Can China be Deterred in Cyber Space?
In a piece for EWI's new Policy Innovation blog, EWI Advisory Board Member Joseph S. Nye, Jr. discuss the potential for China to be deterred from cyber attacks and theft of intellectual property.
If we look at the cyber realm, the effectiveness of deterrence depends on who (state or non-state) one tries to deter and which of their behaviors. Ironically, deterring major states like China from acts of force may be easier than deterring non-state actors from actions that do not rise to the level of force. The threat of a bolt from the blue attack by a major state may have been exaggerated. Major state actors are more likely to be entangled in interdependence than are many non-state actors, and American declaratory policy has made clear that deterrence is not limited to cyber against cyber but can be cross domain with any weapons of our choice.
Along with punishment and denial, entanglement is an important means of making an actor perceive that the costs of an action will exceed the benefits. Entanglement refers to the existence of interdependences which makes a successful attack simultaneously impose serious costs on the attacker as well as the victim. This is not unique to cyber. For example, in 2009, when the People’s Liberation Army urged the Chinese government to dump some of China’s massive holdings of dollar reserves to punish the United States for selling arms to Taiwan, the Central Bank pointed out that this would impose large costs on China as well and the government decided against it. Similarly, in scenarios which envisage a Chinese cyber attack on the American electric grid imposing great costs on the American economy, the economic interdependence would mean costly damage to China as well. Precision targeting of less sweeping targets might not produce much blowback, but the increasing importance of the Internet to economic growth may increase general incentives for self restraint. At the same time, entanglement might not create significant costs for a state like North Korea which has a low degree of interdependence with the international economic system.
Even among major powers, there may be situations, such as August 1914 where various actors believe that the benefits of attack exceed the costs to entanglement. European states were heavily entangled in trade and finance, but still chose to go to war. Most incorrectly envisaged a short war with limited costs, and it is doubtful that the Kaiser, the Czar and the Austro-Hungarian emperor would have made the same decision if they had foreseen the loss of their thrones and dismemberment of their empires. Norman Angell who wrote that war had become too costly because of entanglement was correct in that sense, but miscalculation can affect any type of deterrence. Trade between the U.S. and Japan did not prevent the Japanese attack on Pearl Harbor, but in part that was caused by the American embargo that manipulated the interdependence in a way that led the Japanese to fear that failure to take a risky action would lead to their strangulation.
Deterring state actors from attacks that do not reach the level of force is more difficult. For example, deterring China from cyber theft of intellectual property for competitive commercial advantage has proven more difficult than deterring an attack on the electric grid. Yet even here, the American threat of economic sanctions seems to have changed the declaratory policy of Chinese leaders at the time of the September 2015 summit between presidents Xi and Obama. The American indictment of five PLA officers for cyber theft of intellectual property in 2014 initially seemed counter-productive when China used it as a pretext to boycott a previously agreed bilateral cyber committee. But the costs of naming and shaming plus the threat of further economic sanctions seems to have changed Chinese declaratory behavior. Previously, China had not recognized the American distinction of espionage for competitive commercial purposes as a distinct category, but they accepted it in 2015.
Whether the threat of sanctions and loss of face will deter actual behavior of the complex organization we summarize as “China” remains to be seen. Skeptics argue that the declaratory policy change did not alter behavior of cyber theft originating from some actors in China. Optimists point out that deterrence requires clarity about what one is trying to deter, and the Chinese president’s declaration at last provides a clear baseline for behavior that China can be held to.
If there is no progress, further sanctions with credible consequences could include using the dispute settlement mechanism of the World Trade Organization, but such cross domain deterrence can be problematic if it involves issue-linkage which is resisted by trade bureaucracies and corporate groups that do not wish to see their interests damaged by reprisals. Options such as naming and shaming corrupt officials by disclosing hacked information about their behavior can attack a country’s soft power but it sometimes resisted as over escalatory. The jury is still out on the extent to which China can be deterred in cyber space, but the evidence suggests it would be mistaken to totally discount the possibilities.
To read this article on The Diplomat, click here.