Chinese cyber-attacks steal billions of dollars in intellectual property from American businesses every year, said Nelson G. Dong, partner of Dorsey and Whitney LLP and chair of the National Security Law practice.

The Thomas S. Foley Institute hosted Dong’s lecture on Chinese cyber security attacks yesterday in order to promote public education and confront the issues and affairs of the day, said Richard Elgar, the assistant director of the Foley Institute.

Elgar said his goal was to get students to ask questions, and to generate an interesting and important conversation.

Dong said there is an intensive effort by the Chinese government and businesses alike to penetrate many U.S. businesses in order to gain economic advantages. These economic advantages can include insider market information, patents and other kinds of intellectual property (IP), he said.

“China is the world’s largest source of IP theft, and accounts for about 70 percent in the world. There is a problem,” Dong said.

Relationships between the U.S. and China are strained, but the two nations are nearly co-dependent, Dong said. He said China is the largest source of manufactured goods to America, and the largest training partner, while also a geopolitical and ideological rival to the U.S.

“We have a schizoid view of China. We love them, but we don’t trust them,” said Dong. “In every possible way, China touches our lives.”

What sets Chinese cyber-attacks apart from the rest are the magnitudes at which they occur and their specificity, Dong said.

He said while most hackers are opportunistic, cyber-attacks from Chinese businesses and government are pointed and strategic.

“Every segment of American industry has been targeted,” he said. “The government response in this is slow and inadequate.” 

Dong said these tactics call for new strategies that businesses and the U.S. government need to implement to protect themselves.

According to the IP Commission Report, published in 2013 by the National Bureau of Asian Research, Chinese IP theft from America is worth about $300 billion, almost the same value as annual U.S. exports to China. The report states that the potential losses of future cyber-attacks include the loss of innovation and investment.

According to the IP report, Chinese cyber-attacks utilize a wide variety of strategies.

Dong said in many cases, business people staying in hotels in China will go to meetings, and Chinese Intelligence will break into their rooms and duplicate all of the information on their computers.

Another strategy utilized by the Chinese government for IP theft is infiltration, in which employees of different organizations and businesses will be convinced to steal information, he said.

China is developing quickly through both legal and illegal means, Dong said. They are doing this to develop “National Champion Companies” because they still view themselves as a developing country, he said.

While there is substantial economic growth in Chinese cities and urban areas, about 50 percent of Chinese people still labor on farms, Dong said.

“These are truly sustenance farms. Most people in these situations are stuck, and don’t even finish fourth grade,” Dong said.

IP theft may also be encouraged by Chinese government because of unfair treatment from the West in the past, Dong said.

“They have a great sense of grievance from how the West exploited China,” Dong said.