What Confucius would say is not so good

Sunday's editorial, "Confucius Say, This Good," is at best open to dispute.

For the past eight years I have spent a month annually at the Law School of the University of Virginia teaching a course on Trade Secret Law. My 15 - plus or minus - students and I spend a significant portion of the course discussing China. And we're not talking about cultural exchanges or moo goo gai pan. Nor do we discuss the fact that most of the pots for sale at local garden stores all are "hecho en China." No, there are much more serious issues; ones that every one of us should ponder as our nation fends off Chinese cyber attacks and rampant theft of one of our most valuable assets, our technology.

To set all this in perspective, the April 22, 2013, edition of the Wall Street Journal featured a front-page article on cyberspying by the Chinese and the options Washington is exploring to deal with it. Sugar coating what the Chinese are doing with praise for a cultural exchange ignores why the Chinese want to do it and just what they really are doing. A few examples will suffice, although there are many more.

1. Last month, on March 13, 2013, John Powell, the vice president and general counsel of American Superconductor Corporation, testified before the U.S. Sentencing Commission. AMSC is - and maybe soon will be "was" - one of the leading green tech companies in the United States. Unlike Solyndra, it was profitable and its shareholders were seeing handsome appreciation in their investment. One of its most profitable products was its software that provided the brains for electric generating wind turbines. Seventy-five percent of its business was with Sinovel, a Chinese manufacturer, which utilized the AMSC software. In March 2011, Sinovel refused to accept $70 million of AMSC product which was under contract and refused to pay $70 million for product previously shipped. The value of AMSC stock declined 40 percent in one trading day.

AMSC subsequently found that one of its former employees had been paid several million dollars by Sinovel to give them the source code for AMSC software. Dejan Karabasevic was arrested, convicted and imprisoned in Austria for the theft. The impact of this business loss has been staggering; 70 percent of AMSC employees have been laid off. The shareholders have suffered a 90 percent loss, in excess of $1 billion, to their investment. And the Chinese government has done nothing. Compare one U.S. company's loss with the $600 million exported to China from Idaho, as Governor Otter boasts.

2. On March 16, 2013, last month, Bo Jiang was arrested at Dulles Airport, about to leave on a one-way ticket to China. Among his possessions was a laptop with stored NASA data. The technology related to satellite optical systems for our spy satellites. What was Jiang, a Chinese national doing with such information since NASA regulations precluded foreign nationals having access or working on the project? In order to get around its own regulations, NASA subcontracted the work to businesses who employed foreigners.

3. In December 2012, two American engineers were convicted of economic espionage dealing with the theft of Goodyear tire equipment, which was carried out for Hao-Hua, a Chinese tire manufacturer.

4. In August 2012, Hanjuan Jin, a former Motorola software engineer, was sentenced to four years in prison for economic espionage. Ms. Jin, who had received an advanced technical degree from Notre Dame, remained here on an H-1B visa to work for Motorola. At the same time she was working undercover for a business in China closely tied to the Chinese military. She was caught leaving the country because of a currency violation; she was 10 feet away from making off with information valued at more than $600 million. Again equal in value to Idaho's exports to China.

5. Chunlai Yang, a Chinese national, pleaded guilty, in September of last year, to theft of Boeing software which he intended to use in China. He has yet to be sentenced and faces up to 10 years in prison.

6. In 2011, the 9th Circuit Court of Appeals affirmed the conviction of Dongfan Chung who had been caught with over 300,000 Boeing documents relating to a NASA space shuttle antenna. Chung and the documents were on their way to China. He was sentenced to in excess of 15 years.

7. Jack Liew and Pangang, a Chinese state-owned steel manufacturer, are currently under indictment in the U.S. District Court in San Francisco, charged with stealing DuPont trade secret chemical formulae. While Pangang fights jurisdiction, Liew remains confined under house arrest.

8. Yu Qin and Shanshan Du have been indicted for theft of thousands of GM documents relating to electrical engine components.

9. In December 2011, Kexue Huang pled guilty to economic espionage in the theft of the formulae for agricultural chemicals, the property of Dow Chemicals and Cargill, Inc. He was sentenced to seven years, three months in prison.

10. Amsted Industries, an Illinois-based manufacturer of cast railway wheels, licensed Datong Castings LTD of China to use its secret "ABC" casting process. A competitor, TianRui, sought a similar license. When an agreement was not reached, TianRui hired nine Datong employees who knew Amistad's technology and commenced manufacturing wheels using Amsted's secret process. Amsted successfully obtained an order from the U.S. International Trade Commission barring the TianRui wheels from import in the U.S., an order affirmed by the Federal Circuit Court of Appeals; however TianRui continues to sell wheels elsewhere using the Amsted process.

Last month two members of the House of Representatives wrote the following to the Obama administration, "As evidence mounts that the Government of China actively engages in the cyber theft of the trade secrets of American businesses, we write to request that you consider designating China as a Priority Foreign Country under ... the Trade Act of 1974." The letter published, in Reuters on March 28, 2013, notes that the conduct originates either from the Chinese government itself or entities which it controls.

Each of the foregoing are prosecutions brought under the Federal Economic Espionage Act. But as my students wonder, "These got caught; how many got away?" Security consultant agencies estimate that we lose over $100 billion annually in stolen technology and the principal culprit is China. We might, in that regard, ask ourselves how it is that China has produced the J-20, an advanced stealth aircraft when it never demonstrated any earlier prototypes? It has taken the U.S. aviation industry more than 10 years to develop its current stealth aircraft and the Chinese did it in how long?

So before we think it wonderful that we have a rumored Chinese industrial park being constructed on the outskirts of Boise or that we are going to have some feel good cultural exchanges, we really ought to consider what we are dealing with and it's really not moo goo gai pan. Conduct, not soothing words, should measure Chinese intentions and our sensitivities. It's really all about national security.

Todd M. Sloan is a Hayden resident.