More than a quarter of US companies surveyed by the American Chamber of Commerce in China say they have had trade secrets stolen or compromised through cyber-attacks on their China operations, adding weight to US accusations that Beijing is behind numerous corporate espionage attacks.
Twenty-six per cent of respondents to the US business lobby’s annual survey said they had been victims of such attacks and 95 per cent of respondents said the situation was unlikely to improve. The Chamber noted:
Over 40 per cent of respondents say the risk of a data breach is actually increasing. This poses a substantial obstacle for businesses in China, especially when considered alongside the concerns over [intellectual property rights] enforcement and de facto technology transfer requirements.
In recent weeks, US officials, including President Obama and National Security Adviser Thomas Donilon, have publicly called on the Chinese government to cease cyber-attacks on US companies aimed at stealing their trade secrets.
During a visit to Beijing last week, US Treasury Secretary Jack Lew confronted China’s newly-appointed leaders on the issue of Chinese corporate espionage, describing it as a “very serious threat to our economic interests.”
Lew and other US officials have tried to separate the issue of cyber attacks by state-sponsored Chinese entities trying to stealing commercial secrets and the broader problem of criminal hacking and government or military attacks on other governments.
Beijing’s consistent retort has been to deny any involvement in cyber-hacking and to insist that it is itself a major victim of hacking attacks.
“These allegations [from the Amcham survey results] are not credible because Chinese hackers don’t have great skills – their hacking is akin to ‘three-legged cat Kungfu’ and they don’t have the ability to steal business secrets,” Zhang Peiheng, a senior engineer at the Chinese Academy of Sciences Institute of Computing Technology, told the FT.
In response to a question about the Amcham survey, a spokesman for the Chinese Foreign Ministry described any accusation of Chinese cyber-theft as “irresponsible” and urged US officials and companies “not to politicize economic and trade issues and to stop hyping the issue of cyber-security.”
The survey of US companies was conducted late last year, before Chinese cyber-hacking had garnered much international attention and before any US official had made any public statement on the issue.
Worries over corporate espionage were a major reason for a large drop in the proportion of US companies who say China’s investment environment is improving, from 43 per cent a year ago to just 28 per cent in the survey released Friday.
Concerns about data security were also cited as the overwhelming reason why only 10 per cent of US companies would consider using China-based cloud computing.
China’s pervasive internet censorship regime was seen as hurting the businesses of more than half of US companies surveyed, while almost three quarters said the slow and unstable internet access that results from cyber-censorship is an impediment to doing business in the country.
Nearly half of all US companies surveyed said intellectual property theft had caused material damage to their operations in China or globally, a marked increase from last year’s survey, when less than a third of companies said it had damaged their business.
The percentage of companies that said they faced increasing pressure for them to transfer technology to Chinese counterparts or face exclusion from the Chinese market also rose significantly from 27 per cent last year to 37 per cent this year.