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China Is Waging Economic War on America. The Pandemic Is an Opportunity to Turn the Fight Around.

August 05, 2020

CPA's Take: China sees COVID recovery as an economic growth and jobs opportunity. America’s elected officials only think in terms of supply chain resiliency. Why are they not talking about the jobs opportunity? We are just not serious about fixing unemployment.

For all practical intents, the United States is at war with China. This may come as a surprise since no bullets have been fired nor declarations made. Yet there is little question that, for over a decade, the Chinese government has engaged in a sustained campaign of cyber-enabled economic aggression against us and our allies. They have targeted our most productive economic sectors and are currently winning. But as we restart our economy after Covid-19, we have a unique opportunity to shift this fight decisively back in our favor.

[Keith B. Alexander and Jamil N. Jaffer | August 4, 2020 | Barron's]

At the heart of this conflict is a series of grand economic competitions across key industries, including telecommunications, advanced computing, robotics, energy generation, resource extraction, aerospace, and the medical sciences, to name just a few. We are currently facing off with China on 5G technology, machine learning, quantum computing, nuclear and solar power, satellites, rare earth metals, biotechnology, and pharmaceuticals. Fundamental to the Chinese strategy for winning in each of these areas—and many more—is the rampant theft of American intellectual property.

The Chinese playbook is deceptively simple: Why spend trillions of dollars on basic science or advanced research when it can be stolen with almost no penalties? The Chinese government is stunningly good at this theft. Not only do they employ thousands of government operatives to engage in this effort, a new federal indictment charges that they have fostered a criminal hacker class that works for its personal economic gain as well as for the Chinese state.

This brazen theft is not just limited to intellectual property. It also involves the pilfering of massive amounts of data—from the likes of the U.S. Office of Personnel Management, Equifax, Marriott, and Anthem—that will fuel intelligence operations and train machine learning algorithms, generating economic and political gain for decades.

Chinese companies also look to acquire American technology through investment, acquisition, litigation, and bankruptcy, turning our own markets and courts against us. They masquerade as American companies while under the control of the Chinese government. Even worse, they take advantage of our companies looking to do business in China by extorting them into creating joint ventures, transferring intellectual property, and providing data to the Chinese Communist Party.

They likewise send students and researchers to our best research universities, all the while pressuring them to steal information for the Chinese state. The recent indictment of a Chinese military officer allegedly masquerading as a researcher at Stanford is but one such example. Chinese intelligence agencies likewise seek to co-opt American academics by providing grant funding for joint research projects and invitations to write for cash.

All of this economic warfare is directed at one key goal: to replace the United States as the global leader. Their agents do this by handing over the spoils of the state-run hacking and extortion campaign to Chinese companies which, in turn, exploit Chinese (and other) workers to make goods at reduced cost, selling them back to us and our allies, making us more reliant upon them.

We’ve all now seen the price of this reliance in the difficulty many Americans face in getting medical gear and life-saving drugs. But our reliance is hardly limited to these goods. We also rely on China for all manner of finished goods and key inputs, the loss of which could grind our economy to a virtual halt overnight. Indeed, years ago, the Chinese created a plan to make us reliant on them in a dozen key areas. They now see Covid-19 as an opportunity to surge forward. But it need not be so. We have a chance, in this very moment of economic turmoil, to regain the edge.

First, the U.S. government must stand shoulder-to-shoulder with our private sector to protect and push back. Just as the Chinese back their companies in competition with us, we must do the same for our industry. We should collect and share actionable threat intelligence and actively collaborate with the private sector to protect them through collective defense. We must also push back, using all elements of national power, to end the Chinese campaign of cyber-enabled economic warfare, including through the use of trade measures, sanctions, persistent cyber engagement, and, where necessary, more aggressive actions. We cannot allow trade deals or our desire for cheap Chinese goods to force us to sit on our hands, leaving our private sector alone to fight this war. Doing so means certain defeat.

Second, we must also work with our allies across the globe, including in the Indo-Pacific region, which the administration has identified as the single most consequential region for our future. India’s recent travails at China’s hands should be a warning to all in the region and we must reject this aggression just as we have in the South China Sea. Likewise, having brought the British back on board on 5G, we must also now convince Germany to join this unified front. America need not stand alone. Making common cause with our longstanding allies is the right approach.

Finally, as we look to restart our economy, we must incentivize Americans to invest their money here and protect our innovation base. We must create tax and regulatory incentives that encourage investment in American companies struggling to survive and protect their intellectual property. These investors should be able to take advantage of low-cost capital to reorganize and reorient companies working on dual-use technologies to accelerate us into recovery and bring manufacturing and jobs back to the United States.

If we are to preserve this nation and remain a global leader, we cannot permit the continued theft of our children’s future right from under our noses. Now is the time to act.

Gen. (Ret) Keith B. Alexander is the former director of the National Security Agency and Founding Commander of United States Cyber Command, and currently serves as chairman, president and co-CEO of IronNet Cybersecurity, a start-up technology company focused on network threat analytics and collective defense and is on the Board of Advisors for the National Security Institute at George Mason University’s Scalia Law School. Jamil N. Jaffer is the former chief counsel and senior advisor to the Senate Foreign Relations Committee and served in senior national security roles in the George W. Bush Justice Department and White House, and currently serves as senior vice president for strategy, partnerships and corporate development at IronNet Cybersecurity and as the founder and executive director of NSI.

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