US and China IP theft battle could hit Silicon Valley

Worrying times for Silicon Valley as US and China square off over IP theft

On Monday, US President Donald Trump finally came good on one of his many pre-election promises. His executive memorandum will most probably lead to a year-long investigation into allegations of widespread Chinese theft of US intellectual property. While many Silicon Valley firms will be glad to see the White House finally take a determined line against the elephant in the room of Sino-US relations, just as many will be nervous of the potential outcome.

Be in no doubt: a possible trade war would be catastrophic, both for US firms operating in China and their global customers.

 

A multi-billion-dollar problem

The investigation will be carried out under Section 301 of the Trade Act of 1974, a controversial move which would allow the President to impose unilateral trade tariffs and/or sanctions and could itself contravene WTO rules.

Sweeping new legislation in China will restrict firms’ room for manoeuvre. Read more: China’s Cybersecurity Law: Game over for foreign firms?

“The theft of intellectual property by foreign countries costs our nation millions of jobs and billions and billions of dollars each and every year,” Trump said during the signing. “For too long, this wealth has been drained from our country while Washington has done nothing... But Washington will turn a blind eye no longer.”

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