By Leslie Stubbs
White House officials leaked rumors of forthcoming economic sanctions against Chinese businesses and individuals at the beginning of this month. The increasing theft of intellectual property and trade secrets perpetrated by China and Russia pushed this issue to the forefront of U.S. foreign policy. President Obama intimated the economic sanctions would target those profiting from the theft. As reports of these sanctions grew in the weeks preceding Chinese President Xi Jinping’s first official visit on September 25th, so did the ire of the Chinese government. Bringing widespread public attention to another facet of the growing Sino-U.S. tensions raised the stakes for both sides. Now that Xi has arrived in the U.S. for his visit, the dual purpose of the proposed sanctions is revealed: force bilateral talks on cybersecurity and demonstrate U.S. willingness to take a hard line.
An important distinction as the talks between Presidents Obama and Xi progress is the hack against the Office of Personnel Management (OPM) will not be included. The OPM breach is considered an act of intelligence gathering, of which the U.S. is equally guilty. The economic sanctions, if enacted, could impact the individual corporations from doing business internationally. This would mark the first use of Executive Order 13694, authorizing the Secretary of the Treasury to economically block individuals perpetrating economic theft against the U.S. Under the Executive Order, cyber activity must either attack critical infrastructure, disrupt major computer networks, steal intellectual property or trade secrets, or benefit from stolen secrets or property. However, sanctions alone will not generate a policy change within China or prevent future theft by Chinese hackers. This is hardly the point of the threat though. President Obama laid the groundwork to renew the dialogue this week by proposing sanctions against Chinese companies and individuals.
Details of the proposed sanctions were not disclosed, and it is unclear how extensive the sanctions will be if and when they are implemented. The ambiguity behind the unofficial White House statements provided the necessary cover for Obama to voice discontent and resolve to take action on the issue of cybersecurity, without specific commitments. More importantly, the public announcement left open the opportunity for a diplomatic solution. Previous attempts at a hard line against cyber theft ended with indictments against five members of the China’s People’s Liberation Army. By keeping sanctions as an open and possible threat, Obama has forced Xi back into negotiations after China dropped out of a security working group last year after the indictments.
The Cold War days of classic spying and infiltration have long been over, and policy is beginning to catch up to the current theatre of diplomacy. According to the FBI, “economic espionage cases surged by 53%” over the past year, most of which is attributed to China. High profile hacks against Sony and other U.S. corporations has brought new significance to the use and misuse of the internet. Not only is Obama sending a message to U.S. businesses and affirming the government’s support, but also to China who must take a stance. As China’s own role in international affairs grows, through both economic and political means, they must decide what role that will be. China must choose whether to continue as a renegade nation, or emerge as world leader on global interests. Opening talks on cybersecurity and, if the visit goes Obama’s way, intellectual property demonstrates China’s ability and willingness to engage in soft diplomacy.
In the weeks preceding Xi’s visit, the Chinese responded vociferously against sanctions citing it as an impediment to a productive visit. This culminated in a private September 11th meeting between U.S. and Chinese officials. As a result, the Obama Administration opted not to impose sanctions prior to Xi’s visit. Presumably, the threat was rescinded to appease the Chinese but on the condition that cybersecurity would become an integral part of Xi’s visit. The possibility of sanctions is not wholly removed, and if the talks with Xi are unproductive, Obama has them in reserve. The threat of sanctions will likely have greater impact when working directly with Xi. Obama’s tactical plan allows for a diplomatic approach to improve communication with China on strained issues, while maintaining the possibility for a hard line.
Leslie Stubbs is a master’s student at the Patterson School of Diplomacy and International Commerce at the University of Kentucky. She is studying International Security and Commerce with core interests in non-state actors, the intelligence community and a regional focus on Africa. Leslie can be contacted at firstname.lastname@example.org or on LinkedIn.