The Dragon In The Room

Everybody's talking China now. The federal government isn't mincing words anymore, either. No more worst-kept secret that Chinese cyberespionage is rampant, but you just can't really come out and say it. The Defense Department flat-out declared this week in a report to Congress that the Chinese government and military are attacking U.S. government networks. Then a bipartisan group of high-profile senators drafted legislation that would create a watch list of nations conducting cyberespionage against the U.S. and call out foreign firms that benefit from intellectual property stolen from the U.S.

Here's the last paragraph of the press release for the bill, called the Deter Cyber Theft Act: "Recent reports indicate that China is by far the largest source of theft attempts against U.S. companies."

The new trend of officially calling out China's cyberespionage machine actually started this past fall when the House Intelligence Committee warned U.S. companies to steer clear of doing business with Chinese telecommunications companies Huawei and ZTE due to their potential ties to the Chinese government and its spying activities. Then came Mandiant's big report on a long-suspected Chinese military link to cyberespionage against U.S. firms.

It's now OK to talk about the elephant -- er, dragon -- in the room.

"The first step toward recovery is to acknowledge our problem," quips Stewart Baker, partner in the Washington office of Steptoe & Johnson LLP and a former Department of Homeland security official. Baker says the U.S. is in "an attribution revolution" period. The intelligence community has known for more than a decade of China's activities, he says, but just hasn't spoken up like the security community has been doing.

"We know a lot about these attackers. We know what their girlfriends look like. It's not as hard as what we thought four years ago," he says. "It's embarrassing for the government because they've known this stuff for 10 to 15 years."

The "reason the debate changed," he added, is because of what security researchers at Mandiant, Trend Labs, and Citizen Labs have done, he says. "They are the only ones who have really given us the goods on the attackers. Frankly, it's a blow to the intell community that they couldn't figure out how to say things people without a security clearance could say," Baker says.

It's unlikely that the bipartisan Deter Cyber Theft Act bill, co-sponsored by Sens. Carl Levin, D-Mich.; John McCain, R-Ariz.; Jay Rockefeller, D-W.Va.; and Tom Coburn, R-Okla., is going anywhere anytime soon, though. Cybersecurity legislation -- well, practically any legislation for that matter -- has fallen flat in Congress lately. Attorney Kristen Verderame says the fact that the sponsors didn't pull in other stakeholders and committees for the bill indicates it was a more symbolic than serious legislative effort. They were basically making a statement, she says.

And for now, making a statement -- or lots of statements -- is at least a way to keep the conversation going. The trouble is that even if the average American is now at least familiar with the idea of Chinese hackers stealing U.S. trade secrets, the full economic impact of IP theft out of China has neither been truly been felt by him or her nor calculated in such a way to illustrate it.

Once that becomes clearer and its impact directly tied to American jobs and the economy, we'll need a lot more than new legislation.