US may impose sanctions on China over cyber theft

US authorities plan economic sanctions against particular Chinese companies and personnel which have sought benefit from cyber theft of valuable US trade secrets

Photo by: AP
Photo by: AP

US President Obama smiles as a group of children wave flags and flowers during a welcome ceremony held by Chinese President Xi Jinping at the Great Hall of the People in Beijing, China, November 12, 2014

The US government recently announced a plan to place economic sanctions on Chinese companies and individuals who are suspected of having benefited from cyber theft, the Washington Post reported on Sunday.

The Obama administration has not yet officially decided whether to implement these sanctions, but a final announcement is expected within the coming couple of weeks, according to several administration officials, who spoke on the condition of anonymity.

The implementation of the sanctions would signify a harder stance in the administration’s response to the increasing wave of cyber theft allegedly carried out by Chinese hackers, who US officials claimed have stolen everything from nuclear power plant designs to search engine source code to confidential negotiating positions of energy companies.

Any action would also come at a particularly sensitive moment as Chinese President Xi Jinping will visit the US next month, indicating how frustrated US officials have become over persistent cyber espionage by the country.

A senior administration official, speaking on the issue of cybertheft, said, “As the president said when signing the executive order enabling the use of economic sanctions against malicious cyber actors, the administration is pursuing a comprehensive strategy to confront such actors.”

“That strategy includes diplomatic engagement, trade policy tools, law enforcement mechanisms, and imposing sanctions on individuals or entities that engage in certain significant, malicious cyber-enabled activities,” the official added, without specifying any agressor country.

A second administration official stated that the expected sanctions would send two signals: “It sends a signal to Beijing that the administration is going to start fighting back on economic espionage, and it sends a signal to the private sector that we’re on your team. It tells China, enough is enough.”

The sanctions would not be the first major shot at China regarding this particular issue.

In May 2014, the Obama administration imposed sanctions against five members of the Chinese military who were confirmed to have hacked into the computer systems of major US steel companies along with other firms.

China is not the only nation that hacks computer networks to gain trade secrets in attempt to aid its economy, but it is by far the most active - last month the FBI said that economic espionage cases surged 53 percent in the past year and China accounted for most of that, officials reported.

Some officials within the government argued that they must take caution and that such sanctions would only create unnecessary friction.

Jeffrey A. Bader, Obama’s principal adviser on Asia from 2009 to 2011, argued that if sanctions are imposed then the chances of Chinese retaliation are high.

However, “If a Chinese company was a beneficiary of stolen intellectual property from an American company, and the evidence is clear cut, then actions or sanctions against that Chinese company strike me as appropriate,” Bader argued.

The administration, officials from national security agencies, as well as the US Deparment of the Treasury - which is the lead agency on economic sanctions enacted under executive order - have made it their main purpose to impose costs for economic cyberspying. Officials say the best method is to use a variety of tools - indictments, sanctions, maybe even covert cyber actions.

It’s not yet clear how many firms or individuals will be targeted by sanctions, but an official said the Chinese firms would be large and multinational and their activity must meet one of four “harms”: attacking critical infrastructure, such as a power grid; disrupting major computer networks; stealing intellectual property or trade secrets; or benefiting from the stolen secrets and property.

The newspaper stated that the sanctions would not be imposed in revenge for the suspected hacking and theft of four million US government personnel records in June, for that attack was deemed to have been carried out for intelligence reasons rather than for the benefit of the Chinese economy.

TRTWorld and agencies