The Greatest Transfer of Wealth in History: A Selection from John P. Carlin’s Dawn of the Code War (2019)

“China in ancient times had been one of the world’s most innovative forces, the country behind everything from paper to gunpowder to the invention of the compass. Yet by the late 20th century, its brand had become synonymous with cheap, knockoff manufacturing. China’s leadership knew the growth they needed, and their ambitions for their country required China to regain its superiority in innovation. As one US intelligence report concluded, ‘Chinese leaders consider the first two decades of the 21st century to be a window of strategic opportunity for their country to focus on economic growth, independent innovation, scientific and technical advancement, and growth of the renewable energy sector.’ The fastest way to accomplish those goals wasn’t to innovate at home—it was to steal our more advanced technology. . . .

Most Americans have little understanding of the dramatic economic rise of China, nor how much of that growth was powered by the theft of American secrets—both in basic technologies, like computing and solar panels, and in the military’s adoption of cutting-edge fighter and naval technologies. In barely two generations, China has leapfrogged from effectively a 19th-century agrarian economy to a cutting-edge, 21st-century powerhouse that, depending on the measurement, is either the largest or second largest in the world. American technological research-and-development dollars have unintentionally given China a leg up on almost every facet of that transformative economic growth.

American workers are already competing against Chinese versions of the very same products they originally invented, and if someday the United States and China end up in a military conflict, America’s soldiers, sailors, airmen, and marines will find themselves fighting against their own technology. General Keith Alexander, who once headed the National Security Agency (NSA) and US Cyber Command, has explained for years that China’s electronic pillaging of US trade secrets represents the ‘greatest transfer of wealth in history,’ totaling upward of $250 billion a year. It’s a staggering number, and one that has been playing out inside our corporate, university, and military computer networks for more than a decade. . . .

Ever since the industrial revolution and Eli Whitney’s invention of the cotton gin, the US economy has thrived because we innovate faster—and better—than any country on earth. Over the last two decades, though, we’ve seen that lead, our nation’s core spirit, threatened and undermined by foreign powers stealing digitally that which they would never dare to steal in real life. It’s paramount to America’s economy that we ensure that countries around the world compete on an even playing field—that countries are competing based on their innovation, not benefiting by robbing others. . . .

For too long—much of the first 15 years of the information revolution—cybercrimes were cost-free, for both criminals and nation-states. Despite how high-profile many of these thefts were, there was almost nothing that the US government did about them. It was an odd incongruence: Actions that took place virtually escaped punishment; had they taken place in the physical world, they would have provoked obvious and clear retaliation based on established precedents and international law. Whereas if the Chinese military had snuck into Boeing at night and loaded hundreds of cartons of documents into a tractor trailer, or if Russian intelligence officers had tried to rob Bank of America of $10 million cash, we would have known almost instantly and America would have almost instantly taken military action in retaliation, for years we struggled to figure out first the scope and then the response to similar actions conducted electronically. . . .

If Chinese military officers had invaded the headquarters of the SolarWorld manufacturer in Hillsboro, Oregon, we would know that was an act of war, just as if the North Korean Air Force had bombed and destroyed Sony’s offices in Los Angeles, we would recognize the act as one of war. If Soviet KGB agents had broken into the headquarters of the Democratic National Committee in Washington in the midst of the Cold War, there wouldn’t have been any doubt that the United States would have taken punishing, bipartisan retaliatory action. But what happens when all of these things happen virtually?”—John P. Carlin, Dawn of the Code War: America's Battle Against Russia, China, and the Rising Global Cyber Threat (2019)