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Investor's Business Daily: The Next President's Cyberwar
Kevin L. Kearns
Tuesday, November 22, 2016
Photo of Kevin L. Kearns
Kevin L. Kearns is President of The United States Business and Industry Council. Prior to joining USBIC in 1993, he was a Senior Fellow at the Manufacturing Policy Project, a Washington, DC think tank. For 13 years before that he was a U.S. Foreign Service Officer with overseas assignments in Germany, Korea, and Japan, where he witnessed firsthand the operation of highly cartelized, mercantilist economies.
As the Trump transition team works to determine the top priorities for the new administration, a very serious problem requires the immediate attention of the new president: the future of our manufacturing industry. A healthy manufacturing base is critical to America's survival, both militarily and economically. Yet China poses a significant threat to our nation's all important manufacturing sector.

Right now there is an intensive cyberwar waged against the U.S. by China, in which the Chinese are aggressively hacking into thousands of U.S. companies, stealing their intellectual property, and then flooding markets with their own ripped-off, competing products. Even worse, China is "dumping" these products into the U.S. at prices so low that they could eventually drive our manufacturing industry out of business.

Sadly, there are too many examples of China's illegal activities to mention here, but a top example is China's nonstop campaign to undermine the U.S. steel industry, the backbone of our manufacturing. Chinese actions will have disastrous consequences if left unchecked.

U.S. Steel invested millions in the development of a lighter, stronger steel. The company is presently suing 30 Chinese companies and their distributors, saying Chinese hackers stole trade secrets for this steel and China is now manufacturing its own copycat steel products and dumping the products into the U.S. at prices so low that they are impossible to match.

In 2000, China produced approximately 14% of the world's steel, according to the World Steel Association. China is now manufacturing nearly half of all the world's steel products and last year, exported 112 million metric tons of steel, a 20% increase over a record-setting 2014.

At a time when domestic energy production has skyrocketed and labor costs are coming down, the United States should be experiencing a manufacturing revival. Instead, the U.S. steel industry has been the target of continued illegal foreign practices and suffered 16,000 layoffs since the beginning of 2015, with more job losses expected throughout steel-producing communities.

Unfortunately, China's cyber-thievery is not limited to the steel industry. A 2013 report from a bipartisan Commission on the Theft of American Intellectual Property stated, "The scale of international theft of American intellectual property (IP) is unprecedented — hundreds of billions of dollars per year, on the order of the size of U.S. exports to Asia."

It concludes, "China is the world's largest source of IP theft."

The FBI acknowledges an alarming increase in the theft of American trade secrets. An official with the counterintelligence unit was quoted last year as saying American companies have lost hundreds of billions of dollars due to theft of trade secrets. The FBI surveyed 165 private companies and found that half of them had fallen victim to IP theft, with 95% of those cases linked to Chinese cyber-hackers.

Sources at the Justice Department also acknowledge a relentless wave of cybercrime saying thousands of companies in virtually every sector of the U.S. economy have been targeted by the Chinese. Counterintelligence officials also say that despite public pledges by China to end cybertheft, there is no indication that China's hackers have backed off.

Cyberattacks threaten our national defense as well. The Washington Post reports that it's believed Chinese cyber-spies are responsible for hacking into major defense companies Boeing, Lockheed Martin and Raytheon. The spies obtained data and designs for more than two dozen major military weapons systems, including aircraft designs, missile defense, and communications.

And it's not just steel and defense companies, corporations across a gamut of industries are victims of cybertheft. Hackers allegedly stole years of emerging energy technology research from SolarWorld and Westinghouse Electric. Paint company Valspar lost $20 million, or one-eighth of its annual profit, after its proprietary information was stolen by a Chinese rival.

Chinese cyber-thieves have become so adept and skillful, they are even hacking into companies to view international trade strategies, bidding information and other forms of proprietary data that give China's manufacturing industry a decisive leg-up in world markets.

China is not only expanding its military presence in the South China Sea, but also has created a massive cyberattack army that works every day to crush American companies by stealing trade secrets and intellectual property. Donald Trump and the incoming Congress must demonstrate strong support for our companies and help punish cyberattackers, and they must invest more in U.S. counterintelligence capabilities so that America can win what so far has been a devastating cyberwar.

Kearns is president of The U.S. Business and Industry Council — a national organization of domestic manufacturing businesses dedicated to boosting U.S. economic growth and fighting illegal foreign trade practices.

http://www.investors.com/politics/commentary/the-next-presidents-cyber-war/


Kevin L. Kearns is President of The United States Business and Industry Council. Prior to joining USBIC in 1993, he was a Senior Fellow at the Manufacturing Policy Project, a Washington, DC think tank. For 13 years before that he was a U.S. Foreign Service Officer with overseas assignments in Germany, Korea, and Japan, where he witnessed firsthand the operation of highly cartelized, mercantilist economies.