The U.S. Congress should conduct an in-depth assessment of Chinese
cyberspying and consider imposing tougher penalties on companies that
benefit from industrial espionage, a federal advisory group said
The recommendations by the bipartisan U.S.-China Economic
and Security Review Commission reflect its stated concern that China has
become "the most threatening actor in cyberspace."
In its annual
report to Congress, the commission said the most notable trend in
Chinese cyber-espionage over the past year had been "increasingly
creative and resourceful targeting" across government, industry and
Among these are stepped-up efforts to defeat
so-called two factor authentication, it said, referring to the use of a
security token in addition to a traditional password.
Beijing appeared to be within two years of putting nuclear-tipped
ballistic missiles on submarines as it continues to modernize and expand
its nuclear stockpile, the report said, citing U.S. Defense Department
Congress should require the State Department to spell
out steps to bring China into existing and future nuclear arms control
efforts, the group said.
The report included 32 recommendations
for congressional action on ties between the United States and China,
the world's No. 1 and No. 2 economies.
The pair also are the top
spenders on their militaries, although Washington spends about five
times as much as Beijing, according to the Stockholm International Peace
Research Institute, which tracks the figures.
report did not address U.S. espionage involving China, whose rise as a
global competitor has helped frame a U.S. geo-strategic "pivot" toward
the Pacific, announced a year ago after a decade of land wars in Iraq
The report was written before China's 18th Party
Congress that will bring in a new generation of leaders. So the
commission did not analyze the change in leadership, perhaps the most
significant political event in China in a decade.
political transition, the same issues that complicate the bilateral
relationship are expected to continue in the near term, Dennis Shea, a
Republican appointee who is the commission's chairman, told reporters
ahead of the report's release.
recommendations could add to bilateral strains. The commission said
Congress should consider tougher screening laws for investments made by
China's state-owned enterprises because of their allegedly unfairly
subsidized challenges to U.S. corporate competitors.
commission was set up by Congress in 2000 to study the national security
implications of U.S.-China trade and economic relations after President
Bill Clinton's administration granted China permanent trading status
and approved its accession to the World Trade Organization.
U.S. entities lag in their ability to deal effectively with the growing
sophistication of Chinese computer-launched espionage, the commission
"China's cyber capabilities provide Beijing with an
increasingly potent tool to achieve national objectives," it said. "A
diverse set of Chinese hackers use pilfered information to advance
political, economic and security objectives."
relevant congressional committees should conduct an "in-depth assessment
of Chinese cyber-espionage practices and their implications," then
report the findings in an unclassified format so the public will be
aware, the group said.
Congress also should conduct a review of
existing legal penalties for companies found to engage in, or benefit
from, industrial espionage, it recommended.
The call for
congressional assessments is reminiscent of work carried out over the
past year by the House of Representatives intelligence committee.
panel's top Republican and Democrat, reporting on the findings of an
11-month investigation, warned last month that Beijing could use for
spying equipment made by Huawei Technologies Co, the world's
second-largest maker of routers and other telecom gear, and rival
Chinese manufacturer ZTE Corp, the fifth largest.
to reporters on Saturday on the sidelines of the Party Congress,
China's commerce minister, Chen Deming, said the United States was
exhibiting a "Cold War mentality" with its fears that Huawei posed a
security risk because of its ties to the Communist Party.
spokesman for the Chinese Embassy in Washington did not immediately
respond to the commission's recommendations, including the call to
involve Beijing more closely in arms control talks.
research director of the Arms Control Association, a nonpartisan
advocacy group in Washington, said China should be more transparent
about its forces, but the United States has a 20-to-1 edge in nuclear
weapons that can span the Pacific.
"The United States should
continue to pursue consultations with China, but Washington and Moscow
need to draw down their forces significantly before expecting others to
participate in formal negotiations," he said.
© Thomson Reuters 2012