DETROIT — American businesses, the auto industry, academic institutions and research facilities are under economic attack by thieves operating with the approval and support of the Chinese government.
At a 2015 White House press conference in the Rose Garden, Chinese President Xi Jinping publicly committed that China would not commit crimes against American companies. He pronounced that, “China strongly opposes and combats the theft of commercial secrets and other kinds of hacking attacks.”
Despite that commitment, we continued to see widespread Chinese government-led hacking, trade-secret theft and economic espionage that cost our nation hundreds of billions of dollars annually.
We recently saw Phase One of a trade deal signed at the White House that has provisions to protect America from unfair trade practices and theft. While we are guardedly optimistic that China will live up to its commitments, we are going to continue investigating economic crimes and follow the evidence to where it leads in pursuit of justice.
China’s intention is to become the economic, cultural and military superpower of the world. Its ambitions are reflected in the country’s five-year national plans and its “Made in China 2025” agenda, which lays out a road map to theft.
There is nothing wrong with nations wanting to raise their standing in the world. But the world is seeing China advance its goals by illegal means, including the pervasive theft of technology and unfair and unethical trade practices, massive subsidies to state-owned companies and zero enforcement against any of these practices.
Modus operandi
The Communist-led Chinese government uses theft and cheating as key methods of achieving its stated goals.
One of China’s practices is to rob, replicate and replace what it cannot innovate on its own. It robs American industry of its intellectual property, replicates it in China and then attempts to take over the American company’s market share at first in its own markets and, eventually, in the global marketplace.
Just ask General Electric. In April of last year, a former employee was indicted for stealing GE’s trade secrets relating to turbine technologies for the benefit of the Chinese government. The stolen technology at issue had applications for aerospace, aviation and power generation — all sectors targeted in China’s “Made in China 2025” plan.
Alternatively, look at the highly competitive telecom market. In Huawei Technologies Co.’s quest for global market share, the Chinese telecom company engaged in highly questionable business practices and is facing civil lawsuits by victim U.S. companies charging Huawei with theft of their confidential information, and Huawei’s U.S. subsidiaries are charged in a criminal indictment with stealing T-Mobile’s trade secrets relating to its unique automated cellphone testing system.
Ask General Motors
Here in Michigan, ask General Motors. Just a few years ago, two naturalized U.S. citizens born in China were convicted in federal court in Detroit of stealing trade secrets about GM’s hybrid vehicle development program. The defendants stole millions of dollars’ worth of GM’s data so they could use it to create a competitor company in China. The evidence in that case suggested that the defendants also wanted to use GM’s data to benefit the Chinese military.
A staggering 80 percent of all the economic espionage cases prosecuted by the Justice Department since the inception of that statute are directly linked to the Chinese government, and about 60 percent of all trade-secret theft cases have a nexus to China.
So what can Michigan companies do about China’s economic aggression? First, we need to be aware of China’s ambitions, goals and pattern of theft. Last year, I attended the Detroit Regional Chamber of Commerce’s Mackinac Policy Conference to discuss the China threat with Michigan business leaders. Most had no idea that the Chinese government is leading the charge to steal their trade secrets. I’ll be back at the conference in May to continue this important discussion.
How to protect your information
In addition to awareness, here are some other ways Michigan companies can protect themselves:
● Protect your data in Michigan. Attack yourself, or hire a company that specializes in cybersecurity to test your defensive systems. Make sure your company has policies and procedures in place to protect sensitive or proprietary information, with perhaps layered defenses to protect your most sensitive or proprietary information. Train employees on these policies so that everyone in your company knows the rules for protecting sensitive information and regularly test their adherence to the rules and your company’s resiliency to cyber disruptions.
● Protect your data and passwords overseas. When traveling, always keep your electronic devices secure by locking them up or keeping them with you at all times. Or better yet, only travel overseas with the data necessary for your trip. Unnecessary data should be left at home. Further, avoid public Wi-Fi networks, such as those found at hotels and convention centers, especially when connecting back to your organization’s network.
● Report suspected theft. If you have reason to believe you are a victim of data theft or hacking, contact the FBI as soon as possible. Valuable evidence and investigatory leads can be lost the longer you wait. The FBI can investigate and the Department of Justice can prosecute or otherwise disrupt these thieves while protecting your company’s proprietary data from further disclosure. There could also be opportunities for the government to take action to deny the thieves, and those they work for, the economic benefit of the theft.
● Know who you are hiring. After serving his prison term, one of the thieves of the GM trade secrets was hired by another Michigan company that subcontracted their employee background checks to another company. Unfortunately, that business failed to detect the thief’s federal felony conviction for stealing trade secrets. A robust review of a potential employee’s background is important, especially if that employee will have access to your company’s sensitive data.
We are all better off when everyone — employees, customers and others in your community — shares the commitment to protecting your company’s assets.
The future of your organization could depend on it.
