Deterring China’s cyber theft of sensitive technologies

N.B Chyoi / May 24, 2021

American defense and cyber security experts have warned the Biden administration of China’s escalating economic and technological espionage and “theft”, asking for a strong mechanism to deter its “long-running campaign of cyber-enabled economic warfare”.

In a paper in the defense publication of repute, Defense One, that created a storm in the US, experts Jared Thompson and Annie Fixler said: “Over the past decade, Chinese operatives have stolen plans for the latest fighter aircraft, missile defense systems, submarine technology, ships, helicopters, and personnel data.” The experts also advised the administration to “accelerate efforts to make US government and private-sector systems harder to hack and faster to mitigate the damage and recover”.

They want the Biden administration to take stronger measures than economic sanctions as “past (US) administrations have shied away from using sanctions against Chinese state cyber actors likely out of concern for blow back on US companies”. They point out that “restrictions on exporting chips to telecommunication giant Huawei are hampering the company’s ability to turn a profit — and exploiting vulnerabilities in Beijing’s own supply chains”.

The Americans are collecting more evidence that reportedly proves that “more than 60 percent of Chinese export violations are attempts to acquire critical technologies that have military applications” and that “the targets of Chinese hackers align with the priorities of Beijing’s Made in China 2025 strategy”.

The US justice department reported in a paper: “…a nine-man team run by Chinese intelligence officers was hacking a French aerospace manufacturer and US companies that made parts for turbofan jet engines, and “a Chinese state-owned aerospace company was working to develop a comparable engine for use in commercial aircraft manufactured in China and elsewhere”.

The Pentagon has warned the US Congress in its annual report on China’s military capabilities that “Beijing uses its cyber capabilities to ex-filtrate sensitive information from the [defense industrial base] which in turn threaten[s] to erode U.S. military advantages and imperil the infrastructure and prosperity on which those advantages rely”.

China is estimated to be responsible for 50 to 80 percent of cross-border intellectual property theft worldwide, and over 90 percent of cyber-enabled economic espionage in the United States. Various study groups have estimated that Chinese intellectual property theft could cost over $300 billion annually to the US economy.

Defense and technology experts Samantha Ravich and Annie Fixler wrote a paper on China’s cyber theft, “The Economic Dimension of Great-Power Competition and the Role of Cyber as a Key Strategic Weapon”, in which they point out: If China respected intellectual property rights, the U.S. economy would gain 2.1 million jobs and $107 billion in sale. In just one case in which (Chinese) wind turbine company (allegedly) stole trade secrets from US-based (company), the company lost more than $1 billion in shareholder equity and almost 700 jobs, over half its global workforce.

The US-China Economic and Security Review Commission has concluded that Chinese espionage “comprises the single greatest threat to US technology”. It has ironically helped China save on research and development expenses while catching up in several critical industries. China’s aim also appears to “erode the United States’ long-term position as a world leader in [science and technology] innovation and competitiveness”. These and other assertions are made in an authoritative article titled “Understanding the Chinese Communist Party’s Approach to CyberEnabled Economic Warfare”, written by Zack Cooper, a fellow at the Center for Strategic and International Studies and who earlier served in the Pentagon and White House.

The US Department of Defense says in recent years, the CCP has used cyber capabilities in the pursuit of each of the objective of gaining preeminence among the international community. The CCP’s tryst with the ether “began 1986 when Project 863 was launched to narrow the gaps in high-technology sectors”. But well into the 21st century, it realized its “weak innovative capacity” and thus began the National Medium- and Long-Term Plan for the Development of Science and Technology (MLP) in 2010. The west described as a “blueprint for technology theft on a scale the world has never seen before”.

The CCP’s Made in China 2025 is a road map for next generation information technology goals including the objective of producing “40 per cent of all mobile chips in China by 2025…70 percent of industrial robots and 80 percent of renewable energy equipment”. This is to be achieved by the country’s cyber capabilities in industrial espionage, amassing dual-use military technology, gain leverage in economic deals, restrict trade and pressure foreign governments through projects like the BRI.

According to American experts, “the FBI estimates that China has more than 30,000 military cyber spies, plus an additional 150,000 private sector cyber experts “whose mission is to steal American military and technological secrets”. There are allegations of direct ties between the Politburo Standing Committee and China’s cyber attacks. The PLA has an “Integrated Network Electronic Warfare” strategy that combines offensive computer network attacks and electronic warfare as part of the “PLA General Staff Department’s 4th Department, also known as the Electronic Countermeasures Department (4PLA)”. Computer network defense and intelligence gathering responsibilities likely “belong to the 3rd Department (3PLA), Signals Intelligence Department, as well as specialized information warfare militia units”.

The US department of justice describes China’s strategy as one of “rob, replicate and replace”. That is, “rob the American company of its intellectual property, replicate the technology, and replace the American company in the Chinese market and, one day, in the global market”. It says in a paper: “From 2011–2018, more than 90 percent of the Department’s cases alleging economic espionage by or to benefit a state involve China, and more than two-thirds of the Department’s theft of trade secrets cases have had a nexus to China”.

Washington is starting to take a tougher public line against Beijing. The National Security Strategy, for example, insists that the United States “will no longer turn a blind eye to violations, cheating, or economic aggression”.

N.B Chyoi
is a Kachin lawyer and geopolitical analyst focusing especially on Burma, India and China.

The opinion expressed here is the author’s own, and does not represent the editorial policy of The Kachin Post.