Bringing an End to China’s Technology Plundering
Editor-in-Chief Monthly Column

The U.S. Trump administration is moving towards imposing tariffs on all Chinese imports into the U.S., but there is strong opposition claiming that Trump is jeopardizing free trade.

The Trump side argues that these are necessary measures toward a country that has broken the rules of free trade time and again. In fact, for the last 30 years China has constructed and operated a system that is used to steal intellectual property and advanced technology from developed countries.

China obligates all foreign companies entering China to become a joint enterprise with China and share information. After becoming an economic superpower, they have been purchasing European and American companies to obtain advanced technology.

This is one of the methods China uses to misappropriate foreign technology, but up until now it was technically legal. When this method proves difficult, however, they use illegal methods such as economic espionage and cyber-attacks.

This sort of thing happens not just to businesses but also to universities and institutions of higher research.


Destroying China’s World Predomination Blueprint

The Trump administration has started a full-scale economic war against China’s thefts of intellectual property.

He is imposing tariffs on all Chinese imports, and requesting China to stop transferring technology through joint enterprises. Trump also reinforced government inspections of Chinese companies purchasing American businesses.

Chinese telecommunications companies Huawei and ZTE are known to have connections with the People’s Liberation Army, and Congress recently decided to ban them from the U.S. market due to their being a national security threat.

Trump even declared of Chinese students in the U.S. that, “almost every student that comes over to this country is a spy.” International student visas are being shortened from 5 years to 1 year, and intelligence forces such as the FBI have started a thorough investigation of the matter.

Trump is taking measures similar to CoCom (Coordination Committee for Multilateral Export Control), an arms embargo imposed on the Soviet-led Comecon during the Cold War. CoCom prevented the Soviet Union from selling advanced products such as computers and semi-conductors to other countries, which led to their defeat in the technological and military war against the U.S. Trump is now trying to reenact this American victory.

Trump’s economic war aims at erasing China’s trade surplus against the U.S. and uprooting China’s ambitions for world predomination.

Master Ryuho Okawa, founder and CEO of Happy Science, says in his book “The Decision Toward Prosperity”:

We can say that Trump is trying to reduce China’s profit-making system, which is connected to the military.


Stealing Intellectual Property from Universities

The Japanese media paints Trump as a villain who is dismantling the world order, so it would not be surprising if the majority of people fail to grasp what Trump’s strategy is. But it turns out that Japan is the best example of how China used their system to steal intellectual property.

Japan is being invaded via universities and research institutions. In Japan, Chinese students are obliged to join student organizations overseen by the Chinese embassy. The embassy is thus able to keep watch over the students daily lives and access information about the kinds of research being conducted at Japanese institutions.

If the Beijing government finds a Japanese institution researching technology that they want to possess, Chinese universities and businesses approach that institution to provide additional funds in the form of collaborations. This is the basic process of how technology is transferred to China.

The Institute of Laser Engineering at Osaka University is the most advanced laser research institution in Japan, and they are actively engaged in collaboration projects with Chinese establishments such as the Chinese Academy of Science, China’s most advanced science institution.

The Chinese Academy of Science happens to be one of many domestic institutions now helping the People’s Liberation Army develop a laser weapon that can destroy artificial satellites. There is no mistake that Japan’s latest laser technology is being used in the Chinese army.


Unregulated Acceptance of Foreign Students

Osaka University told the Liberty Magazine, “We engage in export control as per the foreign exchange law.” In Japan the Ministry of Economy, Trade and Industry decides whether or not to export technology that could have potential military uses in accord with the foreign exchange law. So, Osaka University is saying that they have done nothing wrong because the Ministry permitted them to export that information.

This loose regulation, however, could prove fatal to Japan, and controlling China’s theft of Japan’s advanced technology is outside of Trump’s jurisdiction.

In 2008 the Ministry of Education, Culture, Sports, Science and Technology announced the “300,000 people plan” that encourages the unregulated acceptance of Chinese students and joint research projects under the banner of ‘national friendship.’ In light of America’s FBI investigations, Japan’s lukewarm response may turn into an international scandal.


Chinese Engineers Go Missing

For Japanese businesses, China similarly uses the method of joint enterprises and obligatory information sharing. There are many cases where even just simple business cooperation ends up with theft.

There was a well-known case where China stole bullet train technology from the East Japan Railway Company and Kawasaki Heavy Industries, and began exporting it, claiming that they had developed it themselves.

It is now common practice among Japanese manufacturing companies to employ Chinese engineers, and espionage incidents are not a surprising result. Many of these cases don’t make it onto the news, and only a few are widely known such as the 2007 incident with the Japanese auto-components maker Denso.

One IP department official from a major Japanese electric appliance company says, “Many of our Chinese engineers disappear after going to China on a business trip. We have no way to prove if they were involved with economic espionage.”

Still Actively Engaged in Development Collaboration

The state-level IP theft system that China took 30 years to create can be simplified down to 3 steps:

  1. Send students and engineers abroad (to Europe, the U.S. and Japan) to learn the latest technology.
  2. The students and engineers bring back that technology (often illegally).
  3. Continue research and development overseas while leaking advanced technology into China (illegally).

Chinese engineers often disappear from Japanese businesses because of step 2. They are well rewarded upon their return to China.

Nevertheless, major Japanese companies such as Panasonic and Softbank are still actively engaged in joint development projects with Chinese businesses such as Huawei, the telecommunications company due to be banned from the U.S. market. And the science and engineering department at the University of Tokyo is also engaged in transnational projects with Huawei.

Japanese universities and businesses are unconsciously creating a haven for economic espionage, but this will only become apparent in 1 or 2 years. When it comes, it will be a decisive moment for Japan.


1. Awareness of the U.S.-China Cold War

Prime Minister Shinzo Abe has showed his eagerness to repair relations with China during his scheduled visit to Beijing in October, saying, “Japan-China relations are on the road to full normalization.” The question is, is Abe really aware about the current Cold War situation between China and the U.S.?

Japan’s political leadership and the businesses that have relations with China must realize that we now stand at the greatest turning point in the last 30 years.

Ever since the 1990s, the U.S. has tried to democratize China by accepting them into the free economy system. Last year, however, the Trump administration boldly declared that China had failed their expectations, and shifted their course to combat China’s communist regime.

Trump is attempting to destroy China’s ideal world order. The Japanese government and major businesses have to decide whether to stand with China or with the U.S.


2. Revising the Rules of Trade and IP

Trump is set on thoroughly revising the rules of trade and IP in order to establish a new world order that turns around an American axis. Japan must step in harmony with this move and thoroughly revise their policies: more specifically the policy of unregulated acceptance of Chinese students and the loose policy that allows technology to be transferred to China.

Like the U.S., Japan’s leaders must talk with China and protest against their enforced information sharing in joint enterprises, thoroughly inspect Chinese investments in Japan, and ban Huawei and ZTE products from the market.


3. Anti-Espionage Laws

Japan is the only country in the world that does not have an anti-espionage law, so the country must act quickly to cover this flaw. In Japan, economic espionage incidents are treated the same way as theft, but spies are a state-level threat. It is common sense to give them a heavier penalty.

Ending the world’s greatest haven for economic espionage will lead to the end of China’s IP theft strategy. At the same time, it will bring closer to reality Trump’s victory in the U.S.-China Cold War.

Jiro Ayaori
The Liberty Magazine Editor-in-Chief

Bringing an End to China’s Technology Plundering
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