James Lewis on the China Cyber Deal

Given the amount of skepticism that writers on this site—including Jack and I—have expressed towards the Obama administration's cybersecurity posture towards China, I thought it was only appropriate to draw reader attention to an important voice with a very different, and more admiring, view of the matter. Specifically, I encourage readers to take a moment to consider the comments of James Lewis on last week's Steptoe Cyberlaw Podcast. Lewis is one of the leading experts on China cybersecurity matters, and I was intrigued by how much credit he gives the Obama administration both for the cyber deal it negotiated with Xi Jinping and for the policies that enabled it to happen.

Here's what he said.

First off, Lewis regards the deal as, in general terms, a good one. It is, he says:

a significant step forward, and the White House did a good job in negotiating. It was two people at the NSC who were the primary interlocutors.

And each of the four elements of the agreement has problems. Now, the negotiators on the US side and probably the Chinese side knew that. There’s things that will have to be worked out in implementation. This doesn’t mean the end of the cybersecurity debate with China. . . . Agreeing to work together in the future in the UN is good. I think what it really means is that the US and China will have a bilateral dialogue on what norms of responsible state behavior should look like.

As Lewis describes it, the ministerial level working group to deal with law enforcement cooperation represents a significant step forward that will provide a real basis for the two countries to cooperate on law enforcement matters.

More notably, Lewis thinks that Xi's commitment on cybertheft of trade secrets is far more than just words. In his view, it's a very big deal. "It’s a good question as to whether the Chinese will rue making this commitment, and my impression is that they will. I believe that both Justice and the White House will be tracking implementation and compliance very closely, and sanctions are still a possibility. So don’t think that this is the end. Think of it as just setting up the next chapter," he says. "Living up to the agreement will be hard, but that’s one of those things that everyone will track. Making the commitment to not engage in commercial espionage is a sea change in Chinese policy."

What's more, Lewis contends that the administration very skillfully used the threat of sanctions to pressure the Chinese into making this fateful commitment. And remarkably, he argues as well that commentators have grossly underestimated as well the impact of the PLA indictments, which were widely dismissed as mere theater:

One point, if you were going to go back and correct the record, which a number of pundits in the blogosphere should probably do, one point you’d want to pay attention to would be the benefit of the indictments. Because the indictments were exceptionally painful for the Chinese. And when they were told, and the White House with some surprising skill was able to leak the threat of sanctions ... when [the Chinese] were told, okay, sanctions, they did not want to go through the pain of indictments again. And of course, as Americans, we clearly understand the difference between sanctions and indictments, but the Chinese don’t. It’s a very different system. . . . When they saw another thing coming down the pike, they remembered the pain of indictments.

. . .
[T]he psychological effect on the Chinese [of the indictments] was profound. It affected the PLA. The PLA felt like it’d been outed. It lost prestige both with other agencies in China and internationally. That was the effect.

. . .

It was clever to use [sanctions] to gain leverage in these talks. It was a moment when you had a number of things [happening.] The Chinese really wanted a happy outcome to the summit, and they made that point repeatedly. They were worried about the sanctions in part because of the indictment experience. They knew that Americans were angry over OPM and that there were even discussions of possible retaliation for OPM. And all of those things put pressure on them in a way.

So if you remember the 2013 summit, Xi pretty much said, “Oh that’s interesting, I’ll get back to you” [in response to cyber issues]. He didn’t say that this time.

Is Lewis right? I certainly hope so. It's a far more optimistic analysis of what the administration has been able to accomplish than I had previously entertained. There will, it seems to me, be two ways to find out: One is if we see reports of enhanced law enforcement cooperation in practice. The other is if we see either a dropoff in IP theft cases emanating from China.