Ep 5: A Cyber Detente
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What are the U.S. concerns about cyber threats from China?
I raised once again our very serious concerns about growing cyber threats to American companies and American citizens. I indicated that it has to stop. The United States government does not engage in cyber economic espionage for commercial gain.
For years, Chinese IP theft was something most US businesses just swallowed with a wink and a nod towards profit. As for the US government, they took a gamble. They hoped that as China's economy grew and the internet took off, China would have no choice but to adopt international norms, improve its track record on human rights, and eventually stop hoovering up all our IP. But hack after hack made clear just how wrong they were. And then this happened.
We have jointly affirmed the principle that governments don't engage in cyber espionage for commercial gain against companies. That all I consider to be progress.
What was the cyber agreement between Obama and Xi Jinping?
On September 25th, 2015, Obama and Xi Jinping stood side by side in the Rose Garden and announced the cyber detente nobody saw coming.
What I've said to President Xi and what I'd say to the American people is, the question now is, are words followed by action?
What you just heard was Obama announcing that Xi Jinping had agreed China would stop hacking for commercial gain. Well, technically Xi and Obama agreed to stop hacking for commercial gain, but this was no doubt a better deal for Obama than it was for Xi. Nobody saw this one coming. Not me, not the white hats who were getting called into Chinese cyber attacks all over the country, not even the government officials who pulled it off. So how'd we get here? Well, as Chinese cyber espionage ramped up, so too did the government's agonizing of what to do about it. I'm Nicole Perleroth, and this is To Catch a Thief.
How has U.S. policy towards Chinese IP theft evolved?
Now, here I should step back and note there had been government efforts, serious efforts, to rein in Chinese IP theft before. Long before Aurora, even before the dawn of the commercial internet really, the first Bush administration had put China on notice.
So, I think folks seem to forget that in 1991, George H.W. Bush brought a Section 301 investigation against the Chinese government for theft of intellectual property and violations of copyrights and other things, and used that to force the Chinese government to a negotiating table so that they would actually start to abide by international rules around respecting copyrights and respecting intellectual property.
That was Matt Turpin, who served as China director at the National Security Council in Trump's first administration. And before that, as China advisor to the chairman of the Joint Chiefs of Staff under Obama. For those not well-versed in the minutiae of trade law, the Section 301 investigation is the first step in imposing tariffs that would have penalized China for its blatant IP theft. And this was a big deal at the time. But when it came down to actually enforcing anything, that was another story.
The Bush administration got to a negotiated settlement in 1991. and then chose not to impose sort of retaliatory tariffs on what Beijing was doing. Beijing agreed to fix its things. And then essentially four years later during the Clinton administration, the Clinton administration is back in 1995, renegotiating compliance on those agreements, right? That Beijing is not compliant. And essentially that is the story that we've been dealing with from then on.
Every time the Bush and Clinton administrations debated actual penalties in the form of tariffs or sanctions, there were always people in the room who'd argue back. It'd be better to kick the can down the road. American businesses were making too much money in China to disrupt the status quo. And back then, policymakers still held out hope for a new China. That once they acquired a certain level of wealth and economic maturity, once the internet took hold, China would cut out the bad behavior, stop stealing RIP, lay off the internet crackdowns, and inevitably democratize. This late 90s, early 2000s optimism was perhaps best summed up by this guy.
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Chapters
5 chapters
1
What are the U.S. concerns about cyber threats from China?
0:08–1:13
2
What was the cyber agreement between Obama and Xi Jinping?
1:13–2:29
3
How has U.S. policy towards Chinese IP theft evolved?
2:29–10:44
4
What was the impact of Edward Snowden's revelations?
10:44–17:39
5
How did the OPM hack escalate tensions with China?
17:39–44:57