China will continue to hack U.S. companies despite ‘agreement’ to end cyberespionage, State Dept. says

( Many cyber security experts and government officials had little confidence that an agreement struck with China by the Obama administration earlier this year that sought to dramatically reduce Beijing’s theft of intellectual property would be honored. It turns out the pessimists were right.

As reported by the Washington Times, U.S. companies that do business with China continue to face threats to their intellectual property under Chinese President Xi Jinping’s security policies, according to a recent report from the State Department.

The Overseas Security Advisory Council reported that the large-scale hacking operations conducted by China are not limited to theft of data from government systems like the Office of Personnel Management, in which millions of records of current and past federal employees were accessed and likely stolen.

Rather, the council said, China’s hacking is part of a much wider trend, with an estimated 80 percent of all hacking targeting Americans originating in China. Despite the recent agreement between Washington and Beijing, “threats to [intellectual property] are unlikely to disappear soon,” the report said.

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“Visitors to China should have no expectations of privacy. Taxis, hotel rooms, and meeting spaces are all subject to on-site and remote technical monitoring,” the council’s report added. “Furthermore, the Chinese government’s access to infrastructure means that all forms of communication, including phone calls, faxes, emails and text messages, as well as Internet browsing history, are likely monitored.”

In addition, the treat is not limited to travelers and the information they have stored on electronic systems they carry. It could also extend to entry points into companies’ secure networks.

“Upon successful intrusion, threat actors may enjoy continued network access long after the traveler has departed, facilitating the theft not only of trade secrets (e.g., formulas, designs and chemical compounds), but of any information that would give an organization a competitive advantage (e.g., contacts, finances and business models),” the report noted.

In addition, the Jinping administration recently implemented a new regulation that threatens intellectual property further by requiring “IT companies to transfer proprietary source could to authorities, create backdoors in existing platforms for third-party access, and house Chinese citizens’ personal data on Chinese servers.”

The measure may be a “subtle means of exacting concessions from foreign firms and forcing technology transfer,” the report noted.

“Ultimately, this may leave U.S. companies faced with a difficult choice: comply and receive access to Chinese markets on the one hand, or refuse to comply and miss a potentially lucrative opportunity on the other,” it said.

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