Stealing advantage

Written by The Financial Express | Updated: May 23 2014, 02:27am hrs
The US governments indictment of five Chinese military officials, accused of stealing business secrets from American companies, is an instance of the message doubling up as the action and also circumscribing it. Six US companies, including United States Steel, Westinghouse Electric, United Steel Workers Union, are victims of cyber espionage leading to the theft of their business secrets. The accused are officials of the Peoples Liberation Armys Shanghai-based Unit 61398, reportedly behind most of the major attacks on US federal agencies and companies.

US Attorney General Eric Holder, in announcing the indictments, couldnt have been unaware of the near-impossibility of Beijing handing over the accused. However, US officials feel sending out a strong message was in order, given the damage the theft of trade secrets does to its victims, ranging from employer to employee, to say nothing of the unfair advantage it provides the beneficiariesin this case, allegedly Chinese state-owned companies and other interests. Stealing trade secrets is cheaper than investing time and money in research and developing original products. The cost savings translate into competitive pricing advantages. That the indictments were brought in western Pennsylvaniathe heart of the US steel industrybears out how seriously Washington views the matter.

Beijings reaction to the fabricated charges, predictably, has ranged from sounding appalled to counter-accusations of US espionage, partially vindicated by Edward Snowden. The US, for its part, acknowledges intelligence gathering for national security but denies spying on foreign companies. Last year, cyber defence company Mandiant reported that the PLA had hacked into computers at 141 companies in 20 major industries worldwide since 2006. The indictments are largely symbolic. But questions may be raised as to how these play into the US pivot to Asia and whether the narrowing geopolitical distance between Russia and China, as via the just-signed 30-year gas-supply deal, was factored into Washingtons calculus. Or if Chinas ban on Windows 8 from government computers too is a partial fallout of this affair.