How Obama should work with business to combat China cyberspying
If the US wishes to stop Chinese economic cyber-espionage, it will need to increase the costs and reduce the benefits to China of such activities. US government actions are important, but the key players in this game sit in the private sector. A true public-private partnership is needed.
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The Washington Post reported this week that several US military weapons systems and technologies have been compromised by Chinese hackers, according to the Defense Science Board. As alarming as that news is, China’s cyber-spying attacks are also bombarding US businesses.
If the US wishes to stop this Chinese economic cyber-espionage, it will need to increase the costs and reduce the benefits of such activities. That will cause China and other competitors to rethink whether such activities are worth it. Government actions are important, but the key players in this game sit in the private sector. A true public-private partnership is needed.
The threat of Chinese cyberspying to US businesses is clear. A report released last week by the Commission on the Theft of American Intellectual Property states that: “China is two-thirds of the intellectual property theft problem, and we are at a point where it is robbing us of innovation to bolster their own industry, at a cost of millions of jobs.”
What makes the US-China dispute unique is that the two countries are playing a game – spy vs. spy – that is accepted in international relations, but they are playing it by different rules.
The US government views espionage as a national security activity, not as a tool for furthering the economic well-being of US companies. In contrast, China views the well-being of its companies as being directly tied to the security interests of the nation. In their minds, drawing a line between espionage focused on stealing state secrets and espionage focused on stealing corporate secrets is arbitrary.
China is not the only country that has such views. However, the scale and scope of Chinese activity is unparalleled, and the potential threat it poses to US competitiveness is certainly raising the eyebrows, if the not hackles, of the nation’s highest leaders.
Because of this fundamental difference in the acceptability of state-sponsored cyber-economic espionage, the United States will be hard pressed to stop such activities with words alone. The US will need to raise the costs and lower the benefits of such activities. There are several policy levers that the US government can use to achieve those goals, though changing China’s fundamental views through government actions alone will be difficult.
For example, the US government can threaten retaliatory actions, be they economic, diplomatic, legal, or technical in nature. For example, the US could impose economic sanctions or deny visas to suspected cyberspies and/or their enablers.
There are certainly benefits to pursuing these ideas, but US options will be limited because of the trade-offs involved in increasing tensions with its largest trading partner. If China truly views economic espionage as a national security matter, if will strongly resist efforts to curtail such activity, especially if it views the US position as being hypocritical. The US may thus risk retaliatory actions on American companies or citizens if it pushes too hard on this issue.