LOS ANGELES, California–As the world stumbles from one issue to the next, it can be understandably difficult to determine where our priorities should be. Should we focus all of our resources on stopping climate change? After all, the health of our planet affects everyone. Perhaps it is the war in Ukraine that should take our attention, as it is causing untold suffering and has the potential to ignite into World War III. While these problems are undeniably serious and must be addressed, one issue in particular will be the most important and dangerous of the next few decades: the unauthorized acquisition of American innovations by power-hungry governments.
International Trade Can Be the Solution to Global Inequalities.
Our world operates in part on two truths: first, there is a large wealth discrepancy between developed and undeveloped countries in terms of both money and ideas, and second, international trade is one way to overcome it and ultimately develop better relations between nations, which benefits everyone. International trade is intended to help lift those in emergent and developing countries out of poverty because they can sell more goods and services to other countries, which creates jobs and fosters livelihood within such communities.
International trade also helps those in more developed and mature countries to open up new markets (in the less developed economies), hire workforces with specialized skills in such markets, and import a variety of goods from those markets. These goods, such as electronics and medical supplies, are often essential to increasing consumers’ quality of life, especially when they can be purchased at affordable costs. Overall, international trade, when both partners honor their commitments, is a win-win proposition because it leads to mutual gains. The assumption of good faith, or trust between two trading partners, is thus the foundational principle that underscores successful trading relationships.
What happens, then, when a country does not honor its agreements and breaks that trust? Let us look to China to see how this is already damaging the economy in America, our security, and the world market.
Authoritarian Governments Are a Threat to Innovators and Businesses.
For decades, the Chinese Communist Party (CCP) – the ruling and only political party in China – has been acquiring and stealing American innovations and ideas through trade with the U.S. and the West. The result is that China has grown its economy at faster rates and lower relative investments than other countries while denying many American firms the gains from trade that it committed to.
Some prominent ways in which it has done this is by stealing American technology, copying our ideas without properly paying for such design and R&D, infringing upon our artists’ and creators’ copyrights and patents, and using these ideas to develop its industries, all while driving many U.S. companies out of business. This directly impacts the economic and social livelihood of Americans.
In short, rather than organically developing its technologies and capabilities through unleashing the power of human imagination and entrepreneurship, China has chosen to steal and deceive, violating the key assumption of trust that underscores a partnership – any partnership.
China’s Misconduct Is Resulting in National Security Risks for the United States.
The greater challenge is that when the creations, designs, ideas, and innovations that China misappropriates have dual-use applications, an economic security risk becomes a national security threat. What is a dual-use technology or application, anyway? Broadly, it refers to innovations that have both commercial and defense uses, civilian and military uses, and private and public uses.
For example, global positioning systems (GPS) help us navigate the road, but they also help the military track down terrorists. Semiconductors are important for calculators and computers, but they also power military drones. Facial recognition software helps unlock our phones through proper identification, but also helps the CCP to monitor and observe its citizens. Technological innovations have the potential to uplift a nation’s economy but when concentrated in the wrong hands, also have the power to threaten global security.
China Wants Dual-Use Technologies for a Key Reason: Power.
China has targeted acquiring dual-use technologies and applications because today, technological innovation is the source of not only a company’s power but also a nation’s. China wants to be the most powerful country in the world, and it sees technology as being vital to achieving that goal. The Communist Party-State considers technology a key to its continued rule.
China’s Ambitions Are Impacting Americans and Businesses Alike.
That raises the question of why it matters that China seeks so much power. The answer depends on the stakeholder. For American civilians, it matters a great deal. Our system of government, though imperfect, is based on human-centered values of democracy and freedom. Our way of life is based in part on our right to determine our own destiny and to participate in open markets with relatively few government restrictions.
In contrast, China’s system of government is arranged differently. With only one political party in power – the Communist Party – China’s policies are designed to keep the party in power rather than to uplift its people. If China believes in a citizen-centered system of government, the CCP would have already proven this by allowing alternative voices to rise and challenge its views of what’s best for its citizens, not only those in power. China’s suppression of its own people’s voices is evidence of the party’s greed, fear, and insecurity. Consequently, when such a hostile nation is engaging in the theft of American innovations – our source of power – it threatens our way of life and raises the question of what will happen if China achieves world domination.
For businesses, it is no less serious. If executives want to continue to operate in economies that are market-based, they must recognize the perils when a Communist country becomes the most powerful country in the world. Will firms be able to freely operate? Will good ideas be cultivated? Will inventors be able to create wealth and seek returns on their investments? Will executives be imprisoned just because they offend those in power?
The American private sector had been duped by China for a long time. They transferred technology, they made investments, they created jobs, and they taught Chinese citizens new skills and uplifted hundreds of millions out of poverty. In return, they were hoping that such economic mobility would lead China to open its markets to American firms, and importantly, become a responsible global stakeholder. Instead, China became more tyrannical each day, emboldened by the technological prowess it inherited from American firms. Corporations had been too slow to recognize China’s deceptions. And now, the private sector is seeing that at some point, our country’s business interests and national interests converge. Economic freedoms and political freedoms go hand in hand.
We Can Already See the Potential for Disaster in Today’s Headlines.
The intersection of China’s desire for power and its hunger for technology will lead our world down dangerous paths unless we act. What do we face? Look, for example, at what Russia has done to the people of Ukraine. Now take it just one step further and imagine if Russia had China’s technological power, population, and political organization. The Russia-Ukraine war foreshadows what will happen if China becomes more technologically advanced than the U.S. and feels emboldened to attack its less powerful adversaries – including us.
Executives Need to Educate Themselves on the Real Threat that China Poses to Them.
Becoming aware of China’s deceptions and threat as a rising power, including what that means for all companies, is the first step for any executive in enacting change. Many peer-reviewed studies have shown that the typical executive is either not aware of the threats they regularly face or simply does not care. They are thinking very short-term because they may feel pressured to deliver shareholder value or they may want to optimize their own career and wealth opportunities by expanding the resources under their control. But business leaders must take the risks seriously instead of prioritizing short-term interests. Consumers must put pressure on them if they do not.
Businesses must also take action. For example, they must stop lobbying Congress and the Biden administration to remove the tariffs imposed on Chinese goods by the Trump administration. Removing tariffs would amount to teaching China that it can continue to deceive Americans by stealing ideas and technologies and blocking access to its markets without suffering consequences. This would also allow China to continue fueling its lawless quest for power.
Consumers must also do their part. They may not like inflation, but that is part of the tradeoff when we increase wages and domestic employment: there is more money chasing the same goods and services, especially those already impacted by tariffs. Americans can and must learn to consume less. If we want to promote local businesses and American jobs, we should expect to pay higher prices. If we want freedom, democracy, and security, we should expect to endure some short-term pains. In short, Americans must stop trying to have it both ways.
Noelle Borao is a social scientist and practitioner-scholar whose focal research is innovation and IP theft, subsumed under the broader area of U.S.-China affairs. For more information, please contact: