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Should U.S. limit China-government influenced IT systems?

Ellen Messmer | April 4, 2013
Some see it as good "first step" but others predict it might backfire as major trade dispute erupts

"The contents of the U.S. Congressional act sends a very wrong signal, and could directly affect normal trade between Chinese enterprises and U.S. business partners," the country's Ministry of Commerce said in a statement earlier this week. "This abuse of 'national security' measures unfairly treats Chinese enterprises." The Chinese Ministry said the U.S. stance presumes all Chinese companies are guilty of security risks, and thus in China's view, violates fair-trade principles.

According to these new anti-China IT equipment restrictions, none of these four agencies may use funds available under the spending bill that just passed to purchase IT equipment "produced, manufactured or assembled" by entities "owned, directed, or subsidized by the People's Republic of China" unless the agency consults with the Federal Bureau of Investigation (FBI) or "other appropriate Federal entity" to assess whether there's "any associated risk of cyber-espionage or sabotage associated with the acquisition of such system." There would need to be a determination made that the desired Chinese-related purchase is "in the national interest of the U.S." and a report back to the House and Senate on it.

But is this ban on China-connected IT systems purchases by the four agencies a viable move to confront a U.S.-China relationship severely strained over cyber-espionage? A relationship that is nonetheless held together through billions of dollars in electronic parts  sent back and forth by the two countries that both make them. And what of all those Chinese parts in U.S.-based manufacturers' gear why are they not a security threat, too?

Even some who've worked diligently over the long term to raise awareness about the national-security issues related to Chinese hacking have questions about the impact of the new procurement rules.

"The new restrictions do not represent a viable long term policy, but they are an important part of the new effort to make cyber-security issues a matter for practical, bilateral discussions," says Scott Borg, director and chief economist at the U.S. Cyber Consequences Unit, a research institute that examines the nature of cyberattacks and supply-chain issues.

"Over the long term, it is very important to have China as a collaborative partner in research and manufacturing," says Borg. "In addition to the huge size of its economy, China has a great cultural tradition that will one day make important new contributions to technology and science, just as it did in earlier times."

But he emphasized that "the Chinese thefts of technology and competitively important business information have become arrogantly and outrageously blatant. The Chinese counterfeiting of electronics products, sometimes with added circuitry, constitutes a direct security risk."

Saying "China's current behavior should not be tolerated," Borg said the damage to the economy and security of the U.S. will be great of China is allowed to keep expanding these activities, but he acknowledged, "Getting China to give up these harmful activities in the near future is probably not realistic," though it should be possible to get China to scale them back.

 

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