Is Indicting Chinese Hackers a Smart Move or Dumb Strategy?

ChinaFile A conversation about responding to Chinese cyberespionage. 

On Monday, May 19, U.S. Attorney General Eric Holder accused China of hacking American industrial giants such as U.S. Steel and Westinghouse Electric -- an unprecedented criminal charge of cyber-espionage against Chinese military officials. Responding almost immediately, the Chinese Foreign Ministry said Beijing had canceled U.S.-China Internet working group activities and demanded that the United States rescind the charges, which the ministry said were "concocted." Will the United States succeed? Is Washington opening itself up to more criticism of its own electronic surveillance? And what are the charges likely to do to U.S.-China relations overall? 

Robert Daly:

I assume China is guilty as charged -- that the five accused People's Liberation Army officers or others in their demographic committed cyber-espionage against American firms to steal technology and gain other competitive advantages. I assume there were more than five people involved.

It's a serious problem, and China denies its existence. This makes bilateral discussion of the matter a bit one-sided. When China refuses to engage seriously on an issue, either through denial in the face of strong evidence or through unevidenced assertion of its own positions, the United States increasingly resorts to name-and-shame tactics. In the South China Sea, China's defense of its territorial claims is pushing the United States toward ever bolder rejection of the nine-dash line.

Against this background, and under American law, the Justice Department's indictments are justified. But they won't be effective, and they may prove counterproductive.

No one expects China's leaders to extradite the officers or to confess that they were following orders from the party they serve. What we should expect -- and what we got from China right after Holder's announcement -- is stronger denials, tit-for-tat accusations, and suspension of the Sino-U.S. Cyber Working Group's interactions. This response surely figured into the U.S. government's calculations. It went ahead with the indictments, probably in order to demonstrate its commitment to protecting American businesses and for lack of a better idea.

Name-and-shame is, after all, a tactic of last resort -- a throwing up of hands. It's an understandable reaction, but it doesn't work with China, at least in the short or medium term.

Not only will the indictments not solve the cyber-espionage problem, but naming Chinese officers as international criminals may harm the U.S.-China military-to-military relationship, which has improved lately. A top Chinese general was in Washington in mid-May at the invitation of the U.S. chairman of the Joint Chiefs of Staff, and China will, for the first time, participate in the Rim of the Pacific military exercises hosted by the United States this summer. Exchanges such as these can decrease the likelihood of accidental conflict and improve joint crisis management. It would be a blow to the relationship if China canceled military exchanges in response to the indictments.

The American case against China would be stronger if other offended nations stood beside the United States. The National Security Agency's hacking programs make that unlikely, of course. They also make American moralizing on distinctions between espionage for security's sake and espionage for economic advantage unconvincing to many Chinese. In China's political and popular narrative, the humiliations China suffered at foreign hands beginning in the mid-19th century mean that the moral balance will be tilted in China's favor for some time between the foreseeable future and forever. China is always the injured party; that is as central to China's virtue narrative as Holder's statement that "the success of American companies since our nation's founding has been the result of hard work and fair play by our citizens" is to that of the United States. China's state-owned enterprises, furthermore, play a role in China's national security as profit centers, bearers of prestige, and channels for the introduction of technology. Their prosperity is essential to state security from the Chinese Communist Party's point of view.

I don't mean to imply that America is wrong about the facts in this case. I do wonder whether U.S. policy is wrongheaded. If the goal is to alleviate the problem, making China lose face (I know, I know -- they did it to themselves) is not the way to go. China cares more about face than America does and will fight harder to save it. Bilateral and multilateral consultation will yield better results over an arduous, imperfect long run. The best we've got is unsatisfactory, but it's still the best we've got.

Chen Weihua:

I think it's a terrible action taken by the U.S. Justice Department to indict five Chinese military officials for alleged cyberattacks, which the Chinese have totally denied.

First, such action has destroyed the mood for bilateral talks on cybersecurity. So it's not a surprise that the Chinese Foreign Ministry would immediately react by canceling the Internet working group meeting. And the United States should be held responsible for damaging such a mechanism that the two governments worked hard to set up in 2013.

Second, the U.S. action could invite Chinese retaliation, such as indicting U.S. officials responsible for the widespread National Security Agency hacking into Chinese government, military, and commercial entities. And we all know that tit for tat leads to nowhere but only escalation. But I am curious to see who might be on the list.

Third, indicting five military officials seems to suggest that what has been alleged by the United States falls in the military and national security domain. And if that is true, it is something that the United States has been doing more aggressively than other nations.

Fourth and definitely most important, the United States is now known to be the largest cyberattacker in the world, after leaker Edward Snowden's revelations. So the United States has completely lost its moral high ground to teach others what should be the norms or rules of the road in cyberspace. It should work with others. The United States only claims what it does not do, which I don't believe. But the United States has never said what it does, given the huge capacity it has in cyberspace.

I am pretty sure that the large percentage of Snowden's files that have not been made public will eventually serve as the best proof of how ridiculous it is for the United States to charge other nations with cyber-espionage.

Rogier Creemers:

This indictment may be an unprecedented and audacious step in confronting one of the emerging pressing issues of these digital times. I believe, however, that it is unfortunately a problematic one. Daly and Chen have already pointed at its effect on Sino-U.S. relations in cybergovernance and related fields. May 19's New York Times analysis discusses the difficulty of separating the economic and security dimensions of cyber-espionage and hacking. It also quotes Mandiant founder Kevin Mandia, whose February 2013 report brought China's cybercapacity to the top of the agenda, as saying, "This was a logical escalation of the pressure."

Except, it was not. A logical escalation of pressure would have been a civil intellectual-property or trade-secrets suit against those Chinese companies that use allegedly stolen information. This could take place in a third locality, such as Hong Kong or Singapore. A civil conviction might have even more profound consequences: It would impact Chinese state-owned enterprises' ability to operate lawfully in overseas markets, apply for stock exchange listings, and even settle payments in dollars. Their foreign assets might be liable to seizure, and key staff members might be limited in their travel options. In short, a civil conviction would hit them where it hurt, unlike this criminal procedure. Furthermore, a civil suit, initiated by a victim of hacking, would have the benefit of keeping some clear water between government and commerce. It would enable the U.S. government to maintain the dialogue in the cyber working group and other forums, while leveraging private initiatives to obtain agreements on more workable rules and practices. This would give greater credibility to the security-commerce juxtaposition in U.S. discourse and provide a better defense against the inevitable accusations of hypocrisy that have rapidly arisen.

To be sure, a civil suit would have had its own difficulties. Evidentiary proceedings would be a nightmare, while individual companies would suffer from first-mover disadvantage, jeopardizing access to Chinese markets, materials, and opportunities in a process equally or more beneficial to other companies. In that sense, a government-initiated suit at least provides an easier way out. But this simplicity comes at the price of soured governmental relationships and fallout in other policy areas, such as currency or the environment, against no apparent benefit.

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Just How Worrying Is China's Standoff With Vietnam?

ChinaFile A conversation about China's brewing dispute with Vietnam in the contested South China Sea.

In early May, Beijing dispatched an oil rig to disputed waters in the South China Sea, claimed by both China and Vietnam. A few days later, according to Beijing, Vietnamese ships rammed into Chinese ships -- which fired water cannons in response. What does this mean for the peace and stability of the region? And how should China's actions be interpreted? 

Dan Kliman:

Five thousand miles from Ukraine, off the coast of Vietnam, China is taking a page from Russian leader Vladimir Putin's playbook. Beijing's recent placement of a huge oil drilling rig in disputed waters in the South China Sea leverages a similar set of tactics as Moscow. In Ukraine, Russia targeted a weak, non-U.S. ally on its frontier, using paramilitary forces to avoid the appearance of naked aggression for as long as possible. In the South China Sea, Beijing is trying to press its territorial claims on Vietnam, a militarily inferior neighbor that does not have a U.S. alliance to fall back upon. Beijing, like Moscow, has also deployed force opaquely, denying that the armada of 80 ships accompanying the rig includes any military vessels.

In Crimea, this form of gray aggression succeeded, but in the South China Sea, it may not. The stakes for China are significant, starting with control of energy resources and ending with a more distant but compelling goal -- the creation of a new order in Asia. Yet the near-term stakes are much higher for Vietnam: sovereignty and self-respect. And China is trying to apply Putin's playbook to a more difficult target. Vietnam, in contrast to Ukraine, is not plagued by internal divisions, and its government has recently invested in military upgrades.

Vietnam has not shied away from escalation in the past, and its pledge to "apply all necessary and suitable measures to defend its rights and legitimate interests" should be taken seriously. It is likely that Vietnam will first press its case through international law and through the Association of Southeast Asian Nations, a regional body of which it is a member. But if such steps fail and China moves forward with drilling, a military confrontation is possible. China would likely win an armed clash, but it could prove an empty victory, pushing Beijing's fearful neighbors to build up their militaries and pursue even closer ties with the United States. 

Ely Ratner:

Although unquestionably dramatic and serious, the current standoff between China and Vietnam is perhaps less dangerous than a similar crisis would be elsewhere in Asia. For starters, the two governments have close and relatively positive relations, a far cry from the enmity and poor communications that characterize Beijing's current ties with Manila and Tokyo.

In addition, Vietnam is not a defense treaty ally of the United States, which removes the elements of adventurism, miscalculation and escalation that cast an ominous shadow over China's maritime disputes with Japan and the Philippines. Vietnam, and then ASEAN, are likely to feature as the most prominent protagonists well before the United States plays an active and consequential role.

Still, this incident highlights two emergent features of China's foreign policy behavior that are deeply troubling.

First, the Chinese Communist Party appears increasingly unable to reconcile predominant political and economic goals of securing its sovereignty aims while sustaining a peaceful regional security environment. There was considerable expectation (even if based more on aspiration than analysis) that President Xi Jinping would exact policies that more gracefully toed the line between these contradictory goals. These hopes were reinforced by his now famous speech on "peripheral diplomacy" in October 2013, which appeared to presage a return to China's charm offensive that defined its approach to Southeast Asia in the mid-2000s.

But that hasn't transpired, and instead we've seen China engage in bearish and clumsy actions that have raised concerns not just in Tokyo and Manila, but also Kuala Lumpur, Jakarta, and now Hanoi. At the end of the day, this means that domestic bureaucratic and political imperatives are overcoming the logic of strategy in Beijing, a dangerous development for outsiders hoping that relative costs and benefits (not politics and nationalism) will shape China's decision-making on its territorial disputes.

Second, the oil rig incident means that we can finally stop talking about Chinese assertiveness as reactive, which was more appropriate two years ago when Japan's nationalization of the Senkaku Islands and the Philippines use of a naval vessel at Scarborough Reef spurred China into action. At the time, Chinese officials were quick to point out that other countries had taken the first step. And the principal critique of China's responses was that they were disproportionate and escalatory, but not necessarily unprovoked.

This excuse is no longer viable. Even though Xi himself continues to assert that China is simply reacting to the provocations of others, this is now an empirical fallacy after the Nov. 2013 announcement of the Air Defense Identification Zone (ADIZ) over the East China Sea and now this assertion of sovereignty against Vietnam. Rather than even waiting for pretexts to advance its sovereignty claims, China is now making first moves without provocation.

These two troubling elements paint the picture of a country whose foreign policy is untethered from strategic logic and increasingly engaging in preemptive revisionism. Not good news for peace and stability in maritime Asia.

Orville Schell:

What is most troublesome about the conflicts that have recently arisen out of the maritime disputes in the East and South China seas (between China and Japan, the Philippines, Vietnam, Brunei, Malaysia, and now even Indonesia) is that they involve the issue of sovereignty. This is a serious matter because, for China at least, the question of "territorial integrity" brooks no compromise, which means that there is very limited room left for its diplomats to negotiate, much less compromise. This rigidity, which has deep historical roots, is fed by China's extreme sensitivity to issues which it views involving any blush of territorial encroachment.

One of the quite distinct elements of Xi's new forward foreign policy is a posture that grows out of what might be called a "never again" Chinese attitude that arises from an important part of the "China dream," namely that after more than a century of suffering incursion, quasi-colonization, foreign occupation, unequal treaties and other forms of predation by stronger counties, now that China is strong, it should never again allow itself to compromise -- especially under pressure from the "Great Powers" -- on questions of its territorial integrity.

But, as others in this discussion have already noted, to make matters even more intractable, China's new muscular posture in confronting its neighbors seems to have been at least indirectly encouraged by Putin's very aggressive attitude toward regaining what he considers Russian rightful territory in the Ukraine. China and Russia have not signed any formal treaty. And the Chinese leadership is very ambivalent about any country's unilaterally invading another (lest that give invitation for some outside power to intrude into the Tibet, Xinjiang, or even Taiwan imbroglios). Still, there is little doubt that Chinese leaders feel a good deal of affinity with Putin's urge to stand up the arrogant West and Japan whenever possible.

Because of the West's sanctimonious and dismissive attitudes, first toward the Communist bloc countries and then our condescending attitudes toward post-reform and post-Perestroika movements that ended up with latter-day Leninist authoritarian political systems in both Beijing and Moscow, there are significant reservoirs of historical resentment against countries belonging to what was quaintly known as "the free world" during the Cold War. While Chinese and Russian leaders have a wariness about each other that goes back to the earliest days of Sun Yat-sen's United Front with the Comintern and Mao Zedong's later reluctant subservience to the USSR as China's "socialist big brother," now they have come to share what we might characterize as a fraternity of a similar "victim kultur." The leaders of both nations see themselves as deeply aggrieved by both the West and Japan, and thus have a natural inclination to prove to the world, whenever they can, that they will not only no longer allow themselves to be hectored, bullied, pressured or pushed around, but will also not be deterred from consolidating what they view as their historical right to reconsolidate and regain lost territories.

Indeed, this may be the fault line on which a new kind of post-Cold War cold war begins to emerge. Such an alliance could be quite dangerous, not because Moscow and Beijing share so much actual concrete common interest (although they do have a very long common border), but because they share a common and very deep wellspring of similar aggrieved national sentiment. And sometimes, it is such inchoate sentiment that proves more powerful and disruptive in world affairs than hard-nosed calculations of real national interest.

Susan Shirk:

We need to view China's actions with clear eyes. Orville, I think it's a mistake to distort our perceptions by drawing connections between how China behaves in Asia and how Russia behaves in Europe. The regional neighborhood in Asia is complicated enough without adding extraneous factors that may only be in our own minds.

What's more salient is the point that Ely makes about how planting the huge oil rig off the Vietnamese coast, like the announcement of an ADIZ in the East China Sea, shows that China is making peremptory first moves to assert its maritime sovereignty claims, not merely acting reactively. China is defending its actions by saying that dispatching its rig to start exploratory drilling is only a normal progression from the 2D and 3D seismic surveys it already did in this area. That is undoubtedly what the oil company, China National Offshore Oil Corporation, says to the decision-makers in Beijing. But given the contested nature of the location -- 15 miles off one of the southern Paracel Islands that China seized from Vietnam by force in 1974 and 120 miles off the main coast of Vietnam -- and the large armada of 80 government ships that accompanied the massive rig, it's certainly not business as usual.

The diplomats in the Chinese Foreign Ministry, especially Foreign Minister Wang Yi -- who crafted China's very successful strategy to reassure Asian countries about China's friendly intentions during 1996-2009 and is trying to revive the strategy now under Xi -- must be well aware that such high-profile assertions of sovereignty will provoke a backlash among China's worried neighbors. When ASEAN meets in mid-May, the Southeast Asian countries will certainly be pointing fingers at China, as Taylor Fravel predicts in his very informative Q&A with The New York Times. But the Foreign Ministry's voice no longer dominates the foreign-policy process.

What China's actions reflect, as Ely says, is the very dangerous possibility that Chinese security policy has become "untethered from strategic logic." In other words, domestic bureaucratic interest groups and nationalist public opinion are driving toward over-expansion of sovereignty claims in a manner that could actually harm China's overall national security interests.

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