Keeping an Eye on Chinese Manufacturing Ambitions
As many of you are aware, the Chinese government has been planning and implementing changes to increase its global manufacturing presence and influence. Within the past five years, a strategic action plan, known as Made in China 2025, was developed and released to the press. The plan seems to be directed toward developing Chinese production to elevate China to be the world’s leading manufacturer. However, several countries are concerned whether the means to achieve the ambitious aims of the plan are ethical and what negative effects the plan will have on current manufacturing powers.
Officials in the U.S. Department of Justice (DOJ) indicate that Chinese efforts to improve technology are not the problem, but China cannot use theft to develop technology. The DOJ has openly accused the plan of encouraging Chinese government departments and corporations of using strategies including physical theft, cyber-theft or other illegal means to achieve the plan’s goals. This battle has been ongoing for years and is heating up again, according to U.S. officials and analysts. It is playing out across a broad manufacturing landscape and gives rise to concerns about the security of forging operations.
To understand China’s goals, U.S. officials say, look at the ambitious aims the country set out in the plan. By 2025, China wants to be a world leader in artificial intelligence, computing power, military technology and energy and transportation systems. According to the South China Post, the list also includes maritime equipment, agricultural equipment and railway transportation.
John Demers, assistant attorney general for the National Security Division at the DOJ, said in recent testimony before the Senate Judiciary Committee that “[The plan’s] guidance to the rest of government and the rest of their companies and to their people, that this is what we want to be the best in class at, and therefore you should organize your activities, whether they’re legal or illegal, to achieve that.” Demers also indicated that recent legal cases against China show the country is aggressively trying to steal technology related to its stated goals.
This most recent Chinese approach to infiltrating and technological espionage does not follow the traditional battles that once largely focused on acquiring government and military secrets. Therefore, U.S. corporations, universities and research labs all need to be aware of China’s broad goals. The U.S. is now prosecuting claims against Chinese nationals in arenas such as food security, intellectual-property theft, artificial intelligence and others. Troublingly, many of these cases have developed from private industry and university losses. Corporations, universities and other private-sector agencies are increasingly finding their technology, plans and intellectual property subject to theft. No longer is the U.S. subject to only military or infrastructure threats by this behavior; businesses like yours can be affected.
For example, the DOJ announced charges in late December 2018 against two alleged hackers suspected of working on the orders of the Chinese government as part what the U.S. alleges is a long-running effort to steal American intellectual property. The indictments detail alleged cyberattacks that targeted intellectual property, confidential business and technological information and other data at more than 45 companies in at least a dozen U.S. states and within U.S. government agencies. The scale of the alleged cyber-theft appears to be quite broad, including banking and finance, medical equipment, oil and gas exploration, aerospace and the maritime industry. Deputy Attorney General Rod Rosenstein indicated that a dozen countries were hurt by the cyber-theft detailed in the charges.
Rosenstein added that more than 90% of the DOJ’s economic espionage cases in the past seven years involve China and that many of the companies that have allegedly been targeted by Chinese defendants operate in sectors that the official Chinese plan listed as targets for strategic development. The attacks described in the indictment exploited “managed service providers (MSPs)” – described as companies that manage IT systems for clients around the world.
With this knowledge, make sure your company has an effective plan to minimize the chances of theft, whether through removal of physical goods or cyber-theft of electronic information from your own servers or those of an MSP that you employ. This strategy can help your forge maintain its hard-earned competitive advantage and help prevent others from gaining ground on your business via nefarious means.