Copycats

US Steel's China hacking gripe clever but risky

United States Steel's complaint about alleged Chinese hacking is clever but risky. The giant producer claims cyber theft violates trade laws and has asked the US International Trade Commission to block offending firms' imports. It's a novel approach to a thorny problem but one unlikely to attract imitators.

China often gets blamed for corporate hacks, with the FBI saying it was behind a 53 per cent increase in economic espionage cases from 2014 to 2015. A Chinese national pleaded guilty last March to charges of conspiring over six years to infiltrate computer networks of Boeing and other American defence contractors. A 2010 breach at US Steel - the first of two - was one of six cyber attacks against companies and a labour union that a 2014 Justice Department indictment pinned on five Chinese soldiers.

Hacking victims typically deal quietly with law enforcement, but US Steel went public out of frustration with a lack of deterrence. It called out major Chinese producers like Baosteel in the ITC complaint, accusing them of benefiting from stolen secrets on how to make advanced high-strength steel. The light and flexible product used often in automobiles took US Steel a decade to develop. Yet the company says Chinese companies suddenly began cranking it out in 2011, just after the second alleged hack.

The ITC has the power to address patent infringement and other violations of intellectual property rights, but hacking cases are less common. Even if US Steel's complaint succeeds, though, it probably won't lead to many similar complaints.

The Chinese market is too lucrative. The company said it was forced to fight back, because the cyber snooping led to a 33 per cent drop in domestic sales from 2013 to 2015 as well as plant shutdowns and workforce cutbacks. Yet China hasn't shied from retaliating against trade sanctions in the past, and it can inflict serious pain as the world's second-largest economy. No wonder hacking victims in telecommunications, clean energy and other industries have avoided costly confrontations.

Instead, they have turned to creating more safeguards against intrusions by, for example, walling off computer servers or putting data into physical files rather than on digital networks. It's a sensible but imperfect solution, of course. When it comes to China, though, occasional breaches are just a cost of doing business.