Rolling out tariffs will not stop China’s cyber theft

The United States is trying to decouple its economy from rivals like China. This includes raising tariffs on Chinese goods, blocking exports of advanced technology and offering subsidies to boost American manufacturing.

The goal is to reduce reliance on China for critical products in the hope that this will also protect US intellectual property from theft. The idea that decoupling will stem state-sponsored cyber-economic espionage has become a key justification for these measures.

For instance, then-US Trade Representative Katherine Tai framed the continuation of China-specific tariffs as …

[Serving the] statutory goal to stop [China’s] harmful … cyber intrusions and cyber theft.

Early tariff rounds during the first Trump administration were likewise framed as forcing Beijing to confront “deeply entrenched” theft of American intellectual property. This push to “onshore” key industries is driven by very real concerns.

Vital technology

By some estimates, theft of US trade secrets, often through hacking costs the American economy hundreds of billions of dollars per year. In that light, decoupling is a defensive economic shield, a way to keep vital technology out of an adversary’s reach.

But will decoupling and cutting trade ties truly make innovation in the United States safer from prying eyes? My research suggests that the answer is a definitive no. Indeed, it might actually have the opposite effect.

To understand why, it helps to look at what really drives state-sponsored hacking.

Intuitively, you might think a country is tempted to steal secrets from a nation it depends on. For example, if Country A must import jet engines or microchips from Country B, Country A might try to hack Country B’s companies to copy that technology and become self-sufficient.

This is the industrial dependence theory of cyber theft. There is some truth to this motive. If your economy needs what another country produces, stealing that know-how can boost your own industries and reduce reliance.

Yet, in a study, I show that a more powerful predictor of cyber espionage is industrial similarity. Nations with overlapping advanced industries, such as aerospace, electronics or pharmaceuticals, are the ones most likely to target each other with cyberattacks.

But why would having similar industries spur more spying? The reason is competition.

If two nations both specialize in cutting-edge sectors, each has a lot to gain by stealing the other’s innovations. Rather, it’s the underlying technological rivalry that fuels espionage.

For example, a cyberattack in 2012 targeted SolarWorld, a US solar panel manufacturer. The perpetrators stole trade secrets. Chinese solar companies then developed competing products based on those designs, costing SolarWorld millions in lost revenue.

Intelligence agencies

This is a classic example of industrial similarity at work. China was building its own solar industry, so it hacked an American rival to leapfrog in technology. But cutting trade ties does not remove this rivalry. If anything, decoupling might intensify it.

When the US and China exchange tariff blows or cut off tech transfers, it does not make Beijing give up. Its intelligence agencies tend to work harder to steal what they can not buy.

This dynamic is not unique to China. Any country that suddenly loses access to an important technology may turn to espionage as Plan B. History provides examples. When South Africa was isolated by sanctions in the 1980s, it covertly obtained nuclear weapons technology.

Similarly, when Israel faced arms embargoes in the 1960s, it engaged in clandestine efforts to get military tech. Isolation can breed desperation, and hacking is a low-cost, high-reward tool for the desperate.

There is no easy fix for state-sponsored hacking as long as countries remain locked in high-tech competition. But there are steps that can mitigate the damage and perhaps dial down the frequency of these attacks. One is investing in cyber defense.

Just as a homeowner adds locks and alarms after a burglary, companies and governments should continually strengthen their cyber defenses. Assuming that espionage attempts are likely to happen is key.

Advanced network monitoring, employee training against phishing, and robust encryption can make it much harder for hackers to succeed, even if they keep trying.

Another is building resilience and redundancy. If you know that some secrets might get stolen, plan for it. Businesses can shorten product development cycles and innovate faster so that even if a rival copies today’s tech, you are already moving on to the next generation.

Steal secrets

Staying ahead of thieves is a form of defense, too.

Ultimately, rather than viewing tariffs and export bans as silver bullets against espionage, US leaders and industry might be safer focusing on resilience and stress-testing cybersecurity firms. Make it harder for adversaries to steal secrets, and less rewarding even if they do.

William Akoto is an Assistant Professor of Global Security at the American University in Washington.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.