The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, June 14, 2012

How big is Chinese economic espionage in Australia?

In a timely contribution given my recent insinuations on the subject, Paul Monk has an outstanding article in Quadrant this month on Chinese espionage. He comments:

In recent years, Western security and counter-intelligence organisations, including our own, have warned repeatedly that financial firms, banks and law practices are targets of cyber invasion by the Chinese. It need hardly be said that the same holds true for government departments, ministerial offices and the headquarters and personnel of leading firms doing business in China. In 2009, MI5 disseminated a fourteen-page white paper to a number of financial institutions warning of hacking by the Chinese. Such cyber espionage, MI5 added, is backed up by “honey traps” set to ensnare British businessmen. It’s a case, of course, of the two oldest professions in the world, as the saying has it, becoming interwoven, as they so often have been. Remember the brouhaha that ensued when Google announced that it had detected highly sophisticated Chinese hacking of its own cyber networks. The sophistication of these attacks was described as “staggering” and, while Beijing routinely denies that it bears any responsibility for them, no one of any seriousness or standing believes these disclaimers.

It’s important to register two things here: the scale on which Chinese cyber espionage is now being conducted and the fact that it’s happening here as well as elsewhere. “They are stealing everything that isn’t bolted down, and it’s getting exponentially worse,” according to Mike Rogers, a Republican Congressman from Michigan and chairman of America’s Permanent Select Committee on Intelligence. Economic and technological cyber espionage is intended to enable China to leapfrog over its American and other foreign competitors to further its goal of becoming the world’s largest economy, according to a US intelligence report of November last year. As national security and counter-terrorism specialist Richard Clarke has expressed it, “What has been happening over the course of the last five years is that China … has been hacking its way into every corporation it can find listed in Dun and Bradstreet.” 

Clarke is a former special adviser on cyber security to President George W. Bush. Speaking at a conference on the subject last October, he stated that the Chinese have targeted every corporation in the USA, in Asia, in Germany. They are “using a vacuum cleaner to suck data out in terabytes and petabytes. I don’t think you can overstate the damage to this country that has already been done.” According to a Bloomberg editorial of mid-December last year, “The electronic theft of proprietary information from US companies has reached the level of grand larceny on a national scale. One declassified government estimate put the value of information stolen in the last year—everything from blueprints to merger plans—at almost $500 billion.” One specialist has described all this as the greatest illegal transfer of wealth in the form of intellectual property in history.