Use trade policy to put an end to China’s hacking
By: Scott Paul
February 28, 2013
Last week, Virginia-based Mandiant Corp. released a report accusing a wing of the Chinese military of waging a campaign of cyberattacks against the United States. In its study, Mandiant makes a persuasive argument that the People’s Liberation Army regularly rummages through the computer files of Beijing’s international competitors. And in this case, the target was the U.S.
But this is old news, say those in the know.
The private sector regularly warns of China’s nasty and persistent habit of using computers to steal trade secrets and intellectual property. As reported by The Wall Street Journal, Google chief Eric Schmidt describes the Chinese government as “the world’s most active and enthusiastic filterer of information” and “the most sophisticated and prolific” hacker of foreign businesses.
Our public officials aren’t shocked either. Rep. Mike Rogers (R-Mich.), chairman of the House Intelligence Committee, told The New York Times this week that the report’s findings are “completely consistent with the type of activity the Intelligence Committee has been seeing for some time.”
Note that both the Journal and the Times have recently been beset by computer attacks as well. And take note that the front-page story in last Thursday’s Washington Post acknowledges that the Post’s servers have been hacked too, along with nearly every other organization in D.C., governmental and nongovernmental alike (and including yours truly at the Alliance for American Manufacturing since 2009).
The culprit — undisputed by everyone save Beijing’s foreign ministry that calls the mountain of hacking accusations “groundless” — is China.
Forced to respond to the Mandiant report, the Obama administration gripped the reins tightly and said it “will continue to act vigorously to combat the theft of American trade secrets that could be used by foreign companies or foreign governments to gain an unfair commercial advantage over U.S. companies.” It also announced a public awareness campaign about the dangers of cybertheft and called attention to an executive order signed by President Barack Obama last week that created a voluntary set of best cybersecurity practices for companies operating critical infrastructure.
That voluntary set of best practices is pertinent, of course, because China’s military hackers have included companies with access to our power grid and oil and gas pipelines in their list of targets.
But again, all of this is old news. The story here isn’t that China participates in state-sponsored political and economic espionage. We’ve known that. It’s that we don’t do anything about it. And our policy stance has and continues to encourage China’s behavior.
More than a dozen years ago, Congress lowered our trade barriers with Beijing. In doing so, we allowed China to take a massive chunk of our manufacturing base. In exchange, we received slightly lower retail prices in big box stores and promises of democratic political reforms in Chinese society.
But instead of reform, China took its new, huge flow of capital and perfected the world’s largest and most technically proficient police state. And as the Mandiant report confirms, it is increasingly looking outside its borders.
And now here we are. The kind of espionage that the Chinese government systematically engages in howls for a response. But the response should be more than a simple protestation, which so far has amounted to acquiescence. To stop China from hacking, it should be one that Beijing will understand: one that puts a dent in its bank account.
When China cheats — or, in this case, does something that is blatantly illegal, like systematically compromising thousands of American computer networks — our trading policies should shift accordingly.
China keeps its currency artificially low to subsidize its imports and tax American exports. Why do we stand pat? China forces technology transfer upon American companies wishing to do businesses within its borders and subsidizes key industries in violation of free-trade rules. Why do we hold our tongue? Our trade deficit with China reached $315 billion in 2012. Why do we continue to reward such a dishonest trading partner with such an annual economic boon?
China is gaming us. This is old news.
And we are literally paying it to do so. That’s the real story here.
Scott Paul is president of the Alliance for American Manufacturing.