ReportAUGUST 17, 2024

Broken Promises of China to the World

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Directorate of Intelligence

“Broken promises fracture the foundation of trust, leaving behind shards of disappointment that echo through the corridors of relationships and international affairs.”

The idea of trust is fundamental to the field of international relations and is essential to promoting global cooperation. Trust is simply the reliance and faith placed in another person, the trustee, with the expectation that one’s interests would be protected, even in the face of possible exploitation. It acts as the cornerstone of diplomatic ties and alliances, affecting the dynamics of cooperation on the international stage.[1] To manage the complexity of geopolitical interactions, the delicate interplay of international affairs primarily relies on building and preserving trust. However, despite its importance in international relations, there are evident cases where promises made were not kept, violating this founding principle. The fragility of trust becomes apparent when certain countries choose to break the expectations and faith put in them for a variety of reasons. In recent times the synonym for such instances has been The People’s Republic of China (PRC). Many countries, time and again, have expressed their concerns about PRC’s actions and policies in geopolitics which has created an impression that it doesn’t uphold the norms and values of trust and promises in the international system. These concerns include a variety of areas like Human Rights challenges, commercial practices, territorial disputes and Intellectual Property Rights (IPR).

When the PRC joined the World Trade Organisation (WTO) in 2001, the international rules-based system substantially helped the Chinese economy, but the Chinese Communist Party’s (CCP) continued disapproval of the notion that the rule of law should take precedence over the Party’s role in governing the state has made it impossible for the PRC to follow through on its WTO obligations and make the transition to a market economy. Hence, even after almost two decades, it has not fulfilled many of the trade-liberalizing promises it made to persuade countries to accept its membership.[2] Contrary to benefiting from the international rules-based system, PRC’s economic and trade policies are increasingly at odds with fundamental principles of global trade. Key principles such as national treatment, non-discrimination, and adherence to rules-governed, market-based trade, as outlined in the theory of comparative advantage, have faced challenges due to the PRC’s evolving economic strategies. Rather than aligning with these global trade principles, the PRC has embraced what is termed ‘innovation mercantilism’.[3] The PRC is enacting laws that actually impede free and fair competition. These consist of actions like intimidating technology transfer, manufacturing and export subsidies, and even currency manipulation. Such measures are intended to provide domestic businesses an advantage over their overseas rivals. Rather than waning, these methods have been stronger recently as the PRC actively pursues absolute advantages in many high-tech areas. PRC’s persistent disregard for WTO standards presents a significant risk to the international innovation framework.[4] The PRC poses a threat to the fundamental basis of the international trade system as long as it persists in pursuing policies that put national benefit ahead of conformity to international standards.

To join WTO, the PRC had to agree on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which provides protections for patents, copyrights, trademarks, service marks, industrial designs, digital content, and other intangible property.[5] However, the PRC companies have many times been accused of stealing IPR from US companies and most of these complaints stressed that the CCP directs these thefts.[6] In October 2023, the intelligence chiefs of Five Eyes also warned about the theft of IPR related to technology, Artificial Intelligence (AI) and other trade secrets. The theft is not limited to government and military secrets but extends to critical infrastructure, academic research at universities, and startup companies.[7] According to a CNBC report in 2019, one in five North American-based corporations on the CNBC Global CFO Council says the PRC companies have stolen their intellectual property in 2018 only.[8]

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