China and Russia Secretly Take Over the U.S. Economy


The United States is playing possum with a tiger. That is to say, the U.S. is standing idly by while Russian and Chinese foreign intelligence services and corporate hackers pilfer its economy.

The U.S. economy remains weak, its adversaries know this fact and are using it to inspire a nationally sponsored feeding frenzy off of U.S. investments in research and development — the secret of America’s growth. If the administration desires to save the U.S. economy, it must act immediately by developing offensive cyber capabilities, building a better rapport with the private sector, working with Congress to pass legislation to defend our industries, and quickly and publically responding to foreign acts of economic espionage.

While some economists labeled a Chinese takeover of the U.S. economy as inevitable, it is clear that China has long had an ambitious and conniving plan to ensure its continued rise at the expense of hard working Americans.  What is unclear is, at what point their state-sponsored pilfering will instigate some sort of action from the U.S. government, which should be protecting our economy. Put another way, how many companies must declare bankruptcy and how many Americans must lose their jobs before the Obama administration understands that protecting our businesses is a national security imperative?

Last year the intelligence community took a first, albeit, small step in the right direction by publishing a report about the damage that many inside the government had known for years was taking place. The Director of National Intelligence’s Office of the Counterintelligence Executive, or ONCE, published a shocking report alleging that economic espionage against the U.S. has long-been national policy of China and Russia. They have been sending common spies into your companies, hacking into your networks, and leveraging their monstrous intelligence and defense assets to capitalize off of your hard work and investments in research and development to grow their industries at the expense of ours.

As estimated by ONCE, the losses could amount to as much as $400 billion a year.  As National Security Agency Director Keith Alexander describes the situation, “It’s the greatest transfer of wealth in history.”

China and Russia have learned better than we that economic power has become as important as military might. When will the U.S. understand that protecting our companies from economic espionage is the same as preserving our ability to defend the U.S. from its enemies?

It now seems apparent that China’s dramatic economic gains may have been due to their profiting off of U.S. research and development. Moreover, while this pilfering endures and the U.S. continues its struggle out of a recession, government officials — sworn to protect America from its enemies — are standing idly by watching as our economy and future is being waylaid by China and Russia.   

Already an incredible loss at $400 billion each year, it is entirely possible that the true damage will amount to much more. There are several problems with generating an accurate estimate of the damages. Companies whose security barriers have been penetrated have little incentive to report their situation to the government for fear that stockholders, business associates, suppliers, and customers will abandon an at-risk company whose data integrity (including sensitive personal data) is at risk. In addition, the ONCE report states that “collectors ... are able to operate in cyberspace with very little risk of detection by private sector targets” meaning companies may only learn of foreign campaigns long after the damage has been done, if ever.

If the U.S. government wants to reverse the flow of intellectual property and research and development dollars out of the U.S. and into China, it should immediately take four steps in the right direction.

First, the administration must publicize the extent of the danger that our industries are in by creating a public-private partnership on combating economic espionage in the US.  The objectives of the partnership are to share common vulnerabilities that put our companies at risk and how to avert them; share successful methods of deterring hackers, malware attacks, and uncover foreign agents; quickly alert companies that are under attack; and foster greater trust and confidence so that violated companies report foreign intrusions, providing the government insight into the true extent of the damage. 

Second, while the national security and defense sectors have begun to increase the integrity and defense of their networks, it is time that they craft offensive cyber capabilities to protect and project force where and when needed to guard the integrity of our industries. 

Third, congress should pass a defense of private sector law providing at-risk companies a set of basic tools they need to ward off foreign intrusions, while requiring them to report economic espionage activities in absolute confidence. 

Lastly, the administration must publically call on China, Russia, and others to immediately cease all forms of government sponsored economic espionage.