ove decades of industrial application. The Chinese leadership’s calls for “incontrovertible proof” of their involvement in hacking are just another round of tired and ultimately unacceptable excuses, as if it made sense for a foreign company to begin playing detective in China and could find the hacker’s fingerprints on a keyboard somewhere. Moreover, China’s attitude on the matter only serves to reinforce Western governments, giving them more arguments to push back against China’s advance in their countries. Investments in Japan are essentially stopped, and not just because of the island dispute. Investments in South Korea never took off. Europe, at the cost of missed opportunities, has not changed its stance on business ethics. The United States has not hesitated in denying Chinese investment in its strategic sectors with the simple consideration that reciprocal transparency was far from guaranteed. US President Barack Obama went as far as mentioning cybersecurity on the same level as North Korea and the monetary war during his call to Xi Jinping to congratulate him on his fledgling presidency. Just a few days earlier, intelligence officials in Washington had declared digital attacks the prime threat to national security, more dangerous than terrorism.
This situation clearly demonstrates that China has chosen the wrong solution to a real problem: the modernization of a successful system that is now beginning to show its age. China seems to be stuck in a quantitative growth model where their only innovation is happening within their established manufacturing processes. The country is not producing alternative solutions, new models, or original technologies. China needs innovation, but it cannot wait for its own research structure to produce these breakthroughs without foreign investment. And so the country follows a path that skirts the edge of legality, in a situation where its foreign partners are now able to deny their acquiescence. China’s new President Xi Jinping knows that the path they have been traveling will ultimately cause them to double back. His authority and competence will allow him to face the problem at its roots and eliminate the remains of an obsolete past, however die-hard they may be. To be respected, China needs to enforce its laws, and not hide behind propaganda or place the burden of proof on its accusers. The violations, both legal and digital, are a setback for their victims, but the advantage to the perpetrator is short-lived. Even if only a small percentage of Chinese companies are guilty of cyber crime, in a country as big as China it is enough to send shockwaves throughout the world. The hope is that China will punish the perpetrators and begin to walk more in step with its history and culture; it certainly does not lack the ability. Only in this way will China be able to project an image of a model worth following, or at least worthy of respect, instead of creating an atmosphere of apprehension, fear, and an obstacle to its growth.