China Commission Report – A Bit Scary

Bear with me here, this gets interesting … and a bit scary. The 2011 REPORT TO CONGRESS of the U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION has been released. From the press release:

The report covers the U.S.-China economic relationship, including the impact of China’s growing State-Owned Enterprises, intellectual property rights violations, and forced technology transfers to China. The report also details China’s military modernization, including recent developments over the past year, the People’s Liberation Army’s “area control” military strategy, and China’s growing space capabilities.

Here are some hilights partly quoting from the release:

Piracy: China has yet to create a system that effectively protects intellectual property; something that is required of all WTO members. But U.S. business software companies still report that China is the world’s largest source of pirated software. About 8 of 10 computers in China still run counterfeit operating system software.

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Trade: China has stepped backward from its original promise to lower trade barriers and to treat foreign products and services fairly. … [They] force the transfer of technology to Chinese firms. These policies … strike at the heart of America’s greatest economic strength – its ability to innovate.

State ownership: … the Chinese government in the past several years has returned to relying on a system of state ownership and control of major sectors of its economy. The government directs a vast array of subsidies to favored industries and seeks to nurture particular technologies behind protective barriers. This is contrary to the spirit, and in many cases the letter, of China’s WTO commitments.

Military: This year also marked several milestones for China’s decades-long military modernization efforts, … a defense budget that has averaged 12 percent growth over the past decade. China has recently achieved several military “firsts”: it flight tested its first stealth fighter, conducted a sea trial of its first aircraft carrier, and made progress towards deploying the world’s first anti-ship ballistic missile.

… the Commission continues to be concerned with the opacity of China’s military development and intentions… And, in particular, our report notes China’s development of its cyber capabilities, focusing on the growing evidence that Beijing sponsors or condones computer network intrusions against foreign commercial and government targets. When combined with the military’s excessive focus on other disruptive military capabilities, such as counterspace operations, it presents an image of Chinese intentions that diverges significantly from Beijing’s official policy of peaceful development.