By Matt Luby ‑ August 11, 2016
China vs the United States: Curbing cyber-espionage
China is well known for its bustling counterfeit trade. If you cannot afford the latest technology in the US, you will almost certainly find a cheaper alternative on the Chinese market. Chinese cyber-criminals and state proxies have famously stolen designs to reproduce on an industrial level in China. However, China’s cyber-activity is unusual – motivated to breach the security of US companies for an economic objective, and not a geopolitical one. Following landmarks talks in September 2015, the US and China publicly agreed not to digitally spy on each other for commercial gain. Has US indictment pressure finally curbed China’s cyber-espionage?
Managing Chinese cyber threats and protecting US intellectual property and trade secrets has been a longstanding issue between the China and the US. Security breaches at insurer Anthem, medical device maker Medtronic and US steel have been attributed to Chinese espionage. Prior to meeting with officials, President Obama considered imposing sanctions on Chinese companies known to benefit from breaches.
Following talks between President Obama and Chinese President Xi Jinping, the public pact led to US officials pressing their Chinese counterparts to improve co-operation and stop cyber-attacks. Some US lawmakers and Republican presidential candidates claimed the pact agreed between the US and China was a weak display of power from the Obama administration, urging the President to be tougher on a nation responsible for a 53 per cent increase in cases of cyber-espionage.
US law enforcement and intelligence officials have failed to see a positive change in cyber-activity since the September pledge. Crowdstrike, a cyber security firm, reported China was still engaging in hacks and there have been seven attempted breaches at companies in the technology and pharmaceutical sectors.
John Carlin, assistant attorney general for National Security, admitted China’s behaviour could pose a serious threat to national security: “Our economy depends on the ability to innovate and if there is a dedicated nation state who is using its intelligence apparatus to steal, day in day out, what we’re trying to develop – that poses a serious threat to our country.”
A recent report from the Institute for Critical Infrastructure Technology (ICIT) warns China's five-year plan for 2016-2020 is still largely dependent on the digital theft of intellectual property from Western nations. While it is possible China has reduced its targeted attacks against American organisations, ICIT’s report predicts China has restructured its cyber operations to assert greater control over its operatives. China may have reined in its most obvious threats, but continues to infiltrate Western businesses with virtually undetectable advanced persistent threat (APT) attacks.
The US reached out to Chinese officials diplomatically, inviting President Jinping to the White House to secure a pact that would prevent the theft of US intellectual property. However, the soft approach taken by President Obama - at the dismay of US law makers – has not succeeded in curbing the threat of cyber-attacks. The report, ‘China's Espionage Dynasty: Economic death by a thousand cuts’, predicts China's program of cyber-espionage through the aggregation of reports from the US government and cybersecurity firms. ICIT will present the report’s findings in Washington on July 28, before an audience of federal agencies and critical infrastructure private-sector organisations. Following China’s persistent IP theft and cyber-activity, the US must take a tougher approach to protect its intellectual property – issuing sanctions or public deterrents to regain complete IP ownership. To halt a significant threat to National Security, the US needs to evaluate the validity of current US – China relations and work quickly to secure what is rightfully theirs.
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