Google Cyberattacks China's War on the U.S. Economy

By: Peter_Navarro

China's recent cyberattacks against Google and as many as 33 other U.S. corporations open up a dangerous new industrial espionage front in Beijing's war on American business.

China's objective was not that of a rogue hacker - to create chaos. Rather, the target was any intellectual property that would give Chinese enterprises a competitive edge - from trade secrets and new technologies to software such as Google's proprietary source code.

Chinese cyberattacks are hardly new. China's military regularly hacks into America's defense networks to acquire military technologies. A glaring case in point: the highly sophisticated penetration last April of the Pentagon's $300 billion Joint Strike Fighter project.

Chinese industrial espionage, along with other illegal means to acquire American business technology, is hardly new either. For example, an American manufacturer such as GM or Intel that produces in China must surrender some of its technology. Such forced technology transfer is clearly illegal under World Trade Organization rules, but U.S. executives meekly kowtow for a piece of the action.

Similarly, on the industrial espionage front, a shadow network of Chinese visitors to American soil regularly troll for new designs, processes, products and software that can be copied or reverse-engineered. The standard joke: What do they call an American patent in China? A blueprint.

More broadly, according to the U.S.-China Economic and Security Review Commission: "China is the most aggressive country conducting espionage against the United States." Of course, once intellectual property is stolen and exported, China gains yet another competitive edge - even as China's economy booms and America's goes bust.

What's new and alarming about China's latest wave of cyberattacks is the extension of Beijing's flagrant industrial espionage to cyberspace. If the bank accounts, client lists, trade secrets, patented technologies and proprietary software of American corporations are not safe from Chinese hackers, this becomes an issue not only of economic policy but also of national security.

Predictably, Chinese government officials deny any culpability. This is supremely disingenuous, given the tight control of China's Internet by its vast army of cybercops and the sophistication of the attacks.

At the dawn of this new cold cyberwar, President Obama and Secretary of State Hillary Rodham Clinton must be clear: Any attack on America - from Pentagon hackings and industrial espionage to forced technology transfer and mercantilist weapons like currency manipulation - represents an act of aggression and will not be tolerated.

Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at www.PeterNavarro.com.

© 2010 Copyright Peter Navarro - All Rights Reserved
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