Chinese Cyber Economic Espionage: Motivations and Responses - U.S. Response During Obama Administration, Inability of America to Stem Chinese Theft of Intellectual Property from Businesses

This report has been professionally converted for accurate flowing-text e-book format reproduction. Alleged Chinese cyber economic espionage periodically fills headlines, Internet security company reports, Congressional hearing transcripts, and official (and semi-official) pronouncements. Despite the apparent recognition of a problem, the U.S. has been seemingly ineffective in deterring or dissuading continued Chinese cyber activity—despite the potential significant impact to economic and national security. While accurate calculations on the cost of stolen intellectual property to U.S. businesses are nearly impossible to determine, some estimates suggest hundreds of billions of dollars per year—independent of broader and more sinister implications for the future of U.S. competitiveness. Why China, apparently, believes it must steal at the expense of the United States, and why the United States has been unable to stem it, are crucial national security questions. An analysis of China's strategic ambitions, coupled with national policies designed to achieve them, illuminate possible answers. Similarly, an examination of the U.S. response during the Obama Administration highlights the interplay between policy development and the influence of domestic politics, corporate interests, and narratives.

For the strategically compelling issue of cyberspace and Chinese economic espionage, the administration similarly seemed to wander. One of the most significant proclamations designed to inform the public about an alleged nexus between America's rising competitor and the widespread theft of corporate secrets came not from the government but instead, three years into the president's first term, from retired government officials (who, admittedly, were likely acting as proxies). In a January 2012 editorial in the Wall Street Journal, Vice Admiral (ret.) Mike McConnell (former Director of National Intelligence as well as Director of the National Security Agency), Michael Chertoff (former Secretary of the Department of Homeland Security), and William Lynn (former Deputy Secretary of Defense) were clear: "The Chinese government has a national policy of economic espionage in cyberspace. In fact, the Chinese are the world's most active and persistent practitioners of cyber espionage today." The cost to the United States—in terms of competitiveness, innovation, dollars, and jobs—is "potentially catastrophic."

An examination of how the United States has responded provides additional insights. Because cyber-enabled economic espionage has as its distinguishing feature cyberspace, which is neither exclusively public nor private, responses span political and social levels and are generally within the broader context of cybersecurity. Given that much of the publicly available debate of Chinese cyber economic espionage has occurred since President Obama assumed office, the chronology of government action between 2009-2015 highlights an incremental approach filled with tension. Recognizing the limits of executive action, particularly since economic espionage targets the private sector, the administration has sought legislation that would better enable cooperation between the government and businesses. Yet domestic politics, corporate interests, and a meandering narrative likely inhibited policies that would both improve U.S. cybersecurity (and therefore defense against cyber economic espionage) and change Chinese behavior.