If China did hack US data, it’s more bad news for US-China relations

Current and former employees of the US government were victims of a big hack, late last year. Data for at least four million people was stolen in the intrustion, which was revealed this week. It was not immediately clear who was behind the cyber attack, but the Obama administration apparently thinks it came from China. If that turns out to be true, it won't be the first instance of Chinese cyber espionage. And computer hacking is not the only thing putting enormous strain on US-China relations.

To get some insight into the state of the relationship between the US and China right now, we spoke with China expert Mary Kay Magistad. The longtime China correspondent for PRI’s The World based in Beijing, Magistad recently relocated to San Francisco. The following is a lightly edited transcript of the interview with Magistad by host, Marco Werman.

How big of a stumbling block is this latest hacking incident for the US and China?

It’s hard to know, because it really depends on who stole the data and what they ultimately plan to do with it. There are different types of hackers in China. Some are directly connected to the [Chinese] military or the government. Some have plausible deniability, but they’re being managed by the military or the government. And some are what’s known as ‘patriotic hackers,’ who are doing things on their own to mess with what they see as adversaries of China. If you look at the information that was apparently captured, social security numbers, security clearance information, personal information — let’s say it was the Chinese government. We don’t know this for a fact. But if they do have this information, it’s useful to know these things. And it could also be used to cause harm or mischief to any US federal government employee whose actions the Chinese government takes issue. So, how big of a stumbling block is this for the US and China? It’s really hard to know.

China would say that it’s also a victim of hacking. And the US will not deny that it does surveillance on foreign governments. The US has taken issue with China’s involvement in hacking related to economic information. But, interestingly, this is not a case with economic information.

Add to all this the tension in the South China Sea. The US says its military will continue to sail and fly anywhere in international waters. China is annoyed by US surveillance flights off its coast. And the Chinese are now building artificial islands in disputed waters. Is this all leading to an inevitable clash?

I don’t think a military clash is inevitable, because I think China would hesitate to fight a battle it’s not likely to win. But it feels like what’s happening is a game of chicken. China is testing US resolve by increasingly trying to change the balance of power in the region. If China calls the US bluff about coming to the aid of its regional allies in the event of a challenge to territorial integrity and China wins, then the US loses face. China would emerge as a more powerful regional actor. I think what the US is doing is a calibrated response. It’s also calling the Chinese bluff, saying that the US is not simply going to shrink away from the region and allow China to build new islands in the South China Sea and claim that disputed territory for itself. Maybe there are other ways of responding, perhaps economic measures or other means that do not involve the military, because I think both sides would lose if that were to happen.

Games of chicken of often end badly. Is the diplomacy between the US and China healthy enough to avoid that?

We’re in uncharted territory here, with two nuclear powers going head-to-head. We saw this happening between the US and Soviet Union decades ago, but it was a different era. This time, the Chinese are canny and they know what’s at stake. At the same time, President Xi Jinping has been very aggressive with his foreign policy. Maybe he feels there is a limited window of opportunity for China to push for greater advantage. Economic growth is slowing in China. The population is aging. There are lots of challenges at home that require significant reforms that could impact the Communist Party’s hold on power, particularly economic power. And if you change the conversation and make it about China’s territorial integrity, this might buy the Communist Party time to deal with these problems at home. It also creates a different narrative for China in the region and in the world. All of that is at play right now.

What about all the shared interests between the US and China, like their interconnected economies and their stated goals of dealing with climate change, are these factors enough to keep things on track?

It’s true that this is a complex relationship and that both sides benefit from maintaining constructive relations, especially on trade and climate change. But, again, President Xi and other party leaders could feel that this is their time, that if they don’t act now then China will remain at a disadvantage and be the subordinate power in this relationship for a long, long time. Beijing might decide that it has a chance right now to push for something more. So, it could conclude that taking that risk is more important than the advantages of keeping relations more friendly with the US. It’s very hard to know.

China expert Orville Schell recently visited Washington to assess the feeling there about US-China relations and he wrote that, “there’s presently no significant core constituency in America still well-disposed toward China.” Mary Kay, you have been back in the US for a little while now. Is that too harsh an assessment?

I think it depends on what you mean when you’re talking about ‘China’ here. If you’re talking about the Chinese government and the Communist Party, there’s much less positive feeling right now about the degree to which the US can have a constructive relationship. But if you’re talking about China more broadly, and the younger generation in particular, there is significant reason for optimism. This is a generation that’s much more open in their thinking and aware of how the rest of the world acts. If you look at how people are voting with their feet at the moment, a lot of middle class Chinese people who have the means are sending their kids to study in the US and elsewhere in the west. They are moving to the west, or at least moving their money out of China. And that includes people from elite circles in China. There is an understanding in China that the way things are going at the moment are not entirely positive and that many people would like to see a different kind of future for themselves. So, I think there are pressures within China that could lead to a more positive outcome for Chinese people and for the world.