By Shen Dingli
The US government has lately been showing in no uncertain terms
its unhappiness with China's protection of the United States'
intellectual property rights (IPRs). On April 20 China released a
64-page action plan promising to toughen its laws and increase
crackdowns on piracy.
One needs to commend the US government for taking this dispute
to the WTO. At least this differs from the long tradition of the US
unilaterally imposing sanctions without resorting to a world
organization where both parties are members bound by the
organization's rules.
Some would sympathize with the United States while understanding
the status of IPR protection in China. There is no dispute
over US concerns, but as to the approaches to addressing the
problems, there exist a variety of views.
The United States tends to think that China either has no
ability or intention of fixing the problem. The US argues that the
Chinese government has a responsibility to provide protection and
ought to have the capacity to improve quickly. Such a view is not
incorrect but is somewhat simplistic.
The truth has a lot to do with economics. For a long time, China
has been isolated from the world, and its economic system has been
quite different from the rest of the world. Consequently, the
pricing system of China differs greatly.
Before China opened to the world, it operated independently from
the global economy and its people received low wages. Since prices
were also low, the purchasing power of the renminbi was actually
higher than the official exchange rate would indicate.
With China's opening, its price system has been challenged by
the outside world and as a result is being transformed.
On one hand, the inexpensive Chinese labor force has been a
magnet for foreign outsourcing. On the other hand, most Chinese
consumers cannot afford Western goods under IPR protection. For
instance, a Windows Vista package could cost a Chinese worker a
month's salary.
Consumers are often forced to choose between not using these
products at all in order to respect intellectual property rights or
use the products without enough respect for such rights.
Likewise, the Chinese government is faced with a similar
dilemma: either rigorously implement its commitment to IPR
protection while curtailing domestic demand or meet consumer demand
while incrementally enforcing protection.
This is the dilemma of all developing economies. To its credit,
the Chinese government has made the strategic decision to launch
economic reform, to join international regimes of intellectual
property rights, and to eventually accede to WTO.
In assuming its responsibilities it is confronting great
challenges. It is unfair for the US to blame Beijing without
recognizing the work done and the immensity of the job.
There is much room for improvement on the Chinese side and the
authorities are committed to this challenge. However, its success
entails cooperation across the Pacific. It is fairly easy to
compare the morality behind addressing the IPR issue with some of
America's own behavior.
One obvious example, Chinese don't consider US troops'
involvement in the 1900 siege of Beijing respectful.
Still, US actions do not provide an excuse for China to evade
its own responsibility in cracking down on pirating. But China's
conformity with international standards requires international
cooperation.
First and foremost, the US needs to understand the complexity of
the differences between US and China price systems. The United
States is partially responsible for the difference because of its
past effort to isolate China. The United States should understand
that China needs more time to meet the daunting challenges of IPR
protection.
Second, making concessions to the developing countries by
discounting the standard prices of goods with US intellectual
property rights provides the best incentive to build a consumer
culture with respect for law, especially for economically
disadvantaged countries.
The US strategy should not be to expect Chinese not to buy these
goods or to punish them when the two price systems are so skewed.
Rather, it should nurture customers who are willing to respect IPRs
while paying reasonable prices.
Third, the US should reach an agreement with China for phased
implementation of IPR protection. There exist not only unequal
economic conditions between the two countries but also significant
regional disparities within China.
With phased IPR protection, the US could encourage the Chinese
central government to launch protection with regional governments
and finally all other sectors following suit.
Forth, encourage the good practices already in effect.
On April 10, a Council on Foreign Relations Task Force report on
Sino-American relations was released advocating continuing the
trajectory of engagement set by Richard Nixon's visit to China in
1972. The report calls for an "affirmative agenda".
Its major findings are to incorporate China into a global system
integration is a responsible course involving a blend of engaging
China on issues of mutual concern, weaving China into the fabric of
international regimes on security, trade and human rights. These
findings affirm the outcome of past engagements that have motivated
China as a stakeholder in the world system. The same approach will
increasingly intertwine China's interests with the rest of the
world.
The wisdom of integrating China into the community of nations
has so far worked and should continue to be effective.
Given China's current challenges, IPR protection neither
constitutes an imminently pressing issue nor vital interest. Many
competing priorities demand more attention and resources.
China will continue to make progress on IPR protection, and its
overall improvement is commensurate with China's advancement in
economic development and integration into the world economy.
Compared with punitive measures, the engagement approach is far
more productive.
The author is executive dean, Institute of International
Studies, and director, Center for American Studies, Fudan
University.
(China Daily April 25, 2007)
