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Will espionage charges spark a trade war with China?

WASHINGTON – On Monday, the U.S. Department of Justice indicted five Chinese military hackers on counts of trade secret theft and economic espionage directed at six American companies in the power and metals industries.

China’s Ministry of Foreign Affairs fired back that neither its government nor military have ever committed cyber theft of trade secrets, and argued that the U.S. is guilty of large-scale and organized cyber theft.

But will the indictment cause a trade backlash?

“It shouldn’t have any impact,” says Iowa Senator Chuck Grassley, but that doesn’t mean there won’t be. “For political reasons, could the Chinese retaliate? Of course they could.”

Grassley says any Chinese trade retaliation would be held to a high standard: the science-based rules of the World Trade Organization, of which both China and the United States are members. But even with all that, Grassley says a reaction would not exactly be unexpected.

“The Chinese are very good at flexing their muscles,” says Grassley, “and complaining about the United States or any other country that raises questions about stuff within China, interfering domestically, and somehow violating their sovereignty. What I always tell the Chinese when they’re around here in Washington is ‘Get over it. You’re 5,000 years old. We’re only 400 years old. You’re a mature society; you ought to grow up and act like it, particularly now that you’re in the world community of nations, and you’re a member of the WTO. Live like you’re a full fledged member!'”

China’s difficulty in acknowledging intellectual property rights as they pertain to agriculture was on full display last year, when that country’s ministry of agriculture re-introduced a requirement that seed companies submit viable seed along with biotech applications; a requirement that had been eliminated in 2007 to reduce the possibility of illegal copying of patented materials.

To hear more about the indictment and the doubtfulness of its affect on trade, click here.

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