President Donald Trump Monday launched a probe into China’s intellectual property practices, marking a new chapter in a fraught relationship that the U.S. government estimates costs the American economy hundreds of billions of dollars each year.
China is the world’s worst infringer of intellectual property rights, according to a 2013 report from the government’s Commission on the Theft of U.S. Intellectual Property. The report estimated that China accounted for between $150 billion to $240 billion annual cost to the U.S. economy from the theft of intellectual property. It put the annual cost globally at $300 billion, meaning China accounts for between 50 percent and 80 percent of those losses.
“IP theft by thousands of Chinese actors continues to be rampant, and the United States constantly buys its own and other states’ inventions from Chinese infringers,” the commission said in a 2017 update to its report. The most recent report included a $600 billion estimate for the global cost to the U.S. economy of intellectual property theft.
Goods from China and Hong Kong accounted for about 88 percent of counterfeit goods seized in the United States last year, according to the Department of Homeland Security.
A study by the U.S. International Trade Commission in 2011 estimated that absent Chinese intellectual property theft, U.S. intellectual-property intensive firms could have increased employment by 923,000 jobs.
This level of theft is not due merely to a lack of enforcement by Chinese officials, according to the Commission on Theft of U.S. IP. Instead, it stems directly from Chinese industrial policies aimed at expanding its economy.
“China is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information, policies that have contributed to greater IP theft,” the commission said in its 2017 report.