US, China claim ‘meaningful’ progress on trade secret thefts

The U.S. and China have reached what U.S. officials called “meaningful” commitments on minimizing trade-secret theft and protecting intellectual property during their Joint Commission on Commerce and Trade, which concluded Monday.

The agreement represents another small step forward in the Obama administration’s attempt to curb China’s alleged massive cyber theft campaign of American intellectual property, coming several weeks after the two sides reached an agreement to end corporate hacking.

{mosads}According to the Commerce Department, China announced steps to give U.S. companies better legal tools in China to defend the misuse of their trade secrets.

Commerce Secretary Penny Pritzker listed these commitments as one of several “meaningful outcomes” of the three-day talks in China.

U.S. Trade Representative Michael Froman also said that U.S. officials had received confirmation China would not be moving forward with a controversial banking technology law that would place restrictions on the amount of foreign information technology Chinese banks could purchase.

Beijing put those regulations on hold earlier this year after considerable pressure from the international business community and top Obama administration officials, including Pritzker.

“We concluded a year of intensive engagement around proposed measures in the banking sector by confirming that banks in China are free to resume purchasing information and communication technology products of their choosing,” Froman said.

U.S. firms argue they are already burdened by onerous Chinese regulations. The banking tech rules were seen as part of a new slate of laws that target foreign companies and could require them to hand over source code and install Beijing-approved encryption. 

While the banking rule is on hold, a new national security law was passed this summer giving Beijing officials vague authority to secure China’s information technology.

Beijing’s decision to delay the banking regulations was a rare move, making Monday’s commitment all the more important to the Obama administration.

“While more needs to be done, we achieved significant outcomes that will benefit and help level the playing field for American businesses in China and promote the growth of China’s own innovation economy,” Froman said.

More broadly, the White House has put increasing pressure on China to cut back on a massive cyber campaign to pilfer American intellectual property.

That pressure resulted in September’s deal to end corporate hacks, reached during Chinese President Xi Jinping’s state visit to Washington, D.C. But many are skeptical China will enforce the agreement, pointing to several reports showing China has not slowed its corporate hacking since September.

Pritzker insisted working diplomatically is the most desirable route to a profitable economic partnership between the two global powers.

“A close and productive U.S.-China commercial relationship, based on responsible partnership, is essential to the growth and stability of the global economy,” she said. “Working to create the conditions that enable more trade and investment between our countries requires us to address issues that inhibit commerce between our two countries, but also explore areas of commercial opportunity.”