Hacking won't scare U.S. companies out of China

U.S. Attorney General Eric Holder (L) speaks as he announces indictments against Chinese military hackers on cyber-espionage as U.S. Attorney for Western District of Pennsylvania David Hickton (R) listens May 19, 2014 at the Department of Justice in Washington, DC. A grand jury in the Western District of Pennsylvania have indicted five Chinese military hackers for computer hacking, economic espionage and other offense directed at six American victim in the U.S. nuclear power, metals and solar products industries.

The Department of Justice announced today that five Chinese military officers have been indicted for allegedly hacking trade secrets from U.S companies.

It’s the first time that the U.S. has charged specific foreign officials with cyber espionage, but as Marketplace's China correspondent Rob Schmitz tells us, it’s actually sort of old news.

“A little more than a year ago we learned that the People’s Liberation Army hacked into dozens of U.S. companies, stealing reams of intellectual property,” says Schmitz. “But this news and its implications were cut short: Right after it was discovered, Edward Snowden released what amounted to a nuclear bomb on the U.S. intelligence community by exposing the NSA’s spying operation.”

Schmitz says China probably wants the trade secrets to help build up its infrastructure. The hacking allegedly took place three or four years ago, when China had just announced plans to build dozens of nuclear power plants across the country.

“Of course the United States has a lot of experience building nuclear power plants. So it could be reasonably assumed that China was cutting and copying the U.S.”

Schmitz says hacking is a growing problem for U.S. companies, but that doesn’t mean they’ll abandon their operations in China.

“The companies that were hacked last year were too scared to complain about having their technology stolen by the Chinese, because they were afraid of upsetting one of their most important global markets. Unless U.S. companies stand up for themselves and start publicly complaining about this, I think the hacking will go on for quite a while.”

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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