November 1, 2018 / 8:22 PM / 14 days ago

Breakingviews - China trade-secrets case brings sanctions closer

U.S. Attorney General Jeff Sessions announces a criminal law enforcement action involving China; and a new Department of Justice initiative focusing on "China’s continued economic criminal activity" during a news conference at the Justice Department in Washington, U.S., November 1, 2018. REUTERS/Jonathan Ernst

WASHINGTON (Reuters Breakingviews) - A China trade-secrets case in the United States may have just brought sanctions closer. State-backed chipmaker Fujian Jinhua was indicted for allegedly stealing designs from U.S. rival Micron Technology. It had already been effectively barred from buying U.S. parts, so this raises the stakes. The idea of targeted, government-mandated punishments for industrial espionage, floated under the last administration, could be in play again.

The U.S. Justice Department has recently brought a rash of cases against China for economic spying. Last month for the first time, prosecutors succeeded in extraditing a Chinese intelligence officer to America to stand trial for stealing trade secrets from GE Aviation and others. Earlier this week, two Chinese intelligence officers, computer hackers and others were indicted for cyber attacks aimed at stealing engine data for commercial airliners.

This time, Fujian Jinhua, its Taiwanese partner United Microelectronics and three Taiwanese nationals were indicted in a document unsealed on Thursday. On Monday, the Commerce Department put Fujian Jinhua on a list of firms that have to obtain special licenses to purchase U.S. parts, and indicated such a license wouldn’t be provided.

While the threat of trade war is unusually intense, anxiety over economic espionage goes further back. In 2014, five hackers from the Chinese People’s Liberation Army were indicted for stealing information from U.S. Steel and other companies. President Barack Obama seriously considered imposing sanctions on companies like Baosteel, which were thought to have benefited from the hacks. An emergency Chinese visit to Washington and promises to stop the espionage stayed the president’s hand.

Economic security is a much hotter topic under President Donald Trump. Attorney General Jeff Sessions said on Thursday that Chinese espionage cases are on the rise and “enough is enough.” FBI Director Christopher Wray said “no country presents a broader, more severe threat to ... our economic security than China.” Trade tariffs, now in effect on almost half of all Chinese imports to the United States, may have lost their power to shock. Sanctions might give the global order its next jolt.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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