* Advisory group says China is cyberspace's "most
* Congress should report findings to public-panel
* Says U.S. should bring Beijing into nuclear arms control
By Jim Wolf
WASHINGTON, Nov 14 The U.S. Congress should
conduct an in-depth assessment of Chinese cyberspying and
consider imposing tougher penalties on companies that benefit
from industrial espionage, a federal advisory group said
The recommendations by the bipartisan U.S.-China Economic
and Security Review Commission reflect its stated concern that
China has become "the most threatening actor in cyberspace."
In its annual report to Congress, the commission said the
most notable trend in Chinese cyber-espionage over the past year
had been "increasingly creative and resourceful targeting"
across government, industry and civil society.
Among these are stepped-up efforts to defeat so-called two
factor authentication, it said, referring to the use of a
security token in addition to a traditional password.
Separately, Beijing appeared to be within two years of
putting nuclear-tipped ballistic missiles on submarines as it
continues to modernize and expand its nuclear stockpile, the
report said, citing U.S. Defense Department estimates.
Congress should require the State Department to spell out
steps to bring China into existing and future nuclear arms
control efforts, the group said.
The report included 32 recommendations for congressional
action on ties between the United States and China, the world's
No. 1 and No. 2 economies.
The pair also are the top spenders on their militaries,
although Washington spends about five times as much as Beijing,
according to the Stockholm International Peace Research
Institute, which tracks the figures.
The commission's report did not address U.S. espionage
involving China, whose rise as a global competitor has helped
frame a U.S. geo-strategic "pivot" toward the Pacific,
announced a year ago after a decade of land wars in Iraq and
The report was written before China's 18th Party Congress
that will bring in a new generation of leaders. So the
commission did not analyze the change in leadership, perhaps the
most significant political event in China in a decade.
After the political transition, the same issues that
complicate the bilateral relationship are expected to continue
in the near term, Dennis Shea, a Republican appointee who is the
commission's chairman, told reporters ahead of the report's
Some recommendations could add to bilateral strains. The
commission said Congress should consider tougher screening laws
for investments made by China's state-owned enterprises because
of their allegedly unfairly subsidized challenges to U.S.
The commission was set up by Congress in 2000 to study the
national security implications of U.S.-China trade and economic
relations after President Bill Clinton's administration granted
China permanent trading status and approved its accession to the
World Trade Organization.
Many U.S. entities lag in their ability to deal effectively
with the growing sophistication of Chinese computer-launched
espionage, the commission reported.
"China's cyber capabilities provide Beijing with an
increasingly potent tool to achieve national objectives," it
said. "A diverse set of Chinese hackers use pilfered information
to advance political, economic and security objectives."
In response, relevant congressional committees should
conduct an "in-depth assessment of Chinese cyber-espionage
practices and their implications," then report the findings in
an unclassified format so the public will be aware, the group
Congress also should conduct a review of existing legal
penalties for companies found to engage in, or benefit from,
industrial espionage, it recommended.
The call for congressional assessments is reminiscent of
work carried out over the past year by the House of
Representatives intelligence committee.
The panel's top Republican and Democrat, reporting on the
findings of an 11-month investigation, warned last month that
Beijing could use for spying equipment made by Huawei
Technologies Co HWT.UL], the world's second-largest maker of
routers and other telecom gear, and rival Chinese manufacturer
ZTE Corp, the fifth largest.
Speaking to reporters on Saturday on the sidelines of the
Party Congress, China's commerce minister, Chen Deming, said the
United States was exhibiting a "Cold War mentality" with its
fears that Huawei posed a security risk because of its ties to
the Communist Party.
A spokesman for the Chinese Embassy in Washington did not
immediately respond to the commission's recommendations,
including the call to involve Beijing more closely in arms
Tom Collina, research director of the Arms Control
Association, a nonpartisan advocacy group in Washington, said
China should be more transparent about its forces, but the
United States has a 20-to-1 edge in nuclear weapons that can
span the Pacific.
"The United States should continue to pursue consultations
with China, but Washington and Moscow need to draw down their
forces significantly before expecting others to participate in
formal negotiations," he said.