Dec 25, 2011Business
How to stop China from hacking US corporate and government institutions to steal trade secrets

The Chinese government has clandestinely supported the largest theft of intellectual property in the history of the United States.  U.S. cybersecurity experts believe that the attacks were the work of as few as twelve groups of hackers.  The amount of property stolen is estimated to be in the range of $500 billion and was taken from over 700 governmental agencies, academic institutions, non-profits, publicly traded firms, defense contractors, and technology companies.


According to Scott Borg, an economist and director of the U.S. Cyber Consequences Unit, "this may be the biggest transfer of wealth in a short period of time that the world has ever seen."  To put that number in a relative perspective, the destruction of The World Trade Center cost the United States an estimated $40 billion in insurance losses.


The Obama Administration has, uncharacteristically, publicly identified the Chinese hackers as the perpetrators responsible for numerous acts including electronic attacks on Google, iBahn, Research In Motion and Boston Scientific. 


Unfortunately, what it has not done is suggest a realistic solution.


These attacks are not the usual "spy versus spy" mode of operation from a Cold War Playbook as the United States has admitted that it has no immediate venues to police this behavior.  Instead, the government has decided to form relationships with Corporate America to promote greater diligence and security in the interest of better protecting intellectual property.  


However, this presents Corporate America with somewhat of a paradox.  The sharing of intellectual knowledge between governmental, private and academic institutions - with the understanding that such knowledge is protected by intellectual property laws - is a foundation principal that drives innovation, collaboration, and ultimately the internal motivators related to personal advancement in our society. 


Therefore, the measures necessary to combat intellectual property theft which includes the draconic control of information ultimately makes technical and creative innovation unlikely because protected information can no longer be shared in the name of advancement, but instead is isolated for the sake of security.  So, even if corporate and academic America were more diligent with additional costly security measures (and ask yourself if it is realistic for a corporation, regardless of size, to be able to protect itself from the resources of an entire nation state), the consequence would be less innovation, which is really our true competitive advantage. Because of this risk, the Chinese deserve a strong and formal response for their transgressions.


A few days ago, it was even discovered that China had managed to breach the Chamber of Commerce. Using a technique called "spear-phishing" which encourages people to click on viral links in an e-mail, China has managed to gain undetected access to data for possibly over a year. In order to appear legitimate, these attacks utilize social media and other semi-public resources to create a very convincing e-mail that the recipient would believe is tailored to them. While spear-phishing is not the typical kind of hacking, in that it relies on tricking users rather than tricking technology, the intent behind it demonstrates China's willingness to reach its thieving tendrils into the very institutions of US government.


As of yet, we are unaware how extensive the effects of these attacks will be.  According to KPMG International, the newest Five Year Plan approved by China prioritizes energy, biotechnology, aerospace and telecom equipment manufacturing, information technology, and several other sectors that could utilize the stolen information, which provides even more motivation for the government to back the activities of the hackers.


The Chinese government vehemently denies its involvement in the attacks, but U.S. officials say they have enough evidence to be confident that they are either linked to the Chinese government or military.  China has since accused the U.S. of protectionism because of proposed tariffs on state-subsidized Chinese imports.  A Chinese official was quoted by Xinhua, China’s official news agency, saying that the tariffs constitute “unfair treatment for Chinese companies, and [do] harm to their interests,” but at what price should we bear in mind the interests of these foreign companies when companies on our own soil have already been compromised?


The corporations victimized by the hackers have expressed frustration over the lack of action on behalf of the U.S. government to stop these attacks, and until something is done in order to send a message that this behavior will not be tolerated, the attacks will only continue.


Rather than declaring cyber war or taking a “quid pro quo” approach, the United States should assume the moral high ground by not utilizing the same type of doublespeak tactics currently used by the Chinese.


We need to take the consequences of dishonorable behavior back to the Chinese by implementing a new type of Great Wall.  This “Great Black Wall” would prevent the individuals involved from traveling, studying and doing business in the United States or any of our Western allies.  Furthermore, academia - through our institutions of higher learning - should be integrated into this policy by agreeing to isolate these individuals by barring them from receiving educational degrees, attending conferences, and studying at (or even visiting) our institutions of higher learning.


Furthermore, the United States should offer amnesty to all hackers working directly and indirectly for the Chinese government who come forward with information to help the U.S. with the following benefits:

  • Immediate US Citizenship for themselves and their family
  • $5 million dollars as a reward for their knowledge and cooperation
  • An honorable job in academia at an institution of higher learning
  • A new identity should they so desire
  • Treatment of their children as "legacies" at any western university (thus guaranteed placement) with a separate educational fund that pays for each child to pursue their educational and vocational goals (up to and including a doctorate)


The Great Black Wall policy is sustainable and morally justifiable as it supports our economic and political tenants around innovation as related to the importance of intellectual property and reward.  The Great Black Wall also puts a significant burden on the Chinese government and military industrial complex as they cannot match the cash component with a similar incentive program and thus will be forced to implement additional security measures on their own hackers to prevent disloyalty.  Which will, of course, create disloyalty.


The Great Black Wall is an appropriate asymmetric-based response to a nation state that is using the power of national boundaries to strike our industries and institutions without the fear of consequences.  It is only appropriate and logical that we start with a response that turns those same boundaries - which the Chinese use for deniability - into a reflective prison that brings shame, dishonor and long-term consequences to those individuals responsible should they not elect to stop their activities or seek amnesty.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Patexia.
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