Putting China’s “Hacking Army” into Perspective

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Demographic Challenge: By 2050, China is expected to have more old people than the U.S. has people.

Great New York Times front-pager on Tuesday finally provides a substantive overview of the comprehensive hacking activities of the Chinese military against all manner of U.S. industries (with an obvious focus on defense).

Actually, the title was a bit of soft sell (China’s Army Seen as Tied to Hacking Against U.S.). This unit’s activities have been much discussed within the U.S. national-security community for several years now, so we are far past the “tied to” allegation. It’s clear that Beijing has the People’s Liberation Army conduct widespread cyber- theft all over the world, targeting the U.S. in particular.

One is tempted to label this cyber-warfare, and to declare that bilateral conflict in full swing, but I like to avoid such imprecision in language.

What we have here is industrial espionage on a grand scale – pure and simple. Yes, the PLA wants to know how to cause as much infrastructure mischief as possible in the event of a shooting war with the U.S., but let’s not be naive about the extensive and ongoing U.S. efforts to do the same to China (much less our Rubicon-crossing cyber strikes against Iran).

That sort of spying and military espionage is nothing new. All that says is that both sides plan to go heavy on cyber warfare in the event of war. It does not prove that cyber is its own warfare domain – as in, constituting genuine war in isolation.

As for the industrial espionage, China’s ambitions are magnificently broad. Check out the list of industries targeted, according to the Times:

  • Information technology
  • Aerospace
  • Government-related agencies
  • Satellites and communications
  • Scientific research and consulting
  • Transportation
  • Energy
  • High-tech electronics
  • Constructing and manufacturing
  • Engineering
  • International organizations
  • Legal services
  • Media, advertising, entertainment
  • Navigation
  • Financial services
  • Chemicals
  • Health care
  • Food and agriculture
  • Metals and mining
  • Education.

Clearly, this is a scope far and beyond thwarting America’s AirSea Battle Concept.

Now, I could rationalize this away by saying every economic power cheated and stole its way to the top – to include America across the 19th century. That doesn’t mean we weren’t inventive as well. It just means we did whatever was necessary to catch up. People – and countries – easily rationalize away all such thievery, and China’s got its “century of humiliation” plus our Pentagon’s AirSea Battle plans to cite.

But, in the end, all of that is really cover.

What really drives China is its own leadership’s fears. Beijing knows it has mortgaged just about everything to grow so rapidly. Besides the environment (which is enough, trust me), a good example is found in China’s unprecedented demographic aging – i.e., the vast piling up of elders. China’s entitlement burden there will dwarf our own. By mid-century, China will have more elders (400 million-plus) than we’ve got citizens (around 400 million total).  The massive trade-offs on guns-vs.-butter are coming just as China’s reliance on foreign sources of food and energy skyrocket, and America “pivots” to East Asia in a transparent “boxing in” military containment strategy.

By way of contrast, consider this: North America is on the verge of energy self-sufficiency, and it controls the vast bulk of global grain flows. America will also age at one-third the rate of China over the next four decades in terms of median age (the U.S. will rise from mid-30s to around 40 by 2050, while China will rise from its mid-30s to its late-40s).

Frankly, the only thing China has in easy abundance is people and dirty coal. Neither is the asset they’re made out to be.

So why cite all this?

If I’m China, and I’m honest about my challenges, I can readily justify this vast industrial espionage campaign. Hell, I’m running the world’s biggest Ponzi economy (propped up by public investment and vast, hidden local government debt) and I know it. I’m also running a single-party dictatorship that will inevitably be blamed when the economy hits the S-curve slowdown that afflicts all rising powers (a.k.a., the middle-income trap). Simply put, there is no end to what I feel I have the right to steal in the near term. Everything is fair game.

This is why the Times‘ very sound suggestion of Washington seeking a cyber code of conduct with China ain’t going to happen any time soon. Besides the Pentagon’s new and deep love for this alleged warfare domain (and the funding it generates in otherwise tight budgetary times), the Chinese leadership’s fears about that nation’s future will only grow in coming years.

Beijing is going to get more frantic and more desperate with time. We may see supreme Chinese confidence regarding its glorious future, but nobody inside China with any genuine knowledge of the costs feels the same way.

Nobody with a brain, at least (and yes, China has plenty of stupid leaders with big mouths).

Now, you can choose to interpret this growing activity as “proof” of Chinese aggression, and whatever the driving internal rationale, it will indeed feature genuine aggression over time. But frankly, we’ve got a bigger problem coming in China’s inevitable slowdown/stalling. That’s a world-shaping dynamic capable of causing huge harm to most of humanity.

Meanwhile, America’s resurgence (e.g., an industrial renaissance fueled by cheap natural gas) is already in the works. Our innovative, democratic society can pull these resurrections out of its hat like clockwork. It’s who we are.

But China’s doesn’t have that. The growth-at-all-costs and political dictatorship model kills innovation and encourages thievery and lying and corruption on a systematic scale – to the point where virtually no one in China has any idea what the “truth” is anymore.

America fell to these scary depths in the boom-and-bust cycle of its “continentalizing,” post-Civil War economy of the 1870s and 1880s. Everything that is economically, socially and environmentally wrong with China today found some expression in America of that age. But get this: we were already a decently functioning – if highly-corrupt – democracy at that point. That’s why our subsequent and lengthy Progressive Era did the trick (God bless the Roosevelt family). By comparison, China has a much longer and more difficult “row to hoe.”

China’s leadership can deal with these domestic challenges in the same innovative fashion America once did (having to invent Chinese democracy along the way, mind you), or it can cling to the mistake of single-party rule and the closed thought it represents. The more it succumbs to the latter, the more cyber- thievery we’ll see (along with the more desperate everything). Again, we can mistake this for “power” and “confidence” and “aggression,” but it’s mostly about a nation running on fear.

And it’s only going to get a whole lot uglier before we can hope for any genuine improvement.