Chinese theft of US trade secrets becomes more public

…That’s the gist of recent comments from none other than the American Chamber of Commerce in China, which released a report showing 26 per cent of US businesses in China have had proprietary data stolen.

As the group’s president Christian Murck told the Wall Street Journal, data theft is “beginning to become public in a way it hasn’t in the past.”

Full report here.

Murck is right. It’s becoming a feature of the US-China trade and business environment.

The question is, how the issue will be viewed by the US public? On the one hand, for good reason, the US public’s respect for business is at a low point. After decades of US citizens being trampled by the freemarket economics that placed business, strangely, at the moral center of the nation, Americans can be forgiven for being less than sympathetic to woes of the industry.

But it’s not in the interest of American voters to stand by and watch as their economy is further damaged by Chinese cyber-espionage.

Americans, despite the general civil disobedience of the corporate sector in recent years, have not turned against the law. In fact, the remedy to the excesses of US business is the same as the remedy to the excess of Chinese cyber-espionage — the law, either in its application at home or the promotion of its culture abroad.

In the US, there is a flap over the reprised Cyber Intelligence Sharing and Protection Act, which is designed to help companies counter the cyber threat. In order to gain the confidence of the US public, the bill should require businesses to strip out personally indentifying information. Then companies can more freely share the anonymized data with the Feds in order to detect suspicious patterns in the information. In that regard, the privacy of American citizens could be protected, while its government, protecting its citizens, would have the raw data needed in order to fight the intrusions.

This would balance the needs of the government, business and US citizens, while helping hold the line on Chinese cyber-espionage of trade secrets.

North Korea, China – what to think, when to panic

Soldiers march past the podium during a military parade in Pyongyang (Reuters)

A couple things on the latest tensions

Despite the endless escalation of rhetoric and military preparations between North Korea and South Korea with the US, as of March 29, the joint South-Noth venture called the Kaesong Industrial Complex was still operational, which has led some to believe Kim Jong-un is still only indulging in high-octane rhetoric. For now.

But clearly, no one will be happy if North Korea’s recent string of threats becomes the norm.

The big question many people are asking themselves is: where is China in all of this?

After all, isn’t China the biggest benefactor of North Korea?

Hasn’t trade escalated between North Korea and China even after UN sanctions?

Hasn’t China looked the other way with North Korea, as long as it was a foil for the US in North Asia?

Isn’t China suspected of selling mobile missile launchers to North Korea as recently as 2012?

Of all the nations in the Six Party talks, China stands out as the most directly influential.
Now, with the media on red alert and politicians watching fearfully, some are daring to speak the unspeakable regarding China and North Korea.

One such politician is Australia’s ex-prime minister Kevin Rudd, who, while giving his usual boilerplate about Pax Pacific to an audience of Chinese military elite Thursday added some straight-talk on China-North Korea.

As always, Rudd is among the most insightful voices on China.

Not only is he a long-time scholar of Chinese history, a speaker of the language, an ex-diplomat who has the ear of policymakers in Washington and elsewhere, Rudd has also contended with China as a prime minister of a nation in the region. So he’s worth listening to.

Rudd, in the speech to the National Defence University of China made a few points about the China-North Korea relationship and what it means to US-China relations.

Says Kevin:

Primo) The US and its allies (Japan, South Korea, and possibly even Australia among others) would have every reason to build up their missile defense to counter North Korea’s threat – and this will further hem China in and frustrate their military’s expansion.

Of itself it is a reflection of profound strategic mistrust towards North Korea. For many it also represents an entirely rational response to a real and growing threat. Such ballistic missile defence cooperation also of course has wider implications for China’s national and security interests beyond the Korean Peninsula.”

Secondo) And this is key: The world outside the region will hold China responsible because of North Korea’s military adventures.

“China’s own global foreign policy standing is suffering and will continue to suffer as a result of North Korean adventurism.”

Terzo) South Korea may finally tire of this festering threat and be forced to take action “given the enormous political pressures within South Korea’s democracy to respond robustly to any future North Korean provocation.”

Pointedly Rudd says:

“For these reasons the international community will be looking more and more to Beijing, in view of its significance as a major supplier of food and energy to the Korean people, for a new diplomacy towards Pyongyang, given that all other diplomacies from other countries have so far demonstrably failed.”

But will a new diplomacy come? Rudd acknowledges a more vocal debate in China about how to handle North Korea. But is it debate at a certain level happening beneath the inertia at a higher level where the ultimate decisions are made?

That presupposes civilian policymakers in Beijing have total control over the Chinese side of the issue.

The article raises serious questions about the civilian control of the Chinese military, which has real implication for what’s happening with North Korea. Even if civilian leader Xi Jinping, who is supposed to be in control of the PLA, wants a different line on North Korea than in the past, there is on guarantee that Xi can achieve that.

In effect, if the PLA wants to give missile launchers to North Korea’s army, the civilian leadership of China can’t stop it.

This gap between civilian and military control of the PLA also exacerbates China’s disputes with its neighbors, as it makes it harder to know who is issuing orders in China when tensions flare.

Yet another possibility is that China is willing to act on North Korea but is paralyzed by the challenge it presents because China itself an doesn’t have the diplomatic or strategic vision to try to guide the situation.

In that scenario, Seton Hall University professor Zheng Wang may be right in concluding Chinese foreign policy, while appearing domineering and threatening, “is actually ambivalent, even weak.”

In any case, the status quo of North Korea’s threats and aggression can’t last.

If there is no new diplomatic approach by China to North Korea, then outsiders – led by the Americans – will conclude that an erratic, threatening North Korea serves the long-term goal of trying to flush the US out of East Asia.

And if that becomes clear, a lot of this talk about how you can’t compare the historical Cold War to the situation today will evaporate further. People – particularly in the US – will wonder aloud why they continue to bankroll through trade a country that clearly resents them, disrespects their laws, and their role in the world. Yes, cross-border trade will not dry up because of this – as it shouldn’t. But politicians, consumers and citizens in the US and West, will stop seeing China as developing country experiencing growing pains and see it as the long-term strategic challenge/threat that it is increasingly becoming.

Dear Cold War Daily readers…

Please let me know what angles of the growing US-China Cold War you are interested in. Feel free to leave comments. If you just want to send a message, leave a comment with instructions not to publish. Sure, it’s not going to be like the Old Cold War. The global economy is integrated. That will just spur competition in new ways.

In any case, I want to know what part of the drift toward a new Cold War you are interested in. While the struggle between the US and China will be a big part of it, the tensions between China and its neighbors like Japan, Vietnam and the Philippines will be a big part as well. It is also a struggle between democracy and neo-authoritarianism, between transparency – even strategic transparency – and an opacity linked to authoritarian governments and older cultures and histories. Anyway, please let me know the areas you are most interested in. And thanks for reading.