The United States Government may  get tougher on Chinese companies that benefit from State sponsored cyber-espionage, with the Administration said to be planning to announce unprecedented sanctions.

According to reports, what form the sanctions will take has yet to be decided, but “a
final call is expected soon—perhaps even within the next two weeks,” according to several administration officials quoted off the record.

The issuing of targeted sanctions at Chinese companies is described as being a significant expansion of the Administration’s response to an alleged wave of cyber-espionage that is said to have stolen everything from “nuclear power plant designs to search engine source code to confidential negotiating positions of energy companies.”

Sanctions themselves could take various forms, some more provocative than others, including freezing financial and property assets of accused companies, through to simply barring commercial transactions with any accused foreign individuals and entities; the sanctions wouldn’t require the approval of Congress and could be approved under the terms of an administrative order signed by President Obama in April.

“As the president said when signing the executive order enabling the use of economic sanctions against malicious cyber actors, the administration is pursuing a comprehensive strategy to confront such actors,” a White House Spokesman told The Washington Post. “That strategy includes diplomatic engagement, trade policy tools, law enforcement mechanisms, and imposing sanctions on individuals or entities that engage in certain significant, malicious cyber-enabled activities.”

“The administration has taken and continues to introduce steps to protect our networks and our citizens in cyberspace, and we are assessing all of our options to respond to these threats in a manner and timeframe of our choosing.”

Geopolitical gambit

Any move against Chinese companies would come at a time of heightened tensions in United States-China relations, particularly as the latter continues to push for spurious claims for ownership of the South China Sea.

A move against China in regards to cyber espionage is not without precedent with the Administration having previously secured indictments against five Chinese military members accused of hacking American companies, but trade sanctions and bans against Chinese companies would be a serious escalation that wold likely only further damage strained Sino-American relations.

Conversely there is a reasonable argument that something should be done and that China, and state-sponsored Chinese companies should not be allowed to get away with these sorts of alleged activities, but geopolitical sabre rattling is a decidedly difficult game at the best of times, and with China holding trillions in U.S. Government debt the Administration has to tread even more carefully.

There’s no definite date given as to when the Administration may make an official announcement on sanctions, but within weeks would be unlikely as Chinese President Xi Jinping is scheduled to make a state visit to Washington in September, and an announcement of sanctions prior to his arrival would not only be a huge diplomatic faux pas, but could put at risk the visit occurring at all.

Photo by Bernt Rostad