Global Pairings

China’s State-Sponsored Cyber Attacks Must Stop

Washington’s politicians must take cybersecurity as seriously as experts and U.S. business do.

Credit: Perspecsys Photos www.flickr.com

Takeaways


  • America’s largest trading partner – China – accounts for as much as 70% of IP losses the US incurs.
  • Sometimes acts of IP theft can destroy most or all of the value of individual companies.
  • Trump has vowed zero tolerance for Chinese hackers. At State Dept, Clinton did virtually nothing.

For all the talk about terrorism on the campaign trail, cyber security issues in one form or another are likely to be prominent in the 2016 presidential election.

State-sponsored cyber espionage inflicts significant damage on the American economy. And just which nation is most actively engaged against the United States?

According to the Commission on the Theft of American Intellectual Property, America’s largest trading partner – China – accounts for as much as 70% of the losses the United States incurs.

What American citizens should find most disturbing about China’s role in what amounts to a global IP theft ring is the outsized role its government plays.

A watershed report by Mandiant reveals a military force of more than 100,000 cyber spies under the firm control of the People’s Liberation Army and under the clear direction of the Chinese Communist Party.

This state-sponsored cyber theft bureaucracy exists despite repeated denials by top government officials that China is even involved in such activities.

Stealing blueprints of American businesses

While the military may run China’s cyber espionage programs, the People’s Liberation Army nonetheless works hand-in-glove with civilian bureaucrats in charge of advancing China’s industrial policy goals.

On any given day, China’s military and civilian hackers seek to steal the obligatory blueprints and proprietary manufacturing processes of American businesses large and small.

China’s cyber spies will also vacuum up everything from emails, contact lists, and test results to pricing information and partnership agreements.

Sometimes such acts of IP theft can destroy most or all of the value of individual companies. A case in point noted by the IP Commission is American Superconductor: When it “had its wind-energy software code stolen by a major customer in China, it lost not only that customer, but also 90% of its stock value.”

The military front

Of course, it’s not just the American economy under relentless cyber attack. On the military front, defense agencies like the Pentagon and National Nuclear Security Administration (which is in charge of America’s nuclear weapons stockpile) each report up to 10 million probes a day. 10 million a day!

Here again, China is at the epicenter of the attacks. As documented in Crouching Tiger: What China’s Militarism Means for the World,” the People’s Liberation Army has stolen the designs for virtually every major US weapons system.

This list includes the F-22 and F-35 fifth-generation fighters America relies on to establish air dominance in theater; critical missile defense systems like the Navy’s Aegis and the Army’s THAAD; vital combat aircraft like the F/A-18 fighter, the V-22 Osprey, and Black Hawk helicopter; and virtually the entire family of American drones.

Many U.S. weapons systems have also been severely compromised by what the U.S. Armed Services Committee has described as a “flood” of counterfeit parts. Here, again – and like a very broken record and relationship – the main culprit is China.

In tracking “over 100 cases of suspect counterfeit parts back through the supply chain,” this Committee found China responsible for over 70% of the problem.

Still a third major form of cyber threat now being refined by China, along with other nations like Russia, Iran, and North Korea, involves attacking the “industrial control systems” of critical infrastructure such as electricity grids, water purification plants, air traffic control, subways, and telecommunications.

The twin goals here are to paralyze the American economy by crippling our infrastructure and to sow chaos among our population – and thereby weaken our will to fight.

Cybersecurity: Clinton vs.Trump

So how do Hillary Clinton and Donald Trump – the presumed Democratic and Republican presidential nominees – stack up on this critical issue? Of the two, Clinton gets the lower marks to date.

As Secretary of State, she did virtually nothing to advance a strong US policy on state-sponsored cyber attacks.

There is also her embarrassingly naïve approach to her own cyber security – she routinely used a private email server vulnerable to hacking and sent dozens of emails during various trips to two of the biggest state-sponsored hackers in the world, China and Russia.

As for Trump, he has vowed to adopt a zero tolerance policy for Chinese hackers in particular: Says Trump: “If China wants to trade with America, they must agree to stop stealing and to play by the rules.”

Given Trump’s rhetorical track record, his zero tolerance enforcement actions might include stiff trade sanctions for hacker countries, the banning of any foreign enterprise that engages in any form of espionage (cyber or otherwise), and the abrogation of any trade deal that fails to provide for adequate IP protection.

More power to FBI

Other Oval Office options include “deputizing” cabinet secretaries – from Treasury and State to Commerce, Labor and beyond – to use all means at their disposal to identify and punish cyber intruders and giving both, the FBI specifically and the Justice Department in general, free rein to prosecute cyber crimes to the fullest extent of the law.

Regardless of who wins in November, it’s long past time that politicians inside the Beltway take this issue as seriously as the American public, American businesses, and American universities. Let the 2016 general election debate begin!

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About Peter Navarro

Peter Navarro is a professor of Economics and Public Policy at The Paul Merage School of Business, University of California-Irvine.

Responses to “China’s State-Sponsored Cyber Attacks Must Stop”

Archived Comments.

  1. On May 31, 2016 at 9:52 am Andrew responded with... #

    The Chinese are not going to just stop attacking us. We must act if we want to defend ourselves in this war. We need to start valuing encryption across the board, even in consumer products. Teach people to be security-conscious and spend the money necessary to develop the best cybersecurity tools available. The government needs to start putting bounties on promising, competing open source security projects such that people can compete for and share in the rewards of open source work. The stipulations for such bounties need to be sufficiently advanced above the current state of the project that it will actually be useful in this war and ensure that the prize money is divided fairly among the contributing developers. Do that and we will see a renaissance in open source security development as developers from all over the world — ironically probably even from countries from which we are trying to protect ourselves — will contribute and seek the prize money. If such a program were longer term, it would inspire a new generation of computer science majors as anyone with a computer and an internet connection can contribute and be rewarded accordingly.