Home' Trinidad and Tobago Guardian : June 13th 2013 Contents JUNE 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
THE ECONOMIST | BG31
President Xi Jinping of China s first meeting
with President Barack Obama as head of
state on June 7 also is the first such summit
to feature prominently the issue of alleged
Chinese cyber-attacks on American com-
panies and interests.
It has taken a long time for the issue to
take center stage in diplomatic relations
between the two countries. After years of
ineffectual and perhaps overly discreet grum-
bling about Chinese hacking, however, Amer-
ican officials are finally forcing the issue.
The prospects for effective public diplo-
macy on hacking appear grim. The Americans
have placed some hope in "naming and
shaming" China for hacking, and, in recent
months, there has been no shortage of that.
Senior American officials, big Western news
media and Mandiant, a security firm, have
issued a series of detailed reports and accu-
sations of widespread Chinese hacking of
defense-industry technology, of energy com-
panies, of blueprints for American infra-
structure and of the email systems of Amer-
ican officials and journalists. Mandiant s Feb-
ruary report traced many attacks to the area
around a People s Liberation Army facility
In recent weeks came two more incendiary
salvos from America. On May 22 an inde-
pendent commission -- led by Dennis Blair,
a former director of national intelligence,
and Jon Huntsman, a former ambassador to
China -- issued a report accusing China of
being responsible for the theft of as much
as 80 per cent of all American intellectual
property that is stolen, including a significant but
unknown quantity from cyber-intrusions.
On May 28 The Washington Post, citing in part a
confidential assessment made for the Pentagon, report-
ed that "many of the nation s most sensitive advanced
weapons systems have been compromised by Chinese
hackers," including missile-defense technology and
All the accusations have met with angry denials by
Chinese authorities, who have complained of being
the victim of American hacking.
Chinese officials at least have agreed to talk about
the issue. In April Secretary of State John Kerry said
in Beijing that the two sides would establish a working
group on cyber-security. It will be hard, however, for
Americans to discuss hacking productively with their
counterparts. China goes by what William C Hannas,
James Mulvenon and Anna B Puglisi, authors of Chinese
Industrial Espionage: Technology Acquisition and Mil-
itary Modernization (Routledge, 2013), call a philosophy
of "admit nothing and deny everything."
In addition, experts accuse China of making no dis-
tinction between hacking to steal intellectual property
and the traditional pursuit of foreign military secrets.
All is fair game.
They don t believe Americans who tell them that,
"America does not conduct espionage on behalf of
our companies," says Mulvenon, an expert on the Chi-
nese army. In the Chinese system, he says, the two
types of cyber-espionage are being conducted by the
same people and the same organisations, and the com-
mercial proceeds are distributed to state-owned enter-
prises and other national champions.
So far none of the investigations that trace hacking
to China has named or shamed -- publicly, at least --
a single Chinese company that has received the fruits
of cyber-attacks. If it is indeed the army that is respon-
sible for much of the hacking, as American security
firms and government officials argue, that makes it
difficult to see which companies are the ultimate ben-
eficiaries. It also makes it impossible to estimate the
total commercial value of Chinese hacking.
"Part of the problem is that we don t fully understand
how much of it is being used and how effectively,"
says Dmitri Alperovitch, a co-founder of Crowdstrike,
a cyber-security firm. "When someone steals the
designs for the latest automobile, that automobile is
not going to roll out off the assembly line in China
the next day."
The lack of transparency complicates strategies for
dealing with hacking. If American investigators had
specific information about Chinese companies which
are benefiting from stolen technology, legal or trade
actions, or the threat of them, might have an impact.
Instead, security experts say that businesses must
protect themselves by increasing their layers of security
and their vigilance against the most common types
of attacks, such as spear-phishing with infected attach-
ments and Web links.
In addition, Alperovitch and Mulvenon both suggest
a standard counterintelligence measure known as "poi-
soning the well." By planting "honey nets" and false
leads, Mulvenon argues, America could force the Chi-
nese to become more selective about their approach.
"The goal of our policy," he says, "should be to
transform the Chinese system so that it is as hard to
get a (cyber-) operation approved in their system as
it is in ours."
Obama also could try to persuade Xi to be more
selective by stressing the damage to China s reputation.
American officials began publicly acknowledging alleged
Chinese cybertheft as early as 2006, according to the
new book. In 2010 Google publicised a suspected Chi-
nese attack against its systems. The recent barrage of
negative publicity has had a bigger impact, playing
into fears of China as an aggressive rising power.
In the past six months hacking has moved to the
top of the list for business executives meetings with
Chinese officials, says James McGregor of APCO
Worldwide, a consultancy. It appears to have done the
same for Obama s meeting with Xi.
Putting the issue at the top of Xi s list apparently
will take more doing.
@2013 Economist Newspaper Ltd. (Distributed by the
New York Times Syndicate)
China, the US and the untopic
Links Archive June 12th 2013 June 14th 2013 Navigation Previous Page Next Page