Are U.S. Companies Being Hacked by China’s Government?

Last week, late September, 2015, Chinese President Xi Jinping, made his first official U.S. visit since his inauguration. It took place amid a background of accusation after accusation thrown by both the U.S. and China with respect to state-backed hacking.

Prior to the arrival of the Chinese Premiere, a U.S. national security adviser fired a warning at China saying that the hacking must stop as it created an enormous strain on relations between the two nations.

And China’s response?

Total denial.

Mr. Xi, in an interview with the Wall Street Journal, said that the Chinese government has never engaged in the thieving of commercial secrets. Neither does it support or encourage Chinese companies to engage in such practices.

Are these denials credible?

In short, no.

It is a known fact that China has a number of military units which are dedicated to the hacking of U.S. industry, says Kevin Mandia, the boss of security firm FireEye.

And Mandia should know. After all, he spent 20 years helping the government and various contractors to clean up the mess after data breaches and then figure out who was responsible.

Mandia’s company has evidence pertaining to net domains, net addresses, the tools used, the attack techniques, and character sets which were used in the cyberattacks.

He also stated that none of the attacks he came across were random. They were all well-organized campaigns which were intent on going after specific industries and specific data.

So, how can the Chinese Premiere deny that this occurs?

Mr. Mandia said it’s because of the language that is used.

He, Mr. Xi, says that the Chinese government are not engaged in hacking. The argument could be made that the military are seen as separate from the government, which in turn means that the statement is true, technically speaking.

And if there is so much evidence, why does it continue?

It’s based on economics. The financial benefits to China normally greatly outweigh the risk of being found out that they are spying on numerous R&D teams.

Further, it’s a fact that China is a huge market for many U.S. companies. As an example, there are more U.S.-manufactured smartphones, particularly iPhones, sold in China than anywhere else. There are over 50 percent of all the jets that Boeing manufacture now operating in China.

Thus, for the U.S. government to complain too bitterly about hack attacks and data going missing may jeopardize the cash flow.

Will it ever halt?

In light of the recent talks between Obama and Xi, yes, there’s a glimmer of hope that, at least, the hacking may be stemmed. For it to stop completely would take a balance shift in the rate of technical innovation from the West to the East.

 

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