On China, spies, steel and intrigue

worker takes a sample at steel company
On Monday, the U.S. Justice Department announced it was prosecuting five Chinese military officers for corporate espionage.

From the BBC, emphasis mine:

In Washington on Monday, [Attorney General Eric] Holder said a grand jury had laid hacking charges against the Chinese nationals, the first against “known state actors for infiltrating US commercial targets by cyber means”.

He identified the alleged victims as Westinghouse Electric, US Steel, Alcoa Inc, Allegheny Technologies, SolarWorld and the US Steelworkers Union.

“The alleged hacking appears to have been conducted for no reason other than to advantage state-owned companies and other interests in China, at the expense of businesses here in the United States,” Mr Holder said.

Here in northern Minnesota, we’ve been well acquainted with the realities of a global economy. Even if the specifics elude most residents, the consequences are evident in how our biggest industry staffs its mines, how market fluctuations affect production, where the product we produce is sent. Not a year ago, we were writing of Iron Range ore that was actually traveling by ship to China. The Asian steel market is a very real player in our region’s economy, even if “Asia” remains a fairly abstract concept to the people milling around our city halls, union halls and bar halls.

This is a charge, not a conviction. China is loudly denying its involvement. We see in this case, however, that this arm’s length relationship with foreign powers won’t remain possible for long. These men are accused of digging into corporate information such as pricing strategy and labor market data, all for the benefit of China’s industries. If China knows what American companies are willing to pay workers, what American workers are willing to tolerate, and what the spitball cost estimate of a slab of steel next March will be, it can manipulate its own markets to undercut the competition.

Underhanded, sure, but that’s only the short term problem. What I’m really concerned about is much bigger than that.

Corporations won’t tolerate losing money or getting beat by a foreign power. They’ll tighten up their own digital security. But at some point, as the stakes continue to rise, they’ll demand additional help in protecting their trade secrets and commerce. And they’ll get whatever they want, because they’ve have played a role in electing nearly ever member of Congress and whatever President happens to be in office at the time. At some point it will likely be declared that Chinese (or Indian, or pick-your-nation) trade secrets are a matter of national security. Private armies will become indistinguishable from the real one.

Black helicopter types have long warned of a government takeover of our American private sector. That’s not going to happen. And corporations won’t take over the government, either, not exactly. It will all be an orderly merger, sealed with handshakes and a series of press conferences. Will we know it when we see it? Will most people even care? After all, we must protect our jobs and safety. It won’t be a totalitarian dictatorship. It will be like walking into a store, where the customer is always right … just so long as he or she doesn’t know the markup rate and shows up for work on time.


  1. Every other major power considers foreign trade secrets to be matters of national security, and utilized state intelligence agencies to pursue those secrets. By continuing with the pathetically naïve assumption that economic security and national security are different spheres, U.S. businesses will gradually lose their competitive advantage to foreign firms, who have their own intelligence agencies at their back. Symbolic indictments by the Justice Department will do nothing to change that.

    It’s past time that we get our head out of the sand and join the real world.

    Edward Snowden was wrong: the U.S. government does not use national intelligence for economic advantage. But it should.

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