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  • Chinese Economic Espionage: An Overlooked Concern

    If you heard that people based in a certain country completely compromised the computer systems of Nortel, a Canadian telecom firm that has since collapsed, what country would you guess?

    If you heard that a company based in a certain country was accused of receiving commercial secrets stolen from DuPont, what country would you guess?

    If you heard that a company based in a certain country was accused by American Superconductor (AMSC) of stealing software used to program advanced wind turbines, what country would you guess?

    Most people might just guess China, China, and China. They’d be right, which is a problem. And it’s not a new problem.

    Economic espionage overlaps with and falls between national security and economics, between cybersecurity attacks and the violation of intellectual property rights (IPR). China is at or near the top of the offenders list in both cyberwarfare and IPR infringement, so it’s no surprise that the same is true for economic espionage.

    The DuPont case is getting the most attention right now. A large state-owned Chinese steel firm, Pangang, is accused of receiving production secrets stolen from DuPont for a whitening chemical so that it could be made in China rather than in the U.S.

    The Nortel fiasco is older but more worrisome. Telecom is not only a major industry; it has an obvious role in national security. Nortel fell apart at the same time that Chinese telecom companies became very competitive very quickly. It’s all but impossible to believe that the hacking had nothing to do with this.

    But it’s AMSC’s suit against Sinovel that best illustrates the problem. There is no possibility whatsoever that AMSC will get a fair hearing in China; Sinovel is absolutely protected at home. The same is true of Pangang and other large Chinese firms.

    AMSC’s only option is to purse its assets in the U.S. and elsewhere outside China. This is an ugly road to travel, and it opens the door to possible abuse. But unless Chinese companies—not just individuals—face costs for their actions, they have no reason to stop. It’s an unfortunate and even economically dangerous situation, one triggered by lawless, predatory behavior by a number of Chinese firms.

    In an election year in the U.S., we will hear loud talk about things that don’t really matter in the U.S.–China relationship, such as the exchange rate. Economic espionage is a real problem that needs more attention.

    Posted in Security [slideshow_deploy]

    6 Responses to Chinese Economic Espionage: An Overlooked Concern

    1. goose says:

      This administration is asleep at the wheel. Thye are much more concerned about getting their constituients free stuff rather than jobs. And guess what- these bums aren't even goodat protecting the jobs of the people who can pay for their constituients…. so throw them out!!!!!

    2. MIchael says:

      You seem to have forgotten that countries like China is the reason why the United States is excelling in science and technology. It doesn't take a genius to know that over 60% of all engineering PhDs are granted to foreigners. It also doesn't take a genius to know that our high school students are failing in both science and mathematics. It also is not hard to travel to a college campus and see a very diverse group of professors in almost any department.

      If China stopped sending PhD students to America, America will have to rely on its high school graduates; take Kim Kardashian for example. Another quick look and you'll find that over 70% of American Nobel Laureates since the 1960s grew up in countries other than the United States.

      It is true that some technologies have been stolen. But to stop this, America must fire all persons with a Chinese ethnic background. The Chinese contribution to the American economy is far greater than what has been lost. Thus, the net result is positive.

      • Kent says:

        Michael,
        You are so right. If you come to my house and make me dinner you should have all rights to steal whatever food i've got in the frig. And to say the statement "America must fire all persons with a Chinese ethnic background" is ignorant. Why don't we just place them in concentration camps because they're Chinese. Chinese that have come to America have nothing to do with the crooks from Sinovel stealing IP. I also don't understand why they have to steal the IP? Aren't you claiming that they're smart enough to come up with it on their own.

        The reason the US excels in science and technology is because those that have the means and knowledge want to come here and live here. Yes we reward those that deserve it with awards and degrees but once they're American they're American. China isn't "shipping" PhD students to America, those students are wanting to come here for the freedom and opportunity.

        • "Jet" Havens says:

          Chinese goals are to gain information! At Purdue, they monopolized copy machines in graduate libraries for months, copying dissertations. I shared an office with a researcher who bragged about how much his government paid him for information. And, they paid him to return every three years to teach, later returning to the U.S. to seek advanced training to be followed by a research position in the U.S. The cycle would then repeat itself. The Chinese have a reputation as being excellent students. At least in the past, that reputation was based on a ruse in which Chinese students possessing advanced degrees from their own universities were matriculated at U.S. schools with records indicating them to be younger and less educated than they were. Naturally, they excelled, leading them to be offered the best research and education programs followed by outstanding job offers. Many returned to China, taking with them billions of dollars of research value. Chinese have been successful in compromising U.S. security through politics; e.g., Have you ever wondered how the Chinese could place a man in space when only months before they could not even get their rockets off the ground? The story is not pretty.

    3. Bobbie says:

      aren't these dishonorable acts on honorable trust? what do you call the ethics of people who steal valuable procedures right under the nose of people that assume integrity? too bad people of America/world effected can't hold the accountable, accountable with proper reprimand but not wrapped around the Chinese finger of the dishonorable, eh? The world isn't going to survive with this much longer and with the American President on everyone's side but America's, everyday is filled with nail biting and further contentions put on by America's unconstitutional government of no restraint!!

    4. Rocco says:

      How will AMSC fair? How would a Chinese company fair in the US? Isn't it the court systems in both countries that are ripe with corruption? Foreclosure fraud is all over us, and not one banker got so much as a slap on the wrist. All our agencies are corrupt including the SEC. The culprits behind 9/11 receive full protection by, well, themselves. We are not free. We are run by organized criminals, capos from many families which have banded together. So the Chinese have a similar problem. Bet they don't see it as a problem any more than our own Capos do. In the end, it's the non-billionaires, and unbribed masses from both countries that get screwed.

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