California company sues China

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Cybersitter, a California software company, is suing the Chinese government and two Chinese tech firms over stolen computer code. Cybersitter is alleging that China pirated its software program, called Green Dam Youth Escort, and attempted to install it on over 53 million computers.  Green Dam is utilized to block pornographic and violent websites, but computer experts fear that China tailored it to the monitoring of sensitive, political and religious speech.  The lawsuit seeks $2.25 billion in damages, a figure attained by multiplying the price of Cybersitter software by the number of Chinese computers using Green Dam.

Though the allegations are shocking, this is really nothing new.  China has long been engaged in a robust effort to steal, pirate, and copy sensitive US computer software.  Some will dismiss this latest indiscretion as yet another attempt by a desperate, communist government to limit free speech; however, skeptics would be wise to consider the piracy in its larger, more ominous context.

China is fast becoming an economic superpower that owns approximately $1 trillion of our debt.  For years, China funded our massive borrowing and spending spree, but with the crash of ’08/’09, it has begun to slowly diversify out of the US Dollar and has been highly critical of US fiscal and monetary policy.  While the US stock market has rebounded by an impressive 60% off its 2009 low, China’s Shanghai market has rebounded almost 100%.  Back in 2003, California’s economic output matched China’s, but in 2010, China has exploded past the golden state, a clear sign that China’s huge population advantage is beginning to be more efficiently utilized.  

Critics often counter that China’s dismal human rights record, oppressive communist regime, and widespread poverty make for a poor comparison with the United States.  There is truth to some of these claims.  However, China is rapidly eradicating widespread poverty.  Its overall standard of living is rising.  And although it retains a more oppressive style of government, its markets are becoming significantly more capitalistic in operation.  

The US would be wise to consider China’s quiet, but rapid ascent.  As we find ourselves bogged down in $1.4 trillion budget deficits, $12 trillion of debt, 10% unemployment, and multiple, overseas wars in third world countries, China is stealing our secrets, building up its military, expanding its manufacturing capacity, growing at an almost alarming rate, and closing its poverty gap.  If it is able to sustain this pace, without another economic shock, it may be challenging US hegemony much faster than expected.