Adam Segal

Late last Wednesday, the Department of Justice announced that Su Bin, a Chinese national living in Canada, had plead guilty to "participating in a years-long conspiracy to hack into the computer networks of major U.S. defense contractors, steal sensitive military and export-controlled data and send the stolen data to China." Over several years, under Su's direction, two hackers stole some 630,000 files from Boeing related to the C-17 military transport aircraft as well as data from the F-35 and F-22 fighter jets. The information included detailed drawings; measurements of the wings, fuselage, and other parts; outlines of the pipeline and electric wiring systems; and flight test data. Su's conspirators remain unidentified and at large. The 2014 indictment refers to the co-conspirators as "affiliated with multiple organizations and entities." The plea announcement refers to them as "two persons in China" and says nothing more about them. But in documents submitted as part of Su's extradition hearing, the U.S. government identified them as People's Liberation Army (PLA) hackers. The documents included intercepted emails with digital images attached that showed military IDs with name, rank, military unit, and date of birth.

The United States has reportedly asked the Chinese government for help with North Korea and cyberattacks. Most of North Korea’s Internet traffic passes through China, and the New York Times quotes one administration official as saying,“What we are looking for is a blocking action, something that would cripple their efforts to carry out attacks.”

The United States-China science and technology relationship is shaped by a central paradox. Reducing climate change, preventing pandemics, and developing new energy sources are all challenges that require global solutions. Moreover, the science that will be the foundation of any technological fixes is increasingly collaborative, spanning different disciplines, institutions, and geographical locations. At the same time, science and technology are an essential component of national economic competitiveness and military power. As a result, China and the US are collaborators as well as competitors for talent, new ideas, market share and prestige. Managing this paradox requires the US to maintain scientific strength at home and deepen ties to emerging science powers, while simultaneously pressuring China on its mercantilist technology policies and cyber espionage.

On Oct. 8, the House Select Intelligence Committee released a report on the cybersecurity threat posed by China's Huawei and ZTE, the world's second- and fourth-largest telecommunications suppliers. The report, which described the companies as potential espionage risks and asked the U.S. government and U.S. firms to refrain from doing business with them, drew an angry response from Chinese media: Xinhua, China's state news agency, called its conclusions "totally groundless" and arising out of "protectionism"; the nationalistic tabloid Global Times said the United States is becoming an "unreasonable country"; and the state-run English language newspaper China Daily labeled the accusations "unreasonable and unjustifiable." But the fear of vulnerability from foreign technology, whether reasonable or not, is as present in China as it is in the United States -- now more than ever. The threats China sees from dependence on foreign telecommunications, software, and hardware suppliers echo many of the concerns raised in the House report: both countries fear that dependence on foreign technology makes them vulnerable to spying and threatens network security and economic development. According to an April 2012 article in Outlook Weekly, a Xinhua publication, 90 percent of China's microchips, components, network equipment, communications standards and protocols, as well as 65 percent of firewalls, encryption technology, and 10 other types of information security products rely on imported technology. Foreign producers also dominate the market for programmable logic controllers, devices used to control manufacturing and other industrial processes. As a result, "all core technologies are basically in the hands of U.S. companies, and this provides perfect conditions for the U.S. military to carry out cyber warfare and cyber deterrence," according to a January article in the military newspaper China Defense.

Less than three weeks after US Secretary of State Hillary Clinton and three other cabinet members announced the International Strategy for Cyberspace, another incident has occurred between the United States and China. In this instance, Google claims that hackers based in Jinan stole the passwords of the email accounts of senior government officials in the United States and Asia, as well as Chinese political activists. The Chinese response followed the standard script: deny the claims, point out illegality of hacking in China, note that China is also a victim, and question the motivations of Google and the United States. Foreign Ministry spokesperson Hong Lei said, 'Allegations that the Chinese government supports hacker attacks are completely unfounded and made with ulterior motives'. While this flare up is likely to be short lived, the two sides involved hold fundamentally incompatible views on cyberspace, which means it is almost inevitable that there will be another incident sometime in the near future. The International Strategy states that the US will promote a digital infrastructure that is 'open, interoperable, secure, and reliable' while supporting international commerce, strengthening security, and fostering free expression. At best, China shares interest in two of these goals-global commerce and security-and even in those cases it has a different conception of how they should be defined.

According to public reports, over the last several months computer hackers have stolen proprietary information from DuPont, Johnson & Johnson, General Electric, RSA, Epsilon, NASDAQ, and at least a dozen other firms. Many of these attacks have been traced back to networks in China, but it is unclear whether criminals, government agencies or some combination of the two are responsible for the attacks. U.S State Department cables obtained by Wikileaks further describe attacks code-named Byzantine Hades on U.S. technology and defense companies that appear to be the work of China's People's Liberation Army. Regardless of the source of the attacks, the United States must work independently and, when possible, cooperatively with China to reduce the threat. Chinese cyber espionage is part of a larger effort to reduce China's dependence on foreign technology. Chinese leaders are unhappy with being a factory to the world. It is too labor and energy intensive. Chinese leaders fear that Chinese firms will be trapped producing low-value components while American, Japanese and European companies dominate the high-return, intellectual-property-intensive sectors. The desire for technological self-sufficiency is also tightly tied to concerns about national security. As former Chinese minister of science Xu Guanhua put it in January 2006 when he unveiled a new plan designed to make the country one of the world's leading science powers by 2020, "China still lacks capability in innovation, particularly in those strategically important areas. We would never buy or borrow the key technologies from the global leading economies."

Sometime this year, the Chinese government will announce a new initiative to lure ten scientific superstars to research labs throughout China. The government hopes that if it offers a $23 million dollar award to Nobel Prize winners and other luminaries, they will relocate and raise the quality and prestige of Chinese research and development. The program is part of a larger strategic push to shift from "made in China" to "innovated in China." The Chinese have great ambitions, but can they be met? Spending on research and development as a percentage of China's GDP has tripled over the past fifteen years from half a percent to 1.5%. By 2020, about 2.5% of China's mammoth GDP will likely go to R&D. A 2006 Chinese planning document introduces 17 megaprojects in areas such as high-end generic chips, manned aerospace and moon exploration, developmental biology, and nanotechnology. In 2010, China passed the United States and Japan as the world's largest filer of patent applications. But as with other announcements, anecdotes, and data sets that appear to herald the inevitable rise of China, they mask significant weaknesses. There are serious shortcomings within China's innovation system.