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Outside editorial: US agenda for China should be: level the playing field

Posted: Sunday, January 23, 2011

The following editorial first appeared in the San Jose Mercury News:

Pressing China on human rights has to remain a high priority for President Barack Obama during President Hu Jintao’s four-day visit to the United States this week. To ignore the fact Obama’s fellow Nobel Peace Prize laureate Liu Xiaobo languishes in a Chinese prison would be hypocritical for a nation dedicated to personal freedom.

But right up there on the agenda should be leveling the playing field for companies competing with Chinese tech rivals. Hu has made promises but has yet to follow through.

While other industries focus on nagging currency issues with China, Silicon Valley companies know they cannot lead the U.S. to economic recovery if Chinese firms continue to violate the basic intellectual property rules that govern the rest of the world.

Hu would like his visit to be a four-day photo op to strengthen his image at home and abroad. Likely to leave office in the next two years, he wants to leave a legacy that he solidified China’s relationship with the United States.

That’s great — but it should come with a price tag.

Senior Chinese officials pledged to work harder on intellectual property violations during last month’s United States-Joint Commission on Commerce and Trade talks. Obama should insist that China do more than just talk. We need to see action.

In short, China has to stop stealing Silicon Valley software.

It’s bad enough China’s businesses do this routinely, but government agencies do it, too. No wonder Chinese companies figure there’s nothing wrong with committing outright theft of intellectual property.

Obama raised the subject Wednesday. He told Hu earlier in the day, Microsoft CEO Steve Ballmer had said only one in 10 Chinese customers actually pays for the software giant’s intellectual property. U.S. companies can’t thrive, or in some cases even survive, when one of the largest world markets is stealing their products willy nilly. China must put an end to it, and Obama should make it clear that if it doesn’t, there will be consequences.

China also must put an end to its policy of “indigenous innovation.” The most glaring example is its demand that Chinese government officials only procure products containing intellectual property developed and owned in China.

Imagine the European Union, for example, requiring member nations to buy items not just made in Europe but also developed there. It would be ludicrous. Yet China is getting away with it, along with other unfair practices.

The United States is still China’s No. 1 export market. At the same time, China holds around $1 trillion in American bonds. Neither country would benefit from a trade war. But Silicon Valley’s future depends in large part on how well Obama fares in the talks this week and in the months ahead.

Leveling the playing field between tech companies in the valley and those rising in power in China will be a measure of Obama’s success in this week’s historic talks.



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