Guilt or Competition? Winning the cyber espionage war

In the first cyber-espionage case of its kind, the US Justice Department last month formally indicted five officials in the Chinese People's Liberation Army for allegedly hacking into US commercial computers and stealing top-secret trade information.

The hackers, members of an organisation publicly identified last year as the Shanghai-based cyber unit of the People's Liberation Army, are accused of taking confidential nuclear and solar technology data for the benefit of their firms, thus giving Chinese businesses an unfair competitive advantage. Chinese officials have vehemently denounced these "fictitious allegations" and claim that they threaten the established mutual trust between China and the US.

What is the news here? The move is almost certainly symbolic since there is almost certainly no possibility that the Chinese will turn over the men to the US.

The Chinese have collected information from the United States for quite some time, just as the Russians, Germans, and French have. It is also now common knowledge that the US gathers extensive information from China as well as Germany and many other nations. Why, then, is this kerfuffle taken more seriously than routine hacking?

Some speculate that the entire affair is "running a new pig through town," a European way of referring to new actions designed to shift attention away from policy failures. Perhaps we are witnessing a plan designed to distract from the current criticism of Obamacare or Veterans Affairs.

Or is this Chinese incident truly more serious than regular cyber espionage? America's displeasure seems to be based on its discovery of a link between security measures and industrial espionage. Security espionage benefits from an international consensus that governments have the responsibility to learn about any measures taken abroad which could endanger their own citizens.

Industrial, or economic espionage however, is seen as much more unacceptable if governments intervene abroad to help their businesses gather information. The US differentiates accordingly, and in light of the now great importance of international business, shares this view with other nations. The difference is also well expressed in a terminology, which clearly separates intelligence agents from spies.

If all this is a competitiveness issue, then of course proceeding against the hackers is not enough. Steps must also be taken against the users of the maliciously obtained information, since it is the use not just the possession, which causes the greatest damage.

Is America hypocritical in charging the Chinese with cyber-espionage? When the US was still a young nation and the UK was the world leader in innovation, America also participated in espionage (and did not pay for intellectual property) in order to advance technologically. Perhaps China will ensure better protection once it has enough of its own property to protect.

Is all this only a US-Chinese problem, or is industrial espionage a key problem around the world? Does the punishment reflect a special fear of Chinese reverse engineering capabilities? Will knowledge acquisition and distribution retain a distinction between military/political insights and economic/production knowledge? Or will they be linked?

Right now, the world trend seems to be to obtain information in all areas of human activity, using it for any advance possible. The US can be the key bulwark to separate military and business knowledge. Sanctions against the five Chinese individuals will not result in any curtailment of information acquisition and use. But they can have a clear symbolic effect.

This dispute over espionage is just another demonstration of an important discord between the US and China when it comes to the role of the State and business. If the sanctions achieve a change in the global differentiation between type and use of information, then the actions taken against the five individuals are well worth the effort. If not, we're witnessing the erasure of another line in the sand.

For the sake of an internationally level playing field and the encouragement of fair competition and market driven activities, let us hope that this wake-up call stirs new thinking around the world.

The writer researches international marketing issues at Georgetown University. He served in trade policy positions in the George H.W. Bush and Ronald Reagan administrations.