US accuses China of cyberspying

published 22 May 2014

The United States has indicted five members of the Chinese military on charges relating to stealing trade secrets. The information allegedly stolen includes both technical information and internal discussions about strategy and pricing, from firms including nuclear power plant company Westinghouse and solar panel maker Solar World.

The five people accused are based in China and highly unlikely to be extradited to face trial, since China responded by calling the claims "ridiculous". It also said that this represented "double standards" and that China has also been "victims of US cyber surveillance and theft".

What the commentators said

In contrast, "Beijing uses it mainly to help Chinese companies, many of them state-owned, gain access to valuable intellectual property". They then use this information "to climb the value chain as China modernises its economy".

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But the line between spying for national security and industrial espionage is often blurred, said David Sanger of The New York Times. "While the NSA cannot spy on Airbus and give the results to Boeing", it can "spy on European or Asian trade negotiators and use the results to help American trade officials".

Indeed, "state-run oil companies are a fascination to the NSA, just as American high-tech firms are a Chinese obsession". The only reason why the NSA doesn't share information with US firms is that "unlike the Chinese, they would not know which companies to help".

Still, while China's espionage "might make sense in the short term", a strategy of "aggressively mixing espionage with commerce is doomed", concluded Bloomberg View. After all, "it's going to have to convince international customers, not to mention foreign regulators, that their products aren't being bugged".

China also needs to realise that "its own companies will face digital intrusions as they become global powers". This means that "helping to build an international consensus about the rules of the game now will help ensure that such disputes don't escalate dangerously".

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.