China should be encouraged away from cleantech espionage

A 2012 article looking at how widespread China’s espionage system reaches. The US cleantech, auto and telecom sectors feel the brunt. From a column called Follow the money in Cleanbiz.Asia.

In all the rush and stupor of the Festive Season there were a couple of intriguing stories that didn’t get the notice they deserved. The pessimists point to more China-related spying cases. The optimists pointed to the victory for those supporting US/China clean energy co-operation.

The framework of US/China Clean Energy Research Centers (CERCs) in building energy efficiency (Lawrence Berkeley Lab), electric vehicles (University of Michigan) and clean coal (University of West Virginia) have borne fruit.

This came about through the US Department of Energy’s Advanced Research Projects Agency-Energy managing to survive the budget cuts. While it is funded at half the requested level it has been authorized to open two new DOE Energy Innovation Hubs – one specializing in rare earths and energy-critical materials and one for energy storage technologies – which support the work of the CERCs.

Considering the row over solar manufacturing subsidies, this good news for US-China relations in renewable energy.

Espionage

At about the same time, however, an agri-business espionage case landed a Chinese scientist in jail and underlined the continuing problem with theft of valuable intellectual property (IP). Amidst the deafening silence in the Chinese press, Huang Kexue admitted stealing trade secrets from two US firms and was sentenced to seven years in prison.

Earlier in the year China’s Sinovel Wind Group was sued by American Superconductor Corporation (ASMC), which makes proprietary technologies for electric power infrastructure and has alleged theft of its IP.

In a phone conference with financial analysts, AMSC revealed that a former employee stole software code from the company and is now in jail on corporate espionage charges. It added that investigations showed that Sinovel illegally obtained and used AMSC’s IP to upgrade its 1.5-MW wind turbines in the field to meet proposed Chinese grid codes and to potentially allow for the use of core electrical components from other manufacturers.

Hi-tech espionage has been increasing globally, with China named time and again as being the main culprit and it is increasingly becoming a part of cleantech too. A report by the UK cabinet office this year estimated that cyber-espionage alone was costing the UK economy about USD27 billion a year.

It has to be said this cannot be all attributed to China. One of the many embarrassments revealed by Wikileaks fiasco was that: “French espionage is so widespread that the damages (it causes) the German economy are larger as a whole than those caused by China or Russia,” an undated note from the US Embassy in Berlin said, according to a Norwegian translation by Aftenposten.

The fact is, however, that on a global scale the finger is solidly being pointed at China. Back in 2007 Jin Hanjuan was about to board a flight to Beijing when customs officers found more than 1,000 confidential papers that are alleged to have been stolen from Motorola. In early 2011, a Chinese engineer was found guilty of stealing secrets from Ford Motors to try and get a job with Chinese car manufacturers, while in 2010 another couple was charged with trying to sell secrets about General Motors’ hybrid vehicles to China’s Chery Automobile Company. Fiat and Renault have made vague noises that hybrid technology has been stolen by Chinese manufacturers.

IP battle

While China, along with India, has long complained of the lack of technology transfer from North American and European companies, the lack of respect for IP has been the fundamental problem. For example, some time ago the Financial Times reported that China-based European executives say German industry associations have advised German companies not to file any patents in China at all.

While China, nor its companies, will ever admit to industrial espionage, it is beginning to recognise the value of IP. Considering that little more than 30 years ago the idea that property was theft was as common as the notion of capitalist running dog, attitudes in China have changed remarkably quickly.

Perhaps China’s bare-faced cheek to copy and improve foreign technology might be compared to Japan’s economic emergence in the 1960s and 1970s when it was considered an unreserved manufacturing plagiarist. The move to maintain the framework of US/China Clean Energy Research Centers must be regarded as positive to encouraging China away from French-type practices.

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