Governance & Risk Management

Impact of Economically Weaker China on Cyber Spying

Evaluating How Stock Drop, Devalued Yuan Could Affect Chinese Cyber Espionage
Impact of Economically Weaker China on Cyber Spying
Martin Libicki of Rand Corp.

Will the weakening of the Chinese economy result in more or fewer cyber-attacks waged by the nation?

On Aug. 24, The Chinese Shanghai Stock Exchange experienced its biggest one-day point drop since 2007, resulting in a sharp decline in other global markets as well (see Volatile Stock Market: Cybersecurity Fallout?). Since June 12, the Shanghai Composite Index has plunged by 38 percent. The stock market drop comes after the Chinese government tried to bolster its economy earlier this month by devaluating the yuan against the U.S. dollar.

Less money in government coffers because of lower tax receipts could lead the Chinese to restrain spending on hacking, Martin Libicki, senior management scientist at the think tank The Rand Corp., says in an interview with Information Security Media Group. Then again, he says, the Chinese government could see an investment in cyber espionage as a way to stimulate the economy.

"Actions of the government, particularly actions of the national security part of the government, really work on their own logic, almost autonomous," says Libicki, who researches the impact of IT on national and global security. "Fluctuations in economic behavior don't necessarily [correlate] to corresponding changes in the behavior of national security organs.

"My sense ... is that the Chinese are starting to turn a little a bit away from cyber espionage against industrial corporations and back to more traditional cyber espionage."

In the interview, Libicki:

  • Explains why China might place a greater emphasis on using cyberspace to spy on foreign governments, such as the hack of the U.S. Office of Personnel Management, rather than spying on businesses;
  • Addresses the type of corporate secrets China likely stole from American businesses that resulted in the indictments of People Liberation Army officers last year; and
  • Discusses the impact China's weakening economy could have on negotiating cybersecurity accords with the United States.

In addition to his role as senior management scientist, Libicki is a professor at the Pardee Rand Graduate School. His most recent research involves organizing the U.S. Air Force for cyberwar; exploiting cell phones in counter-insurgency; developing a post-9/11 information technology strategy for the Justice Department; using biometrics for identity management; and assessing the terrorist information awareness program of the Defense Advanced Research Project Agency. He also is conducting information security analysis for the FBI and evaluating In-Q-Tel, a not-for-profit venture capital firm that invests in high-tech companies that develop IT that supports American intelligence efforts.

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