2011 April 14 Thursday
China Winning On Cyber-Espionage

China? Winning. America? Losing. Check out this Reuters article. China is doing a better job of stealing American secrets than vice versa. But how could it be otherwise? The US has far more secrets worth stealing. Plus, China's lacking the sort of moral code that would tend to discourage massive theft of intellectual property.

Though it is difficult to ascertain the true extent of America's own capabilities and activities in this arena, a series of secret diplomatic cables as well as interviews with experts suggest that when it comes to cyber-espionage, China has leaped ahead of the United States.

According to U.S. investigators, China has stolen terabytes of sensitive data -- from usernames and passwords for State Department computers to designs for multi-billion dollar weapons systems.

The American people are really behind the curve in grasping how much China's industrial development combined with super cheap communication changes the nature of the game. China and the United States compete for the same natural resources. That natural resource competition is a zero sum game. Plus, the rapid diffusion of practical knowledge is reducing the return on investment from intellectual creations and therefore lowering living standards in the developed countries.

The Chinese military's systematic efforts to steal secrets just makes a bad (for the West) situation worse. Also, Western corporate efforts to utilize cheap mind workers in China, India, and other countries speeds up the knowledge flow. In the short term this boosts corporate profits. But in the long term corporations are training their future competitors.

Update: The Chinese have $3 trillion in foreign reserves.

Share |      By Randall Parker at 2011 April 14 11:06 PM  China Mercantilism

Florida resident said at April 15, 2011 7:17 AM:


Engineer-Poet said at April 17, 2011 12:48 PM:

The US government should be treating knowledge transfer as a taxable export and demand on-going royalties.

no i don't said at April 18, 2011 1:40 PM:

"Plus, China's lacking the sort of moral code that would tend to discourage massive theft of intellectual property."

Hey, pssst, Randall, I know you're talking about intellectual property, but please don't throw more wood into the fire man; talking about any kind of morality is very risky. Let's not bite our tongues talking about U.S. morality. Just a tip...

"Plus, the rapid diffusion of practical knowledge is reducing the return on investment from intellectual creations and therefore lowering living standards in the developed countries."

Well, does it all have to be profit with us Americans? Do we really have that one-track mind which makes us so stupid? It's really sad to see that we're just not able to see past money, capitalism and what profits we might get from something.

Hey, we just have to become better "players", which means better obtainers and accessers to Chinese information. That's the name of the game, it's called "spying", so we shouldn't whine if somebody else is getting better than what we used to be at the game we still love so much.

Now, for the last 5 or 6 decades -or more- we have not been very much interested in what's going on outside our borders, so it's going to require some practice from "The West" -whatever that means- in accessing that secret info from others. On the other hand, we can of course continue tearing our garments for what the Chinese are doing and make ourseves belive they owe us.

Just a quote: Societies evolve by means of OPEN COMMUNICATION and FREE INQUIRY. -Regardless of immediate profit-

REN said at April 23, 2011 9:05 PM:

China has four big state banks that can spend debt free into their business. Its not unusual for a Chinese business to have growing debt on its books, but that debt is later forgiven. Debt free money comes into being by the State Banks, and it is spent into business. Said businesses then beat each other up, driving costs down and becoming efficient. They then export onto foreign markets. In the meantime, Chinese people get inexpensive goods. Their wages are lower, but their costs are lower too due to efficiencies.

In the U.S. we borrow our money into existence at a private bank (about 40% cost), it is then spent on a POS chinese good. The Chinese Government will give a yuan in trade for your dollar, and your dollar then gets recycled back to the U.S. as a treasury (more debt). The Chinese manufacturer got its start in life boosted with debt free money, and then the Chinese Government traded out your dollar for more debt free Yuans. In the meantime, you became a debt peon with the beginning and the end of your money. China's trading out of Yuans for dollars at a low fixed rate can go on for a long time. As long as their economy grows at the same rate as their money supply, then it is non inflationary.

Actual real wealth in the form of technology and jobs will continue to be transferred, which is the objective. It was only in the mid 1990s that China was given MFN status by Clinton. They progressed from being a back water communist society to what they are today mostly because they have a more advanced money system that we do, and they coupled it to Fascistic Mercantilism. A similar story can be said about Germany. Germany progressed from being debt slaves to being the richest country in Europe 1932 to 1938 roughly. Federer money, or MEFO bills, allowed the autobahn to be built out, and allowed German industry to become first rate in a very short time.

It is not necessarily over for the U.S. We have tremendous resources and we are a Continental country with enough cognitive abilty to do anything. Our best days are behind us if we continue down the Statist path of Private Bank/Government/Corporation oligarchy. Or, we can renew Federalism and simultaneously fix our money sytem. We are at the fork in the road.

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