Mr Ratcliffe said three words encapsulated Beijing’s grand plan.
“I call its approach of economic espionage ‘rob, replicate and replace’.
“China robs US companies of their intellectual property, replicates the technology, and then replaces the US firms in the global marketplace.”
Mr Ratcliffe cited Chinese wind turbine manufacturer Sinovel. In 2011, an employee of US technology company AMSC was bribed by Sinovel to steal key wind turbine software.
After the theft, Sinovel ceased paying the US firm for its technology. It was a good deal for the Chinese firm which bribed the employee just $US20,000 ($A27,000) to avoid paying potentially hundreds of millions of dollars in future payments to AMSC.
“Today Sinovel sells wind turbines worldwide as if it built a legitimate business through ingenuity and hard work rather than theft,” Mr Ratcliffe said.
Earlier this year, FBI head Christopher Wray said there were 1000 investigations underway regarding Chinese technology theft in the US. It’s estimated the crime costs American firms between $US300 and $US600 billion ($A200 billion and $A800 billion) a year.
Mr Ratcliffe also said there had been “frequent arrests” of Chinese nationals at US universities, and even of some US academics who have been charged with passing secrets to China.
China has been accused of hacking into and stealing information in Australia, from organisations as diverse as miner Rio Tinto and the Bureau of Meteorology.
Australia and China have signed agreements not commit cyber espionage. It’s also difficult to conclusively prove where any attack may have originated from or what information was taken.
“Beijing doesn’t appear to have ceased commercial cyber espionage activities in Australia,” it said. “China has also improved its tradecraft, making detection harder and perhaps leading to a mistaken perception that activity has become more focused.”
Professor Jane Golley, of the Australian National University’s Centre on China in the World, told news.com.au there was no doubt China had snaffled trade and other sensitive secrets. But she said its role in China going from a third world to developing nation was overstated.
“It’s a view that is beyond lazy. While there has been some industrial espionage, to characterise China’s remarkable economic reforms in the last four decades as being purely down to robbery is grossly unfair.”
She nominated her own three Rs: revolution, resilience and resurgence.
The revolution was the country’s industrialisation, its resilience was dusting itself off when some of those initial economic reforms proved disastrous even leading to a deadly famine, and the resurgence was through the drive and determination of the country to change course into a more consumer based economy.
China’s embrace of elements of a capitalist economy, within a communist framework, has been widely seen as key to its economic rise.
Indeed, many overseas companies have happily shared their intellectual property with Chinese domestic firms in order to get a foothold into the country’s valuable market. US car firms, for instance, have long set up joint ventures with Chinese companies to build vehicles for that market within China.
China is vulnerable too. It still has massive shortcomings in crucial areas such as advanced electronics including semiconductors as well as more mundane commodities including soy beans and meat.
The US has also demonstrated that it can choke off access to the supply chain of hi-tech components. That realisation is thought to be behind Beijing’s embrace of a new economic model dubbed “dual circulation”.
The first “circulation” is the domestic economy and involves China becoming more self-sufficient in vital industries, such as semiconductor manufacturing.
The second circulation is the international economy that China still intends to engage in. However, if international trade breaks down the theory is the domestic market will be more able to carry on as normal in the future.
Mr Ratcliffe’s missive was certainly bombastic. As well as warning of China’s propensity to indulge in intellectual property theft, he also said Beijing posed a once in a lifetime danger.
“The People’s Republic of China poses the greatest threat to America today, and the greatest threat to democracy and freedom worldwide since World War II.”
He said he had shifted the intelligence budget towards China, which had in the past been more focused on Russia and counter terrorism.
But Mr Ratcliffe’s influence may not last for long. Appointed by President Trump to the intelligence chief role in May, he is known as a hawkish member of cabinet on international affairs yet supported Mr Trump’s criticism of the lengthy investigation into Russian meddling in the 2016 election.
It’s questionable that incoming president Joe Biden will want someone so outspoken and so closely aligned to his predecessor’s views in such a key position if the US wants to reboot the relationship with Beijing.