According to a new report from the Washington Post, the Obama administration is developing a package of unprecedented economic sanctions against Chinese companies and individuals that benefit from ‘cybertheft’ of valuable U.S. trade secrets. Some rumors suggest the new sanctions may even become public sometime in the next couple weeks, just in time for an important visit from President Xi Jinping of China who is scheduled to arrive next month in Washington for the first state visit of his Presidency.
Officials have said that Chinese hackers may have stolen everything from nuclear power plant designs to search engine source code and confidential negotiating positions of energy companies throughout their sustained and effective campaign of cyber-warfare. A set of sanctions would be a significant increase in the intensity of the American administration’s public response to cyber espionage and economic theft that is routinely committed by Chinese hackers that are understood to be performing these tasks with authorization of their government.
If enacted, these new cyber-sanctions would mark the first use of the executive that established the authority to freeze financial and property assets of, and bar commercial transactions with, individuals and entities overseas who engage in destructive attacks or commercial espionage in cyberspaceorder which President Obama signed by President Obama in April of 2015.
A senior administration official told the Washington Post “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 administration has taken and continues to introduce steps to protect our networks and our citizens in cyberspace, and we are assessing all of our options to respond to these threats in a manner and timeframe of our choosing.”
Last month, the FBI said that on a global level, economic espionage cases surged 53% in the past year, and that China accounted for most of that – so the motivation for sanctions is clear, but the reactions possible still make enacting any new sanctions a difficult move at best.
If sanctions are imposed, “I’d say the chances of Chinese retaliation are high,” said Jeffrey A. Bader, Obama’s principal adviser on Asia from 2009 to 2011. But, he also added that “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.”
With the Chinese economy faltering and so much US Debt in the hands of Chinese investors, the complexity of international relations, timing of these events and massive stakes on the line are creating a political challenge of monumental significance. It is also starting to show that the eventual solution to piracy and cyber security concerns is likely to be as political or legislative as technological.