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Only Tariffs Will Stop China's Cyber Attacks

On Monday, GreatFire.org, an Internet monitoring group, charged that China launched “a malicious attack on Apple in an effort to gain access to usernames and passwords and consequently all data stored on iCloud.”

The “man-in-the-middle” attack, which deceived users into logging onto a Chinese government-controlled website instead of Apple’s, was directly traceable to China’s central government. “We know that the attack point is the Chinese Internet backbone and that it is nationwide, which would lead us to be 100 percent sure that this is again the work of the Chinese authorities,” said Charlie Smith, GreatFire co-founder, to the South China Morning Post. Only the Chinese government and Chinese Internet service providers “have access to the backbone.”

The hacking occurred just after Apple began storing iCloud data on China Telecom servers to “ease the tension” with the Chinese government.

The attacks were similar to China’s assaults on Google, GitHub, and Yahoo, and are not the last ones we will see. “We expect that there will be more attacks in the near future and that they will increase in severity,” said Smith.

The Chinese Foreign Ministry, when asked about Beijing’s involvement, used its stock phrase that China “firmly opposes” hacking.

News of the assault on Apple came just days after US Secretary of State John Kerry met with Chinese State Councillor Yang Jiechi at his home in Boston. There, Yang disappointed America’s top diplomat. “Due to mistaken US practices, it is difficult at this juncture to resume Sino-US cyber security dialogue and cooperation,” Yang said, according to a statement posted on the Chinese Foreign Ministry website. Moreover, he stated that the US “should take positive action to create necessary conditions for bilateral cyber security dialogue and cooperation to resume.” 

We should not be surprised by Beijing’s refusal to talk. China each year steals something in the vicinity of $100 billion of US intellectual property—or perhaps more—much of it using Internet connections.

Washington, however, has so far not found the right mix of policies to get the Chinese to stop the practice. The Justice Department indicted five officers of the People’s Liberation Army for cyber theft in May, but it’s unlikely that any of the quintet will ever be transported to the Federal District Court for the Western District of Pennsylvania to stand trial.

There is, unfortunately, only one way to stop the hacking of Apple’s iCloud and the intrusions into the networks of American foundations, charities, NGOs, governments, utilities, and companies. And what is that? Impose costs on China that are in excess of the benefits it receives from its crimes in cyberspace.  A good starting point is the recommendation (pdf) of the Blair-Huntsman Commission of an across-the-board tariff on Chinese goods. That’s the “positive action,” to borrow Yang’s words, that can get Beijing to end its predatory practices. 

Do that, and Yang will fly to Boston and plead for an appointment to discuss cyber issues with Kerry. Don’t do that, and America will continue to bleed. 

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