Australian businesses could be affected by US sanctions on Chinese companies

THEY’RE the “unprecedented” sanctions against Chinese groups cashing in on cyber crime. But it’s what they’ll do to Australia that is frightening.

President Obama is expected to bring sanctions against Chinese businesses in the coming week.

THE White House is preparing to introduce “unprecedented” sanctions against Chinese companies and individuals that have profiteered from cyber espionage.

The Obama administration has been mulling over whether to take diplomatic action in response to growth in cyber espionage by Chinese hackers.

The move is designed to send a message to the Chinese government over its increasing use of cyber attacks to steal government and corporate secrets.

“It’s certainly a part of a new strategy to deter theft by economic espionage”, cyber security expert Greg Austin told news.com.au

While amounting to an extension of US policies in order to fight against cyber-attacks, Mr Austin said the expected sanctions will be “a very important moment” and will be of “special interest to Australia”.

The sanctions will seek to punish both companies and individuals who have profiteered from trade secrets and data stolen from US companies.

Mr Austin, a professor at the Australian Centre for Cyber Security at the Australian Defence Force Academy believes the move is designed partly to show a strong stance against acts of cyber warfare and partly to remind US companies of the importance of safeguarding themselves against such attacks.

He also believes the sanctions could have an impact on Australia’s economic relations with China who is our country’s biggest trading partner.

It is unclear how many companies are likely to be named but Australian policy makers will be paying close attention with the sanctions expected to be announced in the coming week. The Obama administration will no doubt be very tactful in their handling of the sanctions not to hurt their own industries but it is likely the Abbott government will be urged to cut ties with the black-listed companies.

“We don’t want these sanctions interrupt our economic relations,” Mr Austin said. But he admits there is a limit to this diplomatic responsibility.

“It’s not like we’re going to stop selling iron ore to China,” he said.

On the flip side, if the US imposes sanctions against Chinese companies involved in the solar energy industry, it could ultimately benefit Australian solar companies seeking to sell to the US and others markets.

According to Mr Austin, such an industry was a likely candidate to be named in the sanctions after it was already identified as a sector that has profiteered from cyber plundering of US companies in measures brought against five top Chinese military figures in May last year.

The Chinese government has resolutely denied it engages in cyber espionage, a statement that Mr Austin, the author of Cyber Policy in China labelled as “clearly a false statement”.

The United States (along with all governments of the world) conduct programs of cyber snooping, however the US says it does so purely for purposes of national security and does not share the information with anyone outside of its security agencies.

The US is accusing China of sharing the stolen data with its civil sector in order to give their domestic companies leverage in the international marketplace. A big no no in international relations.

China continues to deny any wrongdoing and as usual wants to project a tough image of the country’s leadership to the international community. And the timing of the sanctions couldn’t be worse for the Obama administration.

If the US does impose sanctions as it is expected to do, they will come just weeks before China’s president Xi Jinping is due to make his first state visit to the White House. Some are even calling for President Obama to cancel the planned meeting.

It is unclear how China will react to the sanctions but Mr Austin believes the response from the country will likely be limited to the cyber sphere. China has engaged in cyber espionage with increased gusto over the previous few years and Mr Austin doesn’t believe sanctions will have the deterrent effect Obama is seeking. But it’s clear the wider implications of the unprecedented diplomatic move will be far reaching.