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Casting an Eye Toward Chinese Manufacturing Ambitions

Dave Resser

As many readers are aware, the Chinese government has been planning and implementing changes to increase its manufacturing influence around the globe. 

Within the past five years, a strategic action plan, known as “Made in China 2025” was developed and released. While the plan seems to be directed toward developing Chinese production to elevate China to be the leading manufacturer in the world, several other countries are coming to question the plan’s methods. More to the point, several countries are concerned whether the means to achieve the ambitious aims of the plan are ethical and what negative effects the plan will have on current manufacturing powers.

Officials in the U.S. Justice Department indicate that Chinese efforts to improve technology are not the problem, but China cannot use theft as a means to develop technologically. The Justice Department has openly accused the plan of encouraging Chinese government departments and Chinese corporations of using strategies including physical theft, cyber-theft of electronic files, and espionage to achieve the goals of the plan. This battle has been going on for years and is heating up again, according to U.S. officials and analysts. It is playing out across a broad landscape that involves many industries and gives rise to concern about the security of foundry operations, among many other American industries.

To understand China’s goals, U.S. officials say, just look at the ambitious aims the country set out in the plan. By 2025, China wants to be a world leader in artificial intelligence, computing power, military technology, as well as energy and transportation systems. According to the South China Post, the list also includes maritime equipment, agricultural equipment, and railway transportation; notably sectors that use castings. John Demers, Assistant Attorney General for the National Security Division at the Justice Department, said in recent testimony before the Senate Judiciary Committee that “(The plan’s) guidance to the rest of government and the rest of their companies and to their people, that this is what we want to be the best in class at, and therefore you should organize your activities, whether they’re legal or illegal, to achieve that.”  Demers also indicated that recent legal cases against China show the country is aggressively trying to steal technology directly related to its stated goals.

However, we need to bear in mind that this most recent Chinese approach to infiltrating and taking the technological advances of other countries does not follow the traditional routes that once largely focused on acquiring government and military secrets. This is just one reason why American corporations, universities, and research labs all need to be aware of China’s broad aims. The U.S. is now prosecuting claims against Chinese nationals in various arenas, such as food security, intellectual property theft, artificial intelligence, and others. Troublingly, many of these cases have developed from private industry and university losses. In other words, corporations, universities, and other non-governmental agencies are increasingly finding their technology, plans, and intellectual property subject to theft by multiple levels of operators in China. No longer is the United States subject to only military or infrastructure threats by this behavior; foundries like yours can likewise be affected.

As an example, The U.S. Justice Department announced charges in late December 2018 against two alleged hackers suspected of working on the orders of the Chinese government as part of what the U.S. alleges is a long-running effort to steal American intellectual property. The charges were part of a broader move by the Trump administration to push back against what American officials describe as China’s relentless drive to steal American business secrets.

The indictment details alleged cyber-attacks that targeted intellectual property, confidential business and technological information and other data at more than 45 companies in at least a dozen states and within U.S. government agencies. The scale of the alleged cyber-theft appears to be quite broad, including banking and finance, medical equipment, oil and gas exploration, aerospace, and the maritime industry. Deputy Attorney General Rod Rosenstein indicated that a dozen countries were hurt by the cyber-theft detailed in the charges unveiled on in late December.

Rosenstein added that more than 90% of the Justice Department’s economic espionage cases in the past seven years involve China. Rosenstein also indicated that many of the companies that have allegedly been targeted by Chinese defendants operate in sectors that the official Chinese plan listed as targets for strategic development. The attacks described in the indictment exploited “managed service providers (MSP),” described as companies that manage IT systems for clients around the world, including governments and businesses.

With this knowledge, make sure your foundry operation has an effective plan to minimize the chances of theft, whether through removal of physical goods or cyber-theft of electronic information from your own servers or those of an MSP that you employ. This strategy can help your foundry maintain its competitive advantage that was hard-earned and help prevent others from gaining ground on your business via nefarious means.

Click here to see this story as it appears in the February 2019 issue of Modern Casting