Ahead of Xi visit, US, China lock into cyber war

US sanctions Chinese cos

The United States is contemplating sanctions against Chinese companies and individuals who benefited from cyber thefts of valuable US trade secrets. The decision comes ahead of Chinese President Xi Jinping’s visit to the US in September. Imposing sanctions on individuals or companies would be in sync with the government’s public response to cyber economic espionage by Chinese hackers and others who hack US networks for trade secrets. While there are other hackers too who target US networks, the maximum are Chinese.

The hackers have stolen everything from confidential nuclear power plant designs to negotiating positions of energy companies. While President Jinping is expected to receive a grand state welcome and dinner, the visit is expected to be intense. The two countries have differences over a host of international issues such as the skirmishes in South China Sea and the currency devaluation by China in the aftermath of its stock markets plunging.

The sanctions, as and when imposed on the individuals or companies, would dent their chances of participating in the international financial sector. That is because no transaction takes place between the sanction hit companies and other companies. The world’s two biggest economies already share a sensitive equation with each other after political and economic differences over the years. The currency wars between US and China was also a big issue, when China manipulated its currency to make it favourable for its exports much to the displeasure of the US and other western countries.

While sanctions are unlikely to change China’s approach, it could worsen the already fragile relationship between the two countries. The administration also plans to raise the issue of China’s acts in the cyber space during the upcoming Obama-Xi summit in Washington. Cyber security is one of the most important issues in the bilateral relationship between both countries apart from also being a thorny issue between the two sides.

While the US decision could hurt the Chinese companies, it also comes at a time when China’s economy is in a decline and its markets have taken a beating. On the other hand, some people in the US administration feel, China would single out American corporations and target them, thereby adding to further animosity between both the countries. The relationship between US and China is very complex and cyber security and economic espionage will continue to be a major hurdle in their relationship.

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