China Hacking: A 21st Century Act of War

A brilliant report recently issued by security firm Mandiant clearly identified a high-powered unit of the Chinese Army as the source of the most persistent cyber-attacks against American firms. While the full cost of these attacks may never be calculated the evidence against People's Liberation Army (PLA) unit 61398 continues to grow. The magnitude of this by invasion of privacy and theft of data is both staggering and the lack of any serious response by the U.S. government is damning.

Emails belonging to millions of American workers and terabytes of private data from their firms have been and are still being sucked into a vast server farm in Shanghai run by the PLA and supported by Chinese state owned telecom firms. So, if you work at a major American firm and occasionally use your business email to do things like apply for a home loan, there is a very good chance Chinese hackers have all your personal financial data. And if they didn't get it from your email, there is a good chance they've already hit your bank. You'd think we'd be more concerned about this than we are about Seth MacFarlane's Oscar shenanigans.

More importantly, there is every reason to presume that the huge pile of stolen corporate data is being used to undermine American global competitiveness via the transfer of intellectual property, financial data, and negotiation secrets to Chinese firms. This hacking directly threatens our manufacturing base and our economy. While such cyber-espionage is surely costing many, many American jobs, it is interesting to consider why the PLA is running this massive project as opposed to China's spy agency, the Ministry of State Security (MSS). The Chinese Army's strategic interest in accelerating the deindustrialization of America should not be lost on any student of military history.

Consider this in tandem with the revelations that Chinese hackers have penetrated critical American infrastructure including our natural gas pipelines for reasons that one can only presume are nefarious. As I commented recently on SunTV, "this is a 21st century act of war." Let's be honest, if the Iranian Army had been identified as the perpetrators of this attack, we'd all be enjoying the footage of smart bombs and cruise missiles reducing their HQ to a smoldering pile of rubble.

China is treated differently because corporate America and a lot of current and former U.S. officials make billions in the business of offshoring American jobs to that nation. So the Communist superpower enjoys a unique dispensation for its notoriously bad behavior domestically and around the globe. It really is an amazing double standard that runs the gamut from human rights to trade. For instance, if an African nation treated its people the way that China does with a gulag of political prisons, systematic religious persecution, forced abortions, ethnic cleansing, executions galore, they'd be on sanctions in a minute. However, the U.S. State Department coddles the dictators in Beijing and they repay us by actively blocking sanctions against other bad actors in places like North Korea, Sudan, Syria and Iran.

In the business world, China can censor their domestic news, block market access for Western media firms, and still be allowed to run cable TV stations in America and stuff their "China Watch" propoganda into the Wall Street Journal and Washington Post. China can ban Facebook and Twitter and still run to Wall Street and raise American capital for its social media knock-offs like RenRen. China can block most American films from earning money in Chinese theaters, pirate those same films on bootleg DVDs and still be allowed to buy our entire AMC theater chain.

The evidence is clear that the Communist Party of China is not looking for a win/win with America in some future globalized utopia, but rather positioning for an outright victory over America in the real world by any means they can get away with. We are very much at war, most of us just haven't seen it yet. Unfortunately we don't have Winston Churchill to point it out this time.

Greg Autry is the author of Death by China and serves as Senior Economist for the American Jobs Alliance and Economist with the Coalition for a Prosperous America. He teaches Macroeconomics at the Argyros School of Business and Economics at Chapman University. You can find him on Facebook.