As senior officials from China and the United States wrap up a series of talks in Washington about an array of economic issues, across town members of Congress probed the extent of Chinese efforts to steal intellectual property from tech companies and other U.S. businesses.
“From defense contractors to manufacturing, no American company has been
immune from the scourge of Chinese intellectual property theft,” says
Rep. Tim Murphy (R-Pennsylvania), the chairman of the House Energy and
Commerce Committee’s oversight subcommittee.
Among the witnesses on hand was Slade Gorton, a former senator from
Washington who serves on the Commission on the Theft of American
Intellectual Property, a group that has been studying the economic
impact of the problem, with a particular focus on China.
Gorton cited the commission’s estimate that cyber espionage and other
forms of IP theft from foreign countries account for annual losses of
$300 billion for U.S. companies. The group attributes between 50 percent
and 80 percent of those losses to China.
Battle on several fronts
The commission produced a series of short-, medium- and long-term
solutions, ranging from the restructuring of U.S. government authorities
that deal with intellectual property to encouraging reforms within China
to strengthen laws against IP theft and their enforcement. That
multifaceted approach comes from a recognition that the war against
hackers will not be won simply by playing defense.
“It is clear that we need better defensive measures to deal with cyber
theft and other forms of intellectual property theft, but I am convinced
that that will never solve the problem on its own,” Gorton says.
Last week’s hearing comes amid ongoing, if halting, efforts in Congress
to craft legislation to shore up the nation’s defenses against cyber
attacks, a policy debate that has focused on the appropriate mechanisms
for businesses and government authorities to share information about
threats and the extent to which the federal government should be
involved in regulating the cybersecurity operations of the private
“We cannot take these problems lightly,” says Rep. Jan Schakowsky
(D-Illinois). “They cost our economy billions of dollars and place our
national security at risk, and as the number of Internet-connected
devices and the use of cloud computing increases the number of entry
points for malicious actors to exploit will also rise. With more
information and more sensitive information now stored on the Web we must
sharpen our focus on cybersecurity.”
Issues of cybersecurity were expected to arise at this week’s U.S.-China
trade talks, though the matter is complicated by the string of revelations about U.S. surveillance programs
by former government contractor Edward Snowden. Descriptions of the
sweeping data collection involved in the National Security Agency’s
PRISM program could reinforce the contention of Chinese officials that
they have been on the receiving end of cyber intrusions.
Witnesses at the recent hearing contended that the Chinese perspective
often does not draw a distinction between the espionage that
countries—even allies—routinely conduct on one another and hacking into
businesses to steal trade secrets.
James Lewis, a senior fellow at the Center for Strategic and
International Studies, where he directs the Technology and Public Policy
Program, recalled a meeting with Chinese officials when a senior
colonel in the People’s Liberation Army told him: “‘Look, in the U.S.
military espionage is heroic, and economic espionage is a crime, but in
China the line is not so clear.’ So one of the things we can do is make
the line a little clearer to them.”
Much of the problem can be traced to a weak legal structure in China,
Russia, and other countries that are identified with intellectual
property theft, Lewis explains.
“They have no tradition of protecting intellectual property,” he says.
“One of the differences between the U.S. and countries like China and
Russia is that we have laws and we enforce them. They either don’t have
laws and they certainly don’t enforce them.”
Apart from the legal factors, Lewis’ diagnosis of China’s stance on
intellectual property notes a fear among party leaders that rapid
economic growth is crucial to their ability to hold onto power, and the
concern that businesses in the state-controlled economy are unable to
innovate to achieve that growth.
Lewis says that the defenses of U.S. companies vary widely by sector—he
gives high marks to the banking industry while he says many utilities
are soft targets—but sums up the security posture of the private sector
as “feeble,” and has advocated for strong legislation to prod businesses
to “harden their networks.”