Bipartisan commission says China is "most threatening actor in cyberspace."

Posted by scapozzola on 11/14/2012

In its annual report to Congress, the bipartisan U.S.-China Economic and Security Review Commission (USCC) has called China "the most threatening actor in cyberspace."  Specifically, the USCC sees China's cyber-espionage as being "increasingly creative and resourceful" in targeting both U.S. businesses and the federal government.

In its report, the Congressionaly mandated Commission offered a number of recommendations, including tougher screening laws for investments in the U.S. by China's state-owned enterprises, in part due to Beijing's continued, unfair trade practices.

The USCC was particularly concerned by China's ongoing and predatory efforts to boost exports, including subsidies and currency manipulation:

"China’s adherence to the WTO principles and its Protocol of Accession remains spotty. Most recently, the U.S. Trade Representative has engaged China over its practice of using investigations and trade remedy actions in retaliation for challenges brought by the United States and not based on actual evidence."

The report also found that many U.S. companies are still vulnerable to the growing sophistication of China's computer-launched espionage: "China's cyber capabilities provide Beijing with an increasingly potent tool to achieve national objectives.  A diverse set of Chinese hackers use pilfered information to advance political, economic and security objectives."

The Commission urged Congress to conduct an "in-depth assessment of Chinese cyber-espionage practices and their implications."

Other key findings and recommendations:

  • Congress adopt legislation that would provide a private right of action for domestic producers who suffer injury from antidumping and countervailing duty violations from the operations of Chinese state-owned or –affiliated firms operating in the U.S. market.
  • Congress request that the administration assess and report to Congress on possible vulnerabilities for U.S. government and
    private sector parties in data storage and the provision of web services, such as cloud computing, in terms of national and economic security interests. Such assessment should focus on the provision of such services by Chinese companies and whether specific mitigation, abatement, or notice provisions are necessary.
  • Congress require the Department of Defense to report to Congress on the extent to which its current procurement regulations and contracting procedures allow it to exclude the acquisition of any foreign-produced equipment from any department system where there is concern as to the potential impact of cyber vulnerabilities.

Overall, trade with China remains a thorny international issue.  As the Commission observed:

"In addition, there are small signs, particularly in the WTO, of a growing unity of view among the victims of China’s policies—an increasing number of trade complaints, which, for the most part, have been successful, and small signs of increased interest in cooperation to deal with the Chinese challenge. Whether these factors combined will be enough to encourage meaningful policy change in China remains to be seen, but we continue to believe that the policies they are pursuing are unsustainable over the long term."

Read the full report.


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