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Mum's the word for U.S. businesses hacked by China

Governments spying on each other is nothing new. Nor is corporate spying: The U.S. textile industry began after American industrial spies stole factory plans from 18th century Britain.

But Dan McWhorter, managing director of cyber security firm Mandiant, says the scale of China’s state-sponsored theft of data from U.S. companies is unprecedented and difficult for a democratic society to grasp.

"There’s such a firm divide between government and corporation, that it’s hard to wrap your head around," says McWhorter. "In a communist government, the government and industry are tied together and they’re hard to distinguish at times."

Innovation at all costs is what China is after, says James McGregor, author of No Ancient Wisdom, No Followers: The Challenge of China’s Authoritarian Capitalism:

"It’s hard to understand why China wants to face the world with what appears to almost be an economic war footing," says McGregor.

Equally confounding, says McGregor, is the deafening silence on the part of U.S. businesses that have been hacked.

The Mandiant report says Chinese hackers stole terabytes of data from Coca-Cola, yet the company isn’t talking about it. It’s a typical response, says McGregor, for companies who don’t want to upset their sales in China.

"By hiding under a rock and pretending it’s not happening while at the same time they’re hugely threatened, all they’re doing is inviting more of it to happen," says McGregor.

McGregor says a more appropriate response would be to tackle the issue head-on without initially making China lose face.

"If those companies had held a press conference that said ‘we’ve been hacked out of China, the Chinese government says they’re not involved in this, so we’re going to take them at face value and we’re having this press conference to ask the Chinese government to help us figure out who did this and put a stop to it,'" McGregor says, then the onus is on China to do something about it.

Or you can let the U.S. government do it.

Obama administration officials say they are planning to tell China’s new leaders in coming weeks that the volume and sophistication of the attacks have become so intense that they threaten the fundamental relationship between Washington and Beijing.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.
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