What Equifax Data Breach Indictment Means for U.S.-China Trade Relations

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The U.S. Department of Justice has indicted four Chinese hackers for stealing sensitive information of Equifax customers. Policy experts say the U.S. and China are unlikely to come to a full trade deal — which the U.S. market has rallied on hopes of — until intellectual property theft is eradicated.

Monday, the DOJ published a release saying it has indicated the four hackers, who stole information such as social security numbers from Equifax customers.

This theft was part of the major Equifax data breach which was uncovered in September of 2017. The DOJ said the hackers were acting on behalf of the Chinese military and, in addition to stealing personal information, they also stole intellectual property.

This incident raises a red flag regarding trade policy between the two nations.

Policy experts — and the White House — have said a full trade deal between the U.S. and China hinges on better terms surrounding Chinese theft of intellectual property.

The two countries signed a phase one trade deal on January 15, which included the U.S. rolling back tariffs on hundreds of billions of dollars-worth of Chinese goods to 7.5% from 15%.

A few weeks later, China rolled back its own tariffs on $75 billion of U.S. goods moving into China. Of the many drivers behind the U.S. stock market’s run in early 2020, trade optimism is one. Investors take the recent cues from both countries to mean there will soon be a full trade deal. That’s part of a broader picture of economic growth reacceleration in the U.S., as businesses are now less hesitant to invest.

But for a full trade deal to happen, "what you’re going to need is something that’s enforceable and their [China’s] intellectual property theft and [something that] takes retroactive actions on individuals that have engaged in it,” Jonathan Ward, founder of Atlas Organization, a Washington D.C. based consultancy focused on Chinese policy, and Oxford PHD, recently told TheStreet.

“The idea that you’re going to reduce tariffs on this country, with ambitious of supremacy, doesn’t make a lot of sense,” Ward said. 

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