What can Australia do to stem the rise of industrialised intellectual property theft?

The Five Eyes intelligence-sharing alliance—comprising the United States, Canada, New Zealand, the United Kingdom and Australia—has traditionally cooperated behind the scenes. But a recent public meeting of the group’s intelligence chiefs in Silicon Valley was marked by their public announcement of China as the most sophisticated and sustained thief of intellectual property in the world. True to form, Chinese media responded by dubbing the statement a ‘smear’ and accusing the Five Eyes of ‘demonising China’s development in cutting-edge technology’.

But we shouldn’t really be surprised by this announcement.

China has a lengthy history of (successfully) wedding quasi-licit and illicit strategies to its traditional mechanisms for technology acquisition. In 2020, an ASPI study detailed the comprehensive links between the Chinese Communist Party and talent recruitment programs. Then, in 2022, it was revealed that a hacking group associated with the CCP took hundreds of gigabytes of sensitive data from technology and manufacturing companies in North America, Europe and Asia. Chinese courts have also recently increased their use of ‘anti-suit’ injunctions to stop foreign companies from filing intellectual property claims outside China.

Of course, that’s not to say that China is the only one involved in this kind of activity. Reports have emerged that Vietnam tried to plant spyware on the devices of US senators. Countries like India and Egypt—often dismissed as ‘middling powers’—have been ramping up their espionage operations in the West. Russia has apparently set up an entire university dedicated to training the next generation of signals and human intelligence officers. And North Korea isn’t exactly sitting on the sidelines either—hacking group APT43 has allegedly been given a specific remit to steal nuclear secrets from members of the AUKUS alliance.

What does this shifting intelligence environment mean for Australia?

First of all, Australia needs to move the dial on its security culture by a long way, particularly in university and higher education settings. The head of the UK’s MI5, Ken McCallum, warned last week that Australia was under threat because Chinese intelligence agents had placed a high priority on the secrets of nuclear propulsion due to be delivered under AUKUS. Yet observers inside Australia’s Defence Department are already suggesting that we simply don’t have the security culture needed to protect that technology. Given some reports that Australia is the ‘weak link’ in the AUKUS chain, this is a timely reminder that we are about to start swimming in deep waters.

There also needs to be much stronger collaboration between Australia’s intelligence agencies and university research. Even before AUKUS was announced, industry and policy experts were calling for closer collaboration, increased funding and deeper ties between the Five Eyes allies and the university sector. Shortly after the Five Eyes announcement about China, MI5’s McCallum warned that universities are a prime target because they ‘probably don’t think national security is about them’.

And finally, Australia needs to revisit the funding model for higher education research. In 2020, universities self-funded more than 50% of Australia’s $13 billion research budget, with only 15% of that total funding coming from governmental sources. By comparison, in the same year Amazon spent more than $60 billion on research and development. It’s hardly surprising that Australian universities look at China’s nearly half a trillion dollars in R&D investment with such envy.

Australia also can’t ignore its own backyard—China isn’t the only player in the market for questionably gained intellectual property. We need to be developing our security and collaborative relationships with our neighbours, like Indonesia and Singapore, as well as the Pacific islands that have already been targets of Chinese expansionism. In short, we could take the arguments that the Lowy Institute’s Sam Roggeveen sets out in his recent book about an Australian ‘echidna’ defence strategy and apply them to the protection of research that is in our national interests. We certainly can’t afford to be playing catch up with the larger powers, but with the right mix of research funding and appropriate security around our international collaborations, we can discourage the industrialised theft of our innovations.