What the National Counterintelligence and Security Center Really Said About Chinese Economic Espionage

Defense News recently published a story describing a July report from the National Counterintelligence and Security Center (NCSC) on “Foreign Economic Espionage in Cyberspace.” The article presents the NCSC report as warning that the threat posed by Chinese industrial cyber theft to America’s long-term economic power continues to expand, despite the Obama-Xi agreement in 2015 to “curb Chinese economic espionage over the Internet.” But this framing is at least somewhat misleading.

It’s worth looking at what the NCSC report actually says, which is that “the Intelligence Community and private sector security experts continue to identify ongoing Chinese cyber activity, although at lower volumes than existed before the bilateral September 2015 U.S.-China cyber commitments”—something that Defense News calls a “lull.”

Perhaps more to the point is the different definitions used in the NCSC report and the Obama-Xi agreement. The report defined “economic or industrial espionage” as

(a) stealing a trade secret or proprietary information or appropriating, taking, carrying away, or concealing, or by fraud, artifice, or deception obtaining, a trade secret or proprietary information without the authorization of the owner of the trade secret or proprietary information; (b) copying, duplicating, downloading, uploading, destroying, transmitting, delivering, sending, communicating, or conveying a trade secret or proprietary information without the authorization of the owner of the trade secret or proprietary information; or (c) knowingly receiving, buying, or possessing a trade secret or proprietary information that has been stolen or appropriated, obtained, or converted without the authorization of the owner of the trade secret or proprietary information.

The Obama-Xi agreement, in contrast, said: “The United States and China agree that neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors” (emphasis added).

The Obama-Xi agreement uses what is basically the NCSC’s definition of economic espionage but qualifies it with the italicized language. The addition of that language means that the statement does not prohibit the cyber-enabled theft of intellectual property for purposes other than “providing competitive advantages.” And why would the United States be okay with that? Because the United States does not want to preclude the possibility of engaging in its own cyber-enabled activities to obtain intellectual property for those other purposes—and neither does China.

In other words, the espionage described in the NCSC report goes beyond the realm of what the Obama-Xi agreement rules out—and so not all the ongoing espionage identified by the NCSC would necessarily be prohibited under that agreement.

None of these comments should be taken to mean that Chinese theft of intellectual property is not a threat to U.S. national security or economic interests, or even that China has honored the agreement entirely. And reports about those topics are entirely appropriate and helpful. But complaining about Chinese activities that the United States also undertakes, especially when those activities have not been the subject of any agreement, appears to be gratuitous China-bashing that is likely to increase tensions unnecessarily.