Obama pressured to confront China's Xi Jinping on cyber spying (+video)
When he meets with Chinese President Xi Jinping this weekend, President Obama is expected to bring up electronic espionage, especially China's gathering of data from American companies.
Cybertheft of US weapons system designs. Intellectual property siphoned wholesale from America’s corporate networks. Stealth intrusions into computers that control the vital North American power grid. All linked to China.Skip to next paragraph
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It’s a grim picture of a digital relationship between nations gone sour that President Obama is expected to paint for Chinese President Xi Jinping during this important “working visit” between the two leaders June 7-8.
Blunt behind-closed-doors talk about this bilateral cyber problem is likely to include a laundry list of US expectations for what constitutes good cyber behavior in its largest trading partner – and possible sanctions if China doesn’t act to rein in state-tolerated or -sponsored cyberespionage, US cyber experts say.
Cyber storm clouds have gathered over the globe’s most important trading partnership largely due to fast-growing cyber insecurities on both sides. China worries about US hegemony over the Internet, cyberspying by the US intelligence agencies, and control over key network technologies it sees as key to its security.
The US, meanwhile, wants China to throttle back the flood of cyberspying that daily backs up the equivalent of digital moving vans to US corporate networks to steal away (by downloading in a few seconds) troves of ideas, plans, designs, and formulas that make the US economy hum and keep Americans employed.
Losses from the theft of US intellectual property are roughly $300 billion a year, according to a report last week by the Commission on the Theft of American Intellectual Property, spearheaded by Dennis Blair, a former director of national intelligence, and Jon Huntsman, former US ambassador to China. China is responsible for 50 percent or more of the stolen data, the group reported.
Other economists who have studied the subject say the total hit to the US economy is not that large, but they agree that the effects of Chinese cyberespionage on the US economy are serious and building quickly.
“Total losses from intellectual property theft by China are more on the scale of tens of billions of dollars,” says Scott Borg, director and chief economist of the US Cyber Consequences Unit, an independent think tank that advises government and industry about cyber issues. “There’s danger, however, that with accelerating growth of this practice it could grow to be gigantic.”
Hooked on cybertheft?
Even if China were willing to moderate some of its cyberespionage practices, its economy has become hooked on the economic boost and the competitive advantage provided by cybertheft of US business data. So it likely would not be able to give it up even if its new leader wanted to do so, Mr. Borg says.
To keep China’s society stable, its rulers believe, correctly, that they need to deliver rapid increases in the standard of living, he says. To continue to grow their economy, the Chinese need to get their hands on the high-tech secrets inside US business networks.
“It should be possible to get them to moderate their activity, to cut back on the more egregious things they’re doing,” Borg says. “But it’s difficult to see how they can change this broad cybertheft policy – the pressure on the Chinese rulers is just too great.”