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The Real History of Intellectual Piracy

What China Can Learn From America

Customers at a Xiaomi product launch in Shenzhen, China, May 2018. Bobby Yip / REUTERS

Whether an economy thrives depends in large part on how it treats ideas, knowledge, and innovation. It was by democratizing technology markets that the United States came to dominate the global economy in the twentieth century. Now China has drawn up ambitious plans to become the world economic leader of the twenty-first century. Its strategies for doing so are controversial. The government restricts foreign firms from operating in China, Chinese companies pirate foreign copyrights, and many blatantly engage in industrial espionage to appropriate the trade secrets of their foreign competitors. China’s defenders invoke history to justify these violations of international norms. Today’s developed countries, they claim, were no better during their own rise to power.

The history of technology transfer in developed countries certainly provides ample examples of intellectual piracy, including early industrial espoinage of which China itself was the victim. In the eighteenth and nineteenth centuries, Europeans made continual efforts to steal technical knowhow from China and to acquire the trade secrets of such Chinese innovations as paper, porcelain, and textiles. The British botanical buccaneer Robert Fortune boosted the global tea trade by smuggling specimens of the Chinese tea plant to India in the middle of the nineteenth century.

Yet China’s defenders fail to consider all the evidence. Although copyright protections in the early United States were weak, U.S. patent institutions have always been the strongest in the world in enforcing the rights of inventors. And unlike European patent and innovation systems, which assumed that useful ideas came primarily from elites, the U.S. system was a democratic one. China would benefit from heeding that lesson: control by centralized bureaucrats will never match the results of open competition and spontaneous coordination in the market.

PATENT PROGRESS

In early modern Europe, conventional wisdom held that only elites, with their access to specialized knowledge, could produce meaningful technological advances. European centralized arrangements deliberately made it difficult for ordinary people to benefit from innovations. Patents were granted not as incentives for

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