Protestors shout slogans during a rally against a pro-Beijing official who was appointed as chairman of Hong Kong University’s (HKU) governing council, in Hong Kong on Jan. 3, 2016. Fears are growing over political interference in the city’s education system. (Anthony Wallace/AFP/Getty Images)Protestors shout slogans during a rally against a pro-Beijing official who was appointed as chairman of Hong Kong University’s (HKU) governing council, in Hong Kong on Jan. 3, 2016. Fears are growing over political interference in the city’s education system. (Anthony Wallace/AFP/Getty Images)

Research shows that the political ideology of communism restricts innovation, today’s panacea for economic growth and long-term prosperity.

In broad strokes, the communist tenets of state ownership of business and property with strict government supervision lead to a risk-averse culture working in an environment that discourages ambition and creativity. This could not be further from the building blocks that innovation needs to thrive.

The 2017 International Intellectual Property Index, recently published by the Global Intellectual Property Center (GIPC) of the U.S. Chamber of Commerce, ranks the two bastions of communism, Russia and China, No. 23 and No. 27 respectively—behind the smaller economies of Malaysia, Mexico, and Turkey, for example.

The report associates stronger intellectual property (IP) protection regimes with more innovative economies and conversely, weak IP protection as hindering long-term strategic innovation and development.

“A robust national IP environment correlates strongly with a wide range of macroeconomic indicators that fall under the umbrella of innovation and creativity,” according to the GIPC report.

The leading countries in IP strength are free market, capitalist economies such as the United States and United Kingdom. First-world democratic countries of Europe and Asia also rank highly.

The key to whether China can become a country of innovation is tied to the respect of property rights and the rule of law.

— Ma Guangyuan, Independent Chinese economist

The report states that Russia’s protectionist moves—local production, procurement, and manufacturing—work to restrict IP rights. Russia also suffers from persistently high levels of software piracy.

For China, the report singles out historically high levels of IP infringement.

China and Russia are the “usual suspects” of cyberespionage. Theft of IP, the infrastructure for innovation, is one way these communist nations try to stay competitive globally.

Melbourne, Australia-based agency 2thinknow has been ranking the world’s most innovative cities for the past 10 years. In its latest rankings published Feb. 23, the most innovative city in a communist country, Beijing, ranks No. 30, and Moscow ranks No. 43.

Blunting Universities’ Effectiveness

According to the Organisation for Economic Co-operation and Development (OECD), not a single Chinese university ranks among the world’s top 30 in terms of most-cited scientific publications.

Universities are breeding grounds for young, innovative minds. Within their walls, ideas are born and debated, companies are formed, and research is conducted. They are key components of a healthy innovation ecosystem.

Harvard Business School professor William Kirby wrote about the strict limitations within Chinese universities on what faculty could discuss with students.

“Faculty could not talk about any past failures of the communist party. … They could not talk about the advantages of separation between the judicial and executive arms of the government,” Kirby stated in an article in the Harvard Business Review (HBR) боюнча 2015.

“It is hard to overstate the impact of these strictures on campus discourse and the learning environment,” Kirby wrote.

Communism is known for its corruption and cronyism. A Science editorial noted that the bulk of the Chinese government’s R&D budget is allocated due to political connection rather than merit based on the judgment of independent review panels.

Communist Interference

McKinsey’s 2014 report “The China Effect on Global Innovation” noted that the impact of innovation on China’s economic growth declined to the lowest level since about 1980.

China has a massive consumer market and a government willing to invest huge sums of money—nearly US$200 billion on R&D in 2014—and its universities graduate more than 1.2 million engineers each year.

Communism as a political ideology is as bankrupt as ever.

— Garry Kasparov, former world chess champion

Clearly, China has so much potential, but it is the United States that has taken the lead in technological dominance.

“The country [Кытай] has yet to make an internal-combustion engine that could be exported and lags behind developed countries in sciences ranging from biotechnology to materials,” according to McKinsey.

“While almost all western technology giants have R&D labs in China, the bulk of what they do is local adaptation rather than developing next generation technologies and products,” wrote Anil Gupta and Haiyan Wang in a 2016 article in the HBR. Gupta and Wang are co-authors of the book “Getting China and India Right.”

Excessive government involvement often leads to waste and excess—overbuilding and overcapacity. China’s real estate bubble and steel mills are two such examples.

Lately, the Chinese government has been trying to spur an onslaught of startups by providing them with generous subsidies. But it doesn’t have the savvy to pick winners and losers. Instead, a more efficient use of capital comes from knowledgeable and discerning venture capitalists. Most startups are meant to fail after all.

Why China Can’t Innovate,” a 2014 article in the HBR co-authored by Kirby, noted that the Chinese Communist Party requires one of its representatives to be associated with every company of more than 50 employees. Larger firms must have a Party cell, whose leader reports directly to the Party at the municipal or provincial level.

“These requirements compromise the proprietary nature of a firm’s strategic direction, operations, and competitive advantage, thus constraining normal competitive behavior, not to mention the incentives that drive founders to grow their own businesses,” according to the article.

The system of “parallel governance” constrains the flow of ideas. China’s innovation largely comes through “creative adaptation,” which can mean a lot of things including foreign acquisitions, partnerships, but also cybertheft.

Capital Flight

Communism is against private ownership of property. This puts a damper on innovation.

“The key to whether China can become a country of innovation is tied to the respect of property rights and the rule of law,” wrote Ma Guangyuan, an independent economist in China.

In his blog, Ma cites renowned U.S. investor William Bernstein’s writings, which discuss property rights as being the most important of four factors needed for rapid economic growth. Guangyang wrote, “Entrepreneurs live in constant fear of punishment,” due to the questionable business practices in China, an environment that leads them to lose trust in a viable long-term economic future.

Capital flight out of China is one symptom of the problem; another is the preference of wealthy Chinese to send their children overseas for higher education. The loss of entrepreneurs like Li Ka-shing and Cao Dewang is a sign that greener pastures lie abroad.

Former world chess champion Garry Kasparov, a Russian, wrote: “Communism as a political ideology is as bankrupt as ever.”

In his blog, he went on to say: “It is no coincidence that the values of the American century are also the values of innovation and exploration. Individual freedom, risk-taking, investment, opportunity, ambition, and sacrifice. Religious and secular dictatorships cannot compete with these values and so they attack the systems founded upon them.”

The authors of the HBR article “Why China Can’t Innovate” recognize the nearly limitless capability of the Chinese individual, Бирок,, the political environment in China acts like a choke collar on innovation.

“The problem, we think, is not the innovative or intellectual capacity of the Chinese people, which is boundless, but the political world in which their schools, universities, and businesses need to operate, which is very much bounded,” they wrote.

Follow Rahul on Twitter @RV_ETBiz

Communism is estimated to have killed at least 100 million people, yet its crimes have not been compiled and its ideology still persists. Epoch Times seeks to expose the history and beliefs of this movement, which has been a source of tyranny and destruction since it emerged.

See the entire series of articles here.

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I had the pleasure of speaking at Pace University’s recent Threat Intelligence Forum about what’s really behind Chinese cyberespionage, and I thought it would be useful to replicate that talk here.
There are enough Chinese cyberattacks where it’s fair to say most of us are familiar with the surface picture. There were close to 700 Chinese cyberattacks designed to steal corporate or military secrets in the United States between 2009 жана 2014, according to an NSA map released by NBC News.
It’s also important to note the attacks designed for economic theft are only a small piece of the larger picture. Many Chinese cyberattacks are designed to spy on dissidents living abroad, keep tabs on foreign news outlets, spy on governments, or to censor individuals and organizations that are critical of the Chinese regime.
In March, for example, it launched cyberattacks on the anti-censorship website GreatFire.org. In June, it stole 21.5 million background checks from the U.S. Office of Personnel Management on current and former federal employees. In September, the Chinese regime was caught spying on the U.S. government and European news outlets.
The attacks designed for economic theft usually get the most attentionand with good reason. Retired federal prosecutor David Loche Hall explained the economic seriousness of these attacks in his recent book, “Crack99.
There are 75 industries in the United States identified as intellectual property (IP) intensive, according to Hall. These industries hold 27.1 million American jobs, or 18.8 percent of all employment. Each of these jobs also supports one additional job through the supply chain.
So, when you look at the whole picture, close to 40 million jobs, or 27.7 percent of all employment in the United States, relies on protection of IP. And it’s this IP that the Chinese regime has been stealing with cyberattacks.
Close to $300 billion and 1.2 million American jobs are lost each year to IP theft, according to the Commission on the Theft of Intellectual Property.
“When this innovation is meant to drive revenue, profit, and jobs for at least 10 years, we are losing the equivalent of $5 trillion out of the U.S. economy every year to economic espionage,” said Casey Fleming, CEO of BLACKOPS Partners Corporation, in a previous interview with Epoch Times.
MORE:CHINA SECURITY: China Reaps What It Sows, as Paranoid North Korea Lashes OutCHINA SECURITY: In Cybersecurity, the Chinese Regime Has Become the Boy Who Cried Wolf
BLACKOPS Partners Corporation provides intelligence and cyber strategy to the Fortune 500. He emphasized that to understand the impact of economic theft, you need to look at the full economic life cycle of raw innovation, including trade secrets, research and development, and information for competitive advantage.
Chinese cyberattacks are also a lot different from other cyberattacks, and this is why experts often place them under a different category.
Cybersecurity company MANDIANT wrote in 2010, “These intrusions appear to be conducted by well-funded, organized groups of attackers. We call them the ‘Advanced Persistent Threat’the APTand they are not ‘hackers.Their motivation, techniques and tenacity are different. They are professionals, and their success rate is impressive.
It also notes, we’ve been able to correlate almost every APT intrusion we’ve investigated to current events within China.
So, the big question is what’s really behind the APT. To understand this, you need to understand the structure and operations of the Chinese Communist Party’s (CCP) spy departments.
The overt spy operations are mainly carried out by two departments. The United Front Work Department works to expand the CCP’s sphere of influence in foreign communities, while the Overseas Chinese Affairs Office works to monitor Chinese living abroad and manage the CCP’s overseas systems of governance.
These departments are important to mention here because, while their focus is spying on individuals living abroad, their operations are aided by CCP cyberspy operations that can give them intel on targeted groups or individuals.
As an example, if the United Front Work Department was trying to butter up a U.S. senator, the CCP’s cyberspies could give them information from the senator’s emails or background check, which they can then use.
When it comes to cyberattacks for economic theft, most of these are attributed to the Third Department of the People’s Liberation Army General Staff Department. The Third Department runs the signals intelligence (SIGINT) operations of the CCP.
Alongside the Third Department is the Second Department, which runs many of the conventional human intelligence (HUMINT) operations. Then there’s the Fourth Department that handles the electronics intelligence (ELINT) operations.
There is a lot of overlap in Chinese spy operations. Physical spies may help the cyberspies by “accidentallyinfecting a computer in a company where they’ve been planted. The CCP’s hackers may also help cover the tracks of an insider by launching a cyberattack to make it appear information was stolen by a cyberattack, instead of by the insider spy.
These departments handle the bulk of the CCP’s spy operations under its military, and they run large-scale operations. The Project 2049 Institute think tank estimated in November 2011 there were 130,000 personnel under the Third Department. Wall Street Journal estimated the department has 100,000 hackers, linguists, and analysts.
Both the above estimates, Бирок,, were based on earlier pictures of the Third Department, which said it has only 12 operational bureaus. It’s now known the Third Department has at least 20 operational bureaus.
The CCP’s cyberspies are also divided into three tiers, as was detailed in the 2013 edition of “The Science of Military Strategy,” published by a People’s Liberation Army research institute. The details were outlined in March by Joe McReynolds, research analyst at the Center for Intelligence Research and Analysis.
The first tier of the CCP’s cyberspies are military units “employed for carrying out network attack and defense,” McReynolds said. The second tier are specialists in civilian organizationsincluding with government officesthat are “authorized by the military to carry out network warfare operations.The third are groups outside the government and military “that can be organized and mobilized for network warfare operations.
The Chinese military also runs front companies to aid in these operations. The FBI’s former deputy director for counterintelligence said the Chinese regime operates more

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