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  1. 1. Phillip LiPari, Writing for Intelligence 30 September 2015 Chinese Cyber-attacks on US Private Companies Decreasing Executive Summary: Chinese cyberattacks on US companies targeting intellectual property (IP) are likely to decrease in the wake of Chinese president Xi Jinping`s visit to the US. Xi Jinping expressed interest in developing relationships with US technology companies as well as retaining diplomatic relations with the US. In addition to growing domestic concerns in China, there is a downward trend in Chinese cyber-attacks against the US. Discussion: During his visit to the US, Chinese president Xi Jinping participated in talks with President Obama regarding Chinese cyber-aggression. On 25 September 2015, the US and China announced a tentative agreement to cease support of cyber-attacks on private companies.1 Xi Jinping emphasized communication and openness between the nations, claiming sanctions were detrimental to all involved. DNI James Clapper stated he was not “optimistic” but that the agreement was a “step in the right direction” between the US and China.2 The agreement will pressure the Chinese government to acknowledge and respond to accusations of cyber-attacks rather than ignore them.3 Prior to the meeting between Xi Jinping and President Obama, there was a downward trend in cyber-attacks originating in China against US companies.4 The full scale of these attacks is unclear due to the increasingly complex methods of attack.5 Chinese cyber-aggression seems to be decreasing in the wake of numerous large scale breaches as well as talks between President Obama and Xi Jinping. Xi Jinping also met with a number of US technology companies in Seattle, Washington prior to meeting President Obama. US technology companies are interested in expanding business in China but are concerned over increasing Chinese economic regulation.6 Forty eight percent of the Chinese population accesses the internet and roughly 55% of economic transactions occur via the internet. This increase in internet usage makes China an enticing market to US technology companies.7 A reduction in cyber-attacks on US private companies reassures companies of the Chinese government`s interest in expanding their consumer technological market. Cyber-attacks are becoming a less critical national interest for the Chinese government due to concern over the economy and integrity of infrastructure. China is undergoing large scale overproduction of industrial resources, recently reaching 30% overproduction of resources such as steel.8 Chinese industrial products have been heavily devalued and remain overstocked. The
  2. 2. Chinese Communist Party (CCP) faces criticism over lack of proper safety precautions when it conflicts with economic expansion, as in the Tianjin chemical explosion.9 These growing domestic issues could further pull Chinese government resources from cyber-attacks. Source Reliability: Moderate Analytic Confidence: Moderate Analytic Confidence: Analytic confidence is moderate due to the reliability of sources as well as the use of the ACH structured analytic technique. The analyst collaborated and brainstormed with a partner. Sources agreed with each other on most content and the deadline was easy to meet. With questions or comments, please contact the author: Email: plipar35@lakers.mercyhurst.edu Phone: (585) 752-9449 Peer reviewed by Austin Wood 1 http://www.wsj.com/articles/u-s-china-agree-over-cyberattacks-that-steal-company-records-1443205327 2 http://www.chinatopix.com/articles/66326/20150930/senior-american-intelligence-officials-skeptical-china-u-s- cyber-agreement.htm 3 http://www.reuters.com/article/2015/09/30/us-usa-cybersecurity-idUSKCN0RT1Q820150930 4 http://www.reuters.com/article/2015/09/19/usa-china-cybersecurity-idUSL1N11O11W20150919 5 http://www.nato.int/docu/review/2013/cyber/timeline/EN/index.htm 6 http://www.usatoday.com/story/tech/2015/09/21/china-president-xi-seattle-internet-cyber-security/72425102/ 7 http://www.shanghaidaily.com/business/economy/Huge-online-users-make-Internet-vital-in-reshaping-Chinas- economy/shdaily.shtml 8 http://blogs.reuters.com/great-debate/2015/09/25/as-xi-visits-the-united-states-chinas-economy-is-at-a-tipping- point/ 9 http://www.scientificamerican.com/article/firm-in-china-chemical-blast-skirted-safety-rules/