Taiwan accuses Beijing of waging economic war against tech sector

Taiwan, home to world-leading semiconductor firms, has long been concerned about China’s alleged industrial snooping.

Taiwan’s government has accused China of waging economic warfare against the Chinese-claimed island’s technology sector by stealing intellectual property and enticing away engineers, as its parliament considers strengthening legislation to prevent such alleged activity.

Taiwan is home to a thriving and world-leading semiconductor industry, used in everything from fighter jets and cars to smartphones, and the government has long been worried about China’s alleged efforts to copy that success, including by industrial espionage.

Four Taiwanese policymakers from the ruling Democratic Progressive Party are leading a proposal to amend the commercial secrets law to widen the scope of what is considered a secret and toughen penalties.

In a report to Parliament published on Wednesday about the proposed amendments, Taiwan’s National Security Bureau blamed China for most cases of industrial espionage by foreign forces discovered in recent years.

“The Chinese Communists’ orchestrated theft of technology from other countries poses a major threat to democracies,” it said.

“The aim of the Chinese Communists’ infiltration into our technology is not only about economic interests, but also has a political intention to make Taiwan poorer and weaker.”

Claims and counter-claims

China’s Taiwan Affairs Office did not immediately respond to a request by the Reuters news agency for comment, but Beijing has long denied being involved in industrial espionage.

The US and its allies have for years accused China of being engaged in cyber-espionage to gain an economic edge. In one of its last moves, the administration of former US President Donald Trump in January revoked licences for US companies selling equipment to Chinese telecommunications giant Huawei. Trump had accused Huawei of providing Chinese authorities with the ability to spy on foreign firms and governments.

Tensions between the current administration of US President Joe Biden and China over Taiwan have also been on the rise.

China warned the US earlier this month “not to play with fire” on Taiwan issues after the US Department of State updated its guidelines easing restrictions on meetings between US officials and their counterparts from Taiwan, which Beijing claims as its own.

Taiwan is China’s most sensitive territorial and diplomatic issue, and a regular source of friction between Washington and Beijing, which has never ruled out using force to bring the democratically ruled island under its control.

China has its own gripes over foreign industrial intelligence activity.

Earlier this week, China’s top spy agency announced measures to fight infiltration by what it described as “hostile forces” in companies and other institutions, according to the official Xinhua news agency.

The new rules allow Chinese security authorities to draw up lists of companies and organisations considered susceptible to foreign infiltration and require them to take security measures.

Poaching talent

Taiwan’s economy ministry, in its report, said Beijing was trying to boost its semiconductor industry by “poaching” Taiwanese talent “as well as obtaining our country’s industry’s commercial secrets, to harm the country’s competitiveness”.

Taiwan’s economy ministry says Beijing is trying to harm Taiwan’s competitiveness [File: Billy HC Kwok/Bloomberg] The Cabinet has met many times to work out how to address the problem, the ministry added.

Lawmaker Ho Hsin-chun, one of the legislators who has proposed the amendments, said the need was urgent.

“The infiltration of China’s red supply chain is everywhere,” she told a parliament committee meeting.

It is not clear when or if the amendments could be passed into law, and the justice ministry in its report suggested further discussion of the wording was needed.

Hu Mu-yuan, deputy head of Taiwan’s National Security Bureau, expressed broad backing for the measure.

“As long as it’s helpful for our country’s security and interests, we support it,” he said.