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Guilt or competition? Winning the Cyber Espionage War

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By Michael R. Czinkota

During the Cold War, the Allies protected Germany’s Fulda gap against a possible Soviet invasion. In today’s environment of cyber vulnerability, surely all major parties have developed a plan of defence against cyber aggression. If not, they should do so. Yet even good plans may not fulfill the hopes of their fathers.

Remindful of Emile Zola’s ‘J’accuse’ about anti-semitism in France, the United States has charged five officials in the Chinese People’s Liberation Army of hacking into US commercial computers and stealing top-secret trade information.

The hackers stand accused of taking confidential nuclear and solar technology data for the benefit of their firms, thus giving Chinese businesses an unfair competitive advantage.  Chinese officials have vehemently denounced these “fictitious allegations”, and claim that they threaten the established mutual trust between China and the US

Is this just another stalemate, or what is the news here? The Chinese have collected information from the United States for quite some time, just as the Russians, Germans, and French have. It is also now common knowledge that the US gathers extensive information from China as well as Germany and many other nations. Why, then, is this commotion taken more seriously than routine hacking?

Some speculate that this entire affair is “running a new pig through town,” a European way of referring to new actions designed to move attention away from policy failures. Perhaps we are witnessing a plan designed to distract from the current criticism of Obamacare or Veterans Affairs.

Or is this Chinese incident truly more serious than regular cyber espionage? America’s displeasure seems to be based on its discovery of a link between security measures and industrial espionage.

Security espionage benefits from an international consensus that governments have the responsibility to learn about any measures taken abroad which could endanger their own citizens. Industrial or economic espionage however, is seen as much more unacceptable if governments intervene abroad for the sake of their businesses.

The US differentiates accordingly, and in light of the now great importance of international business, shares its view with other nations. The difference is also well expressed in a terminology, which clearly separates intelligence agents from spies.

If all this is a competitiveness issue, then of course proceeding against the hackers is not enough. Steps must also be taken against the users of the maliciously obtained information, since it is the use, not just the possession, which causes the greatest damage.

Is America hypocritical in charging the Chinese with cyber-espionage? When the US was still a young nation and the UK was the world leader in innovation, America also participated in espionage (and did not pay for intellectual property) in order to advance technologically. Perhaps China will ensure its protection once it has enough of its own property to protect.

Is all this only a US – Chinese problem, or is industrial espionage a key problem around the world? Does the punishment reflect a special fear of Chinese reverse engineering capabilities?

There may be a new era of knowledge acquisition and distribution where military/political insights are either linked to economic/production knowledge, or are kept separate from each other. Right now, the world trend seems to be in the direction of obtaining information in all areas of human activity, and to use it for any advance possible.

The US can be the key bulwark separating military and business knowledge. Sanctions against five Chinese individuals will not produce any major direct curtailment of information acquisition and use. But there can be a clear symbolic effect.

This dispute over espionage is just another demonstration of the ultimate clash between the US and China. They have different perspectives of the role of the State and business. If the sanctions bring a change in the global differentiation between types and use of information, then the actions taken against the five individuals are well worth the effort. If not, we are witnessing the erasure of another line in the sand.  For the sake of an internationally-level playing field and the encouragement of fair competition and market driven activities, let us hope that this wake-up call stirs new thinking around the world.

 

Michael Czinkota researches international marketing issues at Georgetown University. He served in trade policy positions in the George H.W. Bush and Ronald Reagan administrations. His International Marketing text (with I. Ronkainen) is now in its 10th edition. Alice Lu participated in drafting this work.


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