The US-China Economic and Security Review Commission (USCC) released a report to the United States Congress late last week accusing China of waging an "aggressive and large-scale industrial espionage campaign" against American technology. The report attempts to turn the tale of industrial espionage into a national security threat by stating that "sophisticated weapon platforms are coming off production lines at an impressive pace and with impressive quality." It also urged Congress to protect "critical American computer networks and sensitive information" from Chinese cyber-attacks.

The report is not the first of its kind to come out of the USCC, which has been producing similar papers for over five years. Back in 2006, the USCC issued dire warnings about a government deal to purchase Lenovo ThinkPads, claiming that the Chinese-based company could be shipping the laptops with top-secret bugging devices. The deal went through anyway, and so far, no bugs or backdoors have been found.

Concerns about Chinese espionage are hardly limited to the USCC or even to the United States: both the UK and German security agencies have been investigating alleged Chinese attempts to spy on government agencies by breaking into computer networks. The Australian government is also concerned about Chinese espionage, after defector Chen Yonglin alleged that over 1,000 Chinese agents were active in that country.



Defector Chen meets the media. Image courtesy Epoch Times.

Industrial espionage is as old as industry itself, and it should hardly be considered surprising that foreign companies and even governments try to steal the enemy's secret sauce whenever they can. Back in the dying days of the Cold War, IT administrator Clifford Stoll wrote a best-selling book about how he uncovered a KGB-backed plan to get East German hackers to steal the source code for Digital Equipment Corporation's VMS operating system. While their cunning plan failed, rival Data General was a little more successful: in The Soul of a New Machine author Tracy Kidder recalled how Data General engineer Tom West walked into DEC's offices posing as a technician and proceeded to disassemble a brand-new VAX computer.

Somehow the world survived the threat of industrial espionage back then, but it's a different world today, right? In some ways it is: our reliance on technology and networking, in both industry and the military, is higher now than it has ever been (please don't tell the Cylons). However, the global economy is also far more connected than it has been in the past, and this changes the motivations for industrial nations wanting to go to war with one another. In the past, Russian companies built sturdy but unimpressive Russian computers with Russian parts, and the Americans did all their manufacturing at home. These days, the companies themselves are multinational entities, and simply move manufacturing to wherever will provide the highest profit margin. These days, this means building computers in China, although any other country could be substituted should circumstances change and another nation's manufacturing base prove more efficient.

Because of this interdependency, concerns about industrial espionage from China are difficult to assess. Chinese companies hardly need to send out vast shadowy networks of spies across the globe to steal technological secrets when they already have the contracts to produce almost every electronic device being sold in the United States. So far, no solid evidence has been produced linking the Chinese to military espionage, either (but there have been plenty of accusations). However, with Pentagon officials talking about the problem, we know we haven't heard that last of this.