Per several financial-related sources, the global economy’s outlook for 2023 does not look favorable due to a variety of factors including but not limited to the ongoing conflict in Ukraine and post-COVID recovery, with some even predicting a global recession in the future.  The same sentiment has been expressed by the International Monetary Fund that predicts global growth could fall to 2.7% in 2023.  According to JP Morgan, the United States Gross Domestic Product growth is projected to hover around 1%, while it anticipates China’s GDP to be at 4%, outpacing the global average. If valid, this puts China in an advantageous position, as Beijing looks to stabilize the world’s second largest economy and make the necessary policy adjustments to ensure “key targets” are met.  What appears evident is that there may be a small window of opportunity for China to capitalize and make global economic gains.

China’s economic aspirations are well known, and some experts believe China is in a rush to decouple itself from the U.S. economy, as it seeks its continued rise shifting focus from “economic growth to economic control.”  To achieve this end, China needs to separate its reliance on foreign technology by creating an indigenous alternative that is globally competitive. Indeed, Chinese president Xi has stressed the need for China to be innovative and has directed investment in technologies like chip making to help it along this course.  But China’s progress in technology has not come solely from indigenous ingenuity but has relied on a rampant espionage apparatus to steal sensitive research and intellectual property to drive its successes.  In a late 2022 meeting in Washington, government and private sector experts expressed concern that the United States had fallen behind China in several key technology areas, a disconcerting turn of events for the U.S. that has long relied on its ability to innovate to keep it ahead of competitors.

China is pursuing economic superiority via what one China and national security expert has termed “brute force economics,” a term she coined that describes how a government tries to put foreign competitors out of business and weaken industries in rival nations.  Per brute force economics, neutralizing international competitors via acquisition or elimination will force trade partners to rely on China for the technology it needs.  Reviewing how China has built its economy, this strategy has some merit, as it certainly reflects the kind of alternative to submitting adversaries without fighting that hearkens back to the 1999 treatise Unrestricted Warfare.  In that seminal work, the two Chinese military authors espouse a total warfare strategy in every area outside of military conflict to include but not limited to trade, technological, cultural, psychological, and financial.  Economic – and more specifically, technical – dominance is instrumental to Beijing’s plans, and because China has relied heavily on espionage to propel its dominance in strategic industries (e.g., strategic industries such as steel, aluminum, solar panels, wind turbines, electric vehicle batteries, high-speed rail, commercial drones, network equipment), 2023 is gearing up to be a period of increased cyber-enabled economic espionage for Beijing.

China has a variety of means that it uses to pursue economic espionage to include but not limited to traditional intelligence collection, science and technology investments, academic collaboration, insiders,  joint ventures, and surreptitious cyber-enabled operations. The latter has proven to be an important tool for China to gain economic advantage from foreign companies, and a reason why in 2015 then-President Obama attempted to make an agreement with China that neither side would hack the other for economic advantage.  But as we have learned since that agreement, China did not follow-through on its promise, and quickly restarted its economic-driven cyber espionage campaigns and has even ramped up operations.

The United States has consistently been a prime target for Chinese economic espionage, a substantial part coming from cyber-enabled activities.  In mid-2021, a top U.S. counterintelligence official assessed that China had stolen USD $200-$600 billion in trade secrets since the early 2000s.  A recent example of these activities was uncovered in mid-May 2022 when a years-long Chinese cyber operation targeted at least 30 large multinational companies within the manufacturing, energy, and pharmaceutical sectors, stealing intellectual property valued in the trillions of dollars.  Types of information stolen included drug-related research, solar panel designs, and vacuum system technology, the kind that’s needed for large-scale manufacturing.  Much of this research had not been patented at the time of its theft.

For a long time, experts have asserted that China’s cyber espionage apparatus frequently aligns with its Five-Year economic development plans. The 14th Five-Year plan identified “science and technology self-reliance and self-improvement a strategic pillar for national development.”  Dove-tailing with this, in 2021 the U.S. National Counterintelligence and Security Sector published a report identifying artificial intelligence, bioeconomy, autonomous systems, quantum information science and technology, and semiconductors as critical industries to the U.S. economy and its national security.  This is important as Beijing sees no difference between civilian and military technology, and that anything that propels its economy forward is in its national security interests, and therefore viable cyber targets.

With much of the global economy expected to slow down, China will look to capitalize being one of the only economies expecting any significant growth in the near future and will leverage it to help shape global geopolitics to its advantage.  In a 2020 speech, Xi acknowledged that sustaining China’s “superiority across the entire production chain” and “tightening international production chains’ dependence on China” as two necessary factors to help China navigate the global slowdown.  China’s desire for technological self-reliance and decoupling from U.S. technology will continue to drive China’s strategic economic cyber espionage, particularly if the United States imposes stricter export control measures such as the recently passed CHIPS Act.  Such actions do not deter China as much as further propel its espionage activities.  The United States needs a whole-of-country approach starting with official national-level policy to counter China’s multi-pronged quest for technical dominance.  Otherwise, China will continue to do what it does best – persistently steal the information it needs.  And in this case, key tech industries are squarely in Beijing’s crosshairs.

About the Author

Emilio Iasiello

Emilio Iasiello has nearly 20 years’ experience as a strategic cyber intelligence analyst, supporting US government civilian and military intelligence organizations, as well as the private sector. He has delivered cyber threat presentations to domestic and international audiences and has published extensively in such peer-reviewed journals as Parameters, Journal of Strategic Security, the Georgetown Journal of International Affairs, and the Cyber Defense Review, among others. All comments and opinions expressed are solely his own.