Chinese Motivations for Corporate Espionage – A Historical Perspective

One of the most common criticisms of the hypothesis that the People's Republic of China (PRC) conducts corporate espionage is that Beijing would not risk the political and economic fallout that would occur if their role was discovered and exposed. Along those same lines, most people assume that the PRC would conduct political or military espionage, as most other states do, but not necessarily partake in corporate espionage. From the political science or economic perspectives, there are indeed considerable disadvantages to state-sponsored corporate espionage, but in this case one must be careful to avoid the intellectual bias of mirror imaging. There are three important historical factors that contradict the idea that the PRC would conduct one form of espionage but not the other, and these must be taken into account when attempting to determine Beijing's involvement or lack thereof.

  • First, traditional Chinese approaches to commerce have never emphasized a distinct divide between the public and the private, and there is no stigma attached to espionage in general, much less for economic purposes.
  • Second, over the past three decades, strengthening the country's technological and industrial base at all costs and through all means has been a critical national security concern for the PRC to both avoid the humiliations China suffered in the past at the hands of imperialist powers, and to assume the role of a great power in the future.
  • Third, the Communist Party of China (CPC) has banked its legitimacy almost completely on the promise of breakneck economic growth, having largely abandoned Marxism as a dead end and instead attempt to adapt to current conditions.

Although we are aware of these factors as potential motivations for PRC-sponsored corporate espionage, we currently do not know the extent of such activities - aside from brief glimpses such as the activities of APT1 or the 2nd Bureau of the 3rd Department of the People's Liberation Army General Staff Department. Beijing does issue official denials, but most decision-makers in the public and private sectors do not accept such statements at face value, or at least maintain a healthy skepticism. Nevertheless, by taking no action, either preventative or remediation, one would, in fact, be taking the PRC at its word. Furthermore, dismissing the notion of PRC-sponsored corporate espionage as illogical or impractical without first taking into account critical historical factors which influence and drive mainland Chinese decision making would be equally as impractical.

In the end, the possibility of both Chinese political and corporate espionage must be thought of as critical factors for conducting risk management and due diligence planning; failure to take them into account could very well lead to considerable missteps and losses in dealing with PRC entities or operating in the China market.