September 29, 2015

Potential Blowback for Imposing Sanctions on China for Cyberattacks

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News

Cybersecurity was a major point of discussion during a summit between President Obama and Chinese President Xi Jinping, with the U.S. leader calling on his counterpart to curtail government-sponsored cyberattacks on American organizations. As reported in the Guardian, President Obama announced in a speech that he “did indicate to President Xi that we will apply [sanctions] and whatever other tools we have in our toolkit to go after cybercriminals either retrospectively or prospectively.”

Of course, the initiation of sanctions could be a double-edged sword. In a story entitled “Obama cyber sanctions could spur Chinese backlash,” Cory Bennett of The Hill described the dilemma facing U.S. policymakers in considering whether to impose sanctions on China for recent suspected cyberattacks.

Bennett wrote that, on the one hand, many business leaders are calling for the White House to impose sanctions against China for “what’s believed to be a massive campaign to pilfer corporate secrets from U.S. firms,” largely because of the risk that such attacks could “drain the American private sector of its global competitive advantage.”

On the other hand, Chinese policy specialists are warning that imposing sanctions—such as freezing the assets of Chinese companies—could “generate significant blowback,” particularly as China is considering new laws that would keep out foreign businesses, including “banking technology regulations that would limit the Chinese financial sector’s ability to use non-Chinese technology, and a law that would require outside companies to install Beijing-approved encryption and give up source code for inspection.”