Is it government policy in China to pass on commercial secrets obtained via cyberespionage to civil sector firms?

Fear-mongering about efforts to improve Internet security ignores an important reality: The new rules may bring bigger and better opportunities for cooperation between Chinese and American technology firms.

China’s controversial new anti-terrorism law would require foreign companies to install “backdoors” to give authorities remote access to computers and networks, and has been placed under review due to Western concerns. Since China still has to rely on foreign technology in the immediate future, the law might have been used to tell the United States government not to engage in what Beijing called “reckless behavior,” or to further expose U.S. hypocrisy in its own cyber espionage practices.

The U.S. is concerned over China’s new anti-terrorism law due to additional network security regulations that would affect its enterprises in China. Since Chinese governments, banks, and research institutes are almost entirely dominated by foreign IT companies, there is justified concern over domestic cyber security. Strict regulation in law could ensure that all investors are treated equally without favoritism.

The USCC assessment on the weaknesses of China’s People’s Liberation Army (PLA) offered little new analysis on PLA’s cyber-warfare capabilities. This is due to impossibility of finding a comprehensive assessment of China’s military cyber capabilities on the public record. Much of the debate surrounding the PLA’s cyber war capabilities is mere speculation based on evidence of its undoubted success in cyber espionage.

China’s Great Firewall restricts access to the main Internet communication platforms in the U.S. (Facebook, Twitter, Google), thus leading to a general western perception that China lacks Internet openness and access altogether. Stephen Harner argues that Internet protectionism actually allowed China to create rival services (Baidu, Alibaba, Tencent) that have developed into a thriving Internet industry.

Lu Wei, China’s cyber czar has stressed “cyber sovereignty” as China’s official Internet policy. While the recent Sony hack may reveal that China was complicit in the unlawful breach of cyber norms, Gady argues that China and the U.S. need to find less politically sensitive ways to cooperate on mutually beneficial Internet issues, while circumventing their disagreements in other domains.

The recent Sony hack should increase dialogue between China and the U.S. on how to respond to cyber attacks and how to improve cooperation in cyber governance. Both countries are suspicious of the other’s activities, but existing interconnected Internet infrastructure requires new forms of dialogue and accountability.

China’s leaders need to look hard at the “Chinese Dream” they are trying to realize for their country and decide if that dream rests more on cooperation at this critical moment with the world’s other largest economy, the United States, or on an absurd and outdated allegiance to the bizarre and historically obsolete feudal regime of the Kim family in Pyongyang.

China-U.S. relations in the field of the Internet is now an important component of the new model of major power relationship. To a great extent, the Internet will decide the future of both countries.