America Should Only Punish the Chinese Companies That Steal Intellectual Property

Derek M. Scissors

Key point: It makes no sense to allow investment in companies that do America harm, yet also punish companies that have followed the rules.

Yes, there is a Congressional attempt to fix certain flaws in financial relations with China. Yes, the White House held discussions on the matter. No, the White House won’t do anything meaningful, unless stalling Congress counts (see telecom sanctions). That’s what won’t happen.

What should have already happened is delisting the Chinese firms which will not obey US disclosure rules. Also overdue: sensible policy on the PRC’s theft and coercion of American intellectual property (IP). Sensible policy sanctions the culprits, only. Tariffs should be rolled back on firms that have done nothing wrong. Guilty parties should face both tariffs and investment restrictions.

In June, a bipartisan group of Senators introduced a short bill essentially requiring firms listed in the US to disclose properly. This seemed odd — a law to enforce the law? But 10 months ago, the Securities and Exchange Commission indicated why — lack of information from China. This did not seem odd — even friendly observers admit the Communist Party can’t accept transparency.

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