Putting a dollar value on the loss from cyber-espionage is very difficult, and many estimates are wild guesses. A reasonable assessment would be that it costs the United States no more than $100 billion a year and perhaps much less — what some economists would describe as a rounding error in our $15 trillion economy. This is not death by a thousand cuts. It probably isn’t even slowing the U.S. economy.
Even when China steals intellectual property, it can take years to turn it into a competitive advantage. The right technical skills and manufacturing base are needed to turn advanced designs into high-end competitive products. China is still lagging in many high-tech arenas, such as semiconductors.
The one area where this is not true is military technology. Chinese espionage has led to rapid improvements in that country’s stealth, submarine-quieting, nuclear weapons and sensor technologies. While the economic risk from cyber-espionage is generally overstated, the United States has probably underestimated the damage to its lead in military technology.
5. America spies on China, too, so what can we complain about?
Chinese officials portray their country as a victim of hacking. Meanwhile, some American scholars question whether the United States is in a position to criticize, since it also engages in cyber-espionage. “Perhaps the complaint is that the Chinese are doing better against our government networks than we are against theirs,” law professor Jack Goldsmith wrote. That misstates the issue.
The Internet, poorly secured and poorly governed, has been a tremendous boon for spying. Every major power has taken advantage of this, but there are unwritten rules that govern espionage, and China’s behavior is out of bounds. Where Beijing crosses the line is in economic espionage: stealing secrets from foreign companies to help its own. China also outmatches all other countries in the immense scale of its spying effort, and the United States is far from the only nation to have suffered.
The United States, by contrast, does not engage in economic espionage. As one Chinese official put it in recent talks at the Center for Strategic and International Studies: “In America, military espionage is heroic and economic espionage is a crime, but in China the line is not so clear.”
The United States and other countries need to make that line clearer and discourage China from crossing it.
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