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Walt Handelsman | New Orleans Advocate

US forces China’s hand on corporate spies

For years, the Chinese government has been stealing secrets from American companies. Monday, the United States finally put its foot down.

The Justice Department announced that five Chinese military officials have been indicted on charges of espionage against American steel, solar and nuclear power companies – the first time the U.S. has brought such accusations against another country.

It’s the right thing to do. Cybercrime targeting trade secrets and intellectual property is a booming business, one that costs U.S. companies billions each year. It’s been called the greatest transfer of wealth in human history. And China’s legions of cyberspies are, by general consensus, the world’s worst offenders.

The U.S. has now signaled that it will protect companies after years of private warnings to the Chinese. And, more important, the indictment will hopefully remind China that curtailing this kind of abuse is in its own economic interest.

The indictment amounts to a defense of a long-established principle of espionage: While governments can spy to protect national security, as the U.S. does, they shouldn’t steal corporate secrets to benefit their own businesses. The Chinese government has been ostentatiously flouting this norm for years.

A study last year by the computer-security company Mandiant Corp. said that hackers associated with the Chinese army had stolen hundreds of terabytes of data from 141 companies.

This might make sense for China in the short term. In the long term, however, the strategy of aggressively mixing espionage with commerce is doomed.

First, if China intends for its homegrown companies to become global leaders, it’s going to have to convince international customers – not to mention foreign regulators – that their products aren’t being bugged.

The surveillance operation of the National Security Agency offers a lesson. As trust in American technology companies has plummeted globally since their cooperation with the NSA was revealed last year, the costs have kept piling up – potentially reaching $35 billion for the industry by 2016, according to one estimate.

Second, China should realize that a new era of espionage has only just begun. Its own companies will face digital intrusions as they become global powers, and their intellectual property and business secrets will also be lifted by unscrupulous competitors. Helping to build an international consensus about the rules now will help ensure that such disputes don’t escalate dangerously.

Monday’s indictment carries plenty of risks. It could worsen tensions between the U.S. and China. It could make for an awkward diplomatic dynamic with American allies, such as Israel and France, that also engage in economic espionage. And China could retaliate.

Yet it conveys a powerful symbolic message. If it signals to China that its theft of American trade secrets and technology will no longer be tolerated, and forces its government to finally grapple seriously with the long-term costs of economic espionage, it’s worth all those risks.