The Chinese Intelligence Service - Assignment Example

The Chinese Intelligence Service The Chinese Intelligence Service is one of the most insidious foreign threats that are currently infiltrating and operating within the borders of the United States. The services operate under two divisions known as the Ministry of State Security (MSS) and the Military Intelligence Department, which utilize Chinese citizens living and traveling in the US to compromise and steal technology and scientific secrets (Eftimiades 1998). Though this system may seem inefficient and somewhat primitive, it makes up for the weaknesses through the sheer numbers of Chinese citizens that it uses. According to Eftimiades, "In the early 1990s the PRCs clandestine collection operations in the United States expanded to the point where approximately 50 percent of the nine hundred technology transfer cases investigated annually on the West Coast involved the Chinese". This activity allows China to acquire key components to weapons systems as well as compromise private research, which is then used in their modernization programs. The pervasiveness of the Chinese system makes prosecuting espionage cases problematic for law enforcement. According to Lunev, "About one-third of all permanent Chinese diplomatic positions are occupied by political intelligence officers and one-third by military intelligence officers". In addition, many of the students and legitimate travelers that arrive from China are recruited into the intelligence service. Each agent performs only a small portion of a much larger coordinated program. The Chinese focus on mid-level technology and seldom draws the interest of US law enforcement (Eftimiades). This silent network has done significant damage to the economy both in the United States and the global markets. Works Cited Eftimiades, Nicholas. Statement Before the Joint Economic Committee United States Congress Wednesday, May 20, 1998. Washington, DC: US Congress, 1998. 18 Aug. 2008 . Lunez, Stanislav. "Chinas Intelligence Machine." Bnet. 17 Nov. 1997. CBS. 18 Aug. 2008 . The Chinese Threat to Asia, the United States, and the World The rapidly rising emergence of the Chinese onto the world stage has been met with some concern around the world. The images of a totalitarian military regime that confronted the students in Tiananmen Square are still ingrained deeply in peoples memories. Tensions between the communist state of the Peoples Republic of China and the democratic nation of Taiwan casts further suspicion on Chinas military intentions for Asia. Reports of human rights abuses keep the world fearful that the Chinese will begin to export their brand of oppression by force. Still, Chinese military spending and technological advancement is often exaggerated and their motivations are often misunderstood. In fact, China only spends about 10 percent of the $400 billion that is spent by the United States on military research, development, and improved weapons systems. China has not pursued geographical expansion by military means, preferring to work for economic advancement and market domination. This has led to a Chinese pattern of corporate espionage and sabotage, compromising intellectual property, suppression of free market principles, and the manipulation of the exchange rate that has given China a decided advantage and presents the region and the world with a grave economic threat. Recent years have seen corporate espionage move from clandestine operations involving breaking and entering and into the realm of cyber techniques. Computer hacking has become a major tool that the Chinese have employed to obtain technology and research information. The United States began to realize the potential for abuse of information systems as early as 1991. A report from the US government during that year, "expressed government concern over a dependence on computers that control power delivery, communications, aviation, and financial services. They are used to store vital information, from medical records to business plans to criminal records" (Knapp and Boulton 80). This potential has not been overlooked by the Chinese. According to Knapp and Boulton, "Chinese institutions employ thousands of researchers investigating ways to exploit weak spots in technologically superior foes using computer attacks, electronic interference, and other information warfare techniques" (80). These computer attacks threaten to impede commerce as well as the potential to obtain corporate secrets and technology. For the region, the ability of China to infiltrate the cyber system may have an even greater direct threat. The close proximity of Japan and Taiwan have made them especially vulnerable to financial terrorism and economic manipulation. Chinese computer hackers have the ability to manipulate stock markets, induce stock market crashes, control financial instruments, and alter exchange rates (Bolt and Brenner 139). In a three-week period in 1999, a series of false rumors planted by Chinese hackers were responsible for a negative impact on the Taiwan stock exchange (Bolt and Brenner 143). While this disruption could be used as a prelude to war, it would most likely be used to gain a significant economic advantage and to harm their enemies economically. Chinas ability to erode markets and manufacturing market-share also takes a more direct form of attack. Counterfeiting and piracy in China affects products such as books, films, electronics, aircraft parts, and textiles. Products that are reproduced in China reach not only the Chinese domestic market, but are also made available for export to the EU, Asia, and America. This amounts to billions of dollars in unpaid royalties, licensing fees, and marketing costs. Nike, an international footwear company, contends that for every legitimate product manufactured in China one counterfeit is also produced, and the Chinese government is on record as saying that counterfiet products outnumber legitimate retail goods by a margin of two to one (Mertha 167). These goods are often undetectable by the unwary consumer and as Chinese exports have flourished, their presence on the international market has had substantial negative effects for many companies. Chinas lack of enforcement, even in the face of international agreements, further underscores Chinas ability to maintain an economic threat to any market they enter. The piracy and counterfeit problem that China poses to the free market system should not be understated. Often, these products are technical innovations that have seen a considerable cost incurred from extensive research and development, such as a pharmaceutical drug. Generally, the creator of the product will seek to recover the research and engineering costs over the life of the product. When it is copied, the counterfeiter does not have to cover the cost of research and has an unfair advantage. This has the immediate effect of costing the original patent holder the profits that they are entitled to. The longer-term effect is that manufacturers will become more reluctant to invest in research and development and the long-term benefits of research could decline in the US (Elwell, Labonte, and Morrison 39). The United States has recently filed a formal complaint with the World Trade Organization in regards to Chinas unwillingness to enforce international standards in regards to copyrighted material. According to the US government, Chinese promises of a crackdown have not materialized and pirated software, DVDs, automobile components, and shoes are still readily available throughout the country" (US Files Case Over China Piracy). The closed judicial system and central control in China make this a difficult issue for forces outside China to confront. Another important factor that threatens the regional and global economies is Chinas reluctance to adhere to free market policies. Chinese systems of subsidies, tariffs, and state control of key industries has led to Chinas ability to dump products on the global market below cost, implement protectionist policies, and engage in poor environmental practices (Elwell, Labonte, and Morrison 34). These practices give a decided advantage to China over the free market economies of Asia and North America, and create a large imbalance in trade deficits. According to Elwell, Labonte, and Morrison, "the dumping of exports is seen by the United States as an unfair trade practice. It is illegal under U.S. law, and the government has actively used the law to impose anti-dumping duties on the imports of offending countries" (41). Chinas unfair trade practices not only displace manufacturing, impede fair employment, and deflate the fair market value of steel, car parts, and textiles, but also sets the stage for further trade tensions. In an effort to stem the tide of sub-standard products that are heavily subsidized and dumped, countries will naturally take action to alleviate the economic stress unfairly placed on their economy. Broomfield argues that, "China’s trade surplus is the result of direct targeting of US industry, a function of Chinese strategy to undersell American competition via a system of subsidies and tariffs. Thus, the deficit is likely to harm the American economy and provide a great source of contention in the future of Sino–American relations" (272). These retaliatory actions may be perceived as hostile and run the risk of starting a global or regional trade war. All of these trade interventions and unfair practices have been further exacerbated by an exchange rate that has been manipulated by the Chinese to maintain an artificially devalued currency. Estimates are that Chinas currency, the Renminbi (RMB), is undervalued by as much as 40 percent of the US dollar value (Goldstein 2). This has caused the trade deficit in the United States to swell to $857 billion in 2006, over twice the amount as a percentage of GDP that was recorded 20 years ago (Bergsten). Bergsten further contends that, "China has blocked any significant rise in the RMB by intervening massively in the foreign exchange markets. It has been buying $15 billion to $20 billion per month for several years to hold its currency down and its level of intervention jumped to a monthly average of $45 billion in the first quarter of this year". This has resulted in massive surpluses in China that place the US dollar at risk of political exploitation. Without correction, these trade imbalances will eventually result in greater volatility in the US economy and the increase the rate of unemployment. Goldstein warns that, "The global imbalances probably represent the single largest current threat to the continued growth and stability of the US and world economies". China will not dominate the US with an overpowering military, but will simply overtake the economy through manipulation and unjust practices. In conclusion, China has formulated a multi-pronged threat to the economies of Asia, America, and the rest of the world. Cyber-hacking has made sensitive information available to the Chinese that they can use to exploit its neighbors economically and use to their financial advantage. In addition, they can use technology to manipulate markets either directly or through a series of rumors and propaganda. These direct threats are also bolstered by Chinas propensity to counterfiet products in violation of international agreements. These pirated products rob the creators of their rightful royalties and commissions both inside and outside of China. Interventionist and protectionist policies on the part of the Chinese government run the risk of sparking an international trade war. Still, one of the gravest threats to the economic stability of the world is Chinas unfair manipulation of the exchange rate. This has resulted in explosive deficits that threaten the US dollar and our future prosperity. Chinas greatest threat to the region, the US, and the world is in its economic dominance that has come as the result of unfair practices and violations of the international agreements that are a necessary part of a peaceful world order. Works Cited Bergsten, C F. "The Dollar and the Renminbi." Peterson Institute for International Economics, Washington, DC. 23 May 2007. 18 Aug. 2008 . Bolt, Paul J., and Carl N. Brenner. "Information Warfare Across the Taiwan Strait." Journal of Contemporary China 13.38 (2004): 129-50. Broomfield, Emma V. "Perceptions of Danger: The China Threat Theory." Journal of Contemporary China 12.35 (2003): 265-84. Elwell, Craig K., Marc Labonte, and Wayne M. Morrison. Is China a Threat to the U.S. Economy? Washington, DC: Congressional Research Service, 2007. Goldstein, Morris. A (Lack of) Progress Report on China’s Exchange Rate Policies [Working Paper]. Washington, DC: Peterson Institute for International Economics, 2007. Knapp, Kenneth J., and William R. Boulton. "Cyber Warfare Threatens Corporations: Expansion Into Commercial Environments." Information Systems Management 23.2 (2006): 76-87. Mertha, Andrew. The Politics of Piracy. New York: Cornell University Press, 2005. "US Files Case Over China Piracy." BBC News. 9 Apr. 2007. BBC. 18 Aug. 2008 . Read More