By Christian Fleming

May 26 – Microsoft Corporation’s CEO Steve Ballmer expressed his frustrations with China in a recent interview, specifically touching on the country’s lack of progress in the fight against intellectual property theft and piracy. The head of the world’s largest software maker went on to say that Microsoft is much more interested in countries like India, where there is still a degree of piracy, but much less than the levels the company is currently experiencing in China.

“India is not perfect, but the intellectual property protection in India is far, far better than it would be in China,” Mr. Ballmer said in an interview with Business Week in Hanoi, Vietnam on Monday. “China is a less interesting market to us than India, than Indonesia.”

The Microsoft CEO’s statements came as one of the largest ever American delegations visited Beijing for the annual U.S.-China Strategic and Economic Dialogue. The dialogue featured Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner both urging their Chinese counterparts to adopt a “level playing field” for U.S. companies operating in China.

Ballmer believes that pushing Beijing to protect intellectual property rights, instead of pressuring the Chinese government to revalue its currency, is of paramount importance to bilateral relations. Doing so, he said, will create thousands of U.S. jobs and generate billions in revenue.

This isn’t the first time Ballmer has voiced his pessimistic views regarding the Chinese market. He stated back in 2008 that, “China’s not really very important to our business right now…because of the high rate of piracy of intellectual property. We need some IP reform in China for it to be important to our financial results.”

Back then, Beijing said that they were making a conscientious effort to clamp down on piracy, but it seems their sincere efforts haven’t been doing the trick. A recent report by the Washington-based Business Software Alliance and market researcher IDC calculated the value of pirated software in China to have almost doubled from 2005 to 2009 to nearly US$7.58 billion.

If China’s government has attempted to cut back on software theft and piracy issues inside the country, it is hard to believe if you actually visit. Tourists still flock to the country’s notorious “knock-off” markets, like the Hongqiao Pearl Market in Beijing or beneath the Science and Technology Museum and inside the Nanjing Road markets in Shanghai, where you can find all the latest programs and software for around US$1.50 per disc, if you’re willing to bargain. That includes Microsoft 7, Snow Leopard, Adobe Photoshop CS4, and Rosetta Stone in every language you’ve ever heard of, just to name a few.

Regardless, China has defended its progress on the issue of piracy, citing the more than 1,000 measures implemented by the government related to the protection of property rights.

“China’s effort at strengthening protection of intellectual property is universally recognized,” preached Chen Rongkai, a press official within China’s Ministry of Commerce.

But either these measures are merely a show of progress that Beijing can wave in its defense when accusations are brought on by the West, or corruption is so rampant that the measures are not even given a chance to succeed. If vendors are willing to sell pirated copies of Adobe Acrobat and Microsoft Office out in the open for a little more than a dollar, and not even know that they are breaking the law, then the measures that the government are apparently implementing cannot be taken seriously.

If this is the best Beijing can do to control the trade of pirated goods within China, then the ruling Communist party has a lot more pressing issues to tackle. But judging from the way Shanghai cleaned up its streets and shipped out its undesirables ahead of the 2010 Shanghai Expo, they will have no trouble addressing the piracy dilemma when it is in their best interest, that is, when the country starts producing innovative things worth having.

“China is denying that they are a piracy haven but that’s contrary to a tremendous amount of empirical research,” Peter Menell of the University of California Berkeley’s Center for Law and Technology told Business Week. “You don’t really have effective enforcement rules. If China was manufacturing software, they would have a bigger incentive to clamp down.”

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