Unprecedented Cyber Espionage and its Effect on Supply Chain Risk
October 24, 2024
Privacy Plus+
Privacy, Technology and Perspective
This week, we're examining the alarming scale of Chinese cyber espionage targeting the United States and other Western nations. Recent reports paint a picture of unprecedented hacking, emphasizing serious legal and regulatory concerns as well as national security implications.
Highlights from recent intelligence reports include:
The FBI opens a new counterintelligence investigation into China every 12 hours.
Chinese hackers have infiltrated critical US infrastructure, including transport, telecom, water, and electricity networks, dating back many years.
Major data breaches have exposed the sensitive information of millions of Americans, including government officials.
An estimated 1 in 5 US corporations have had intellectual property stolen by Chinese actors.
Chinese cyberattacks now target virtually every sector, including healthcare, financial services, defense, and law firms.
For a deeper dive into these current issues, we recommend reading the full report from J.P. Morgan's Eye on the Market, dated October 17, 2024, which is available by clicking on the following link:
https://assets.jpmprivatebank.com/content/dam/jpm-pb-aem/global/en/documents/eotm/thucydides-cap.pdf
Our Thoughts
For years, advising clients on China-related data protection and supply chain risks has been challenging. Part of this has been due to the Chinese government’s voracious appetite for Western know-how to advance its economy, particularly in view of its massive “Belt and Road” initiative meant to create whole new trade routes controlled by China. (You can read more about this here: https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative ). Part, too, has been due to China’s recent regulations greatly expanding government control and access to confidential and proprietary information of foreign businesses operating in China. For more on this, see
Increasingly, we sense that the decades-long trend of having products manufactured in China for export to the U.S. is rapidly slowing, and even reversing – because manufacturing in China isn’t as cheap as it used to be, certainly, but just as certainly because of these relatively new risks to their trade secrets and other intellectual property. For more on this, see https://www.forbes.com/sites/deandebiase/2024/08/30/why-companies-are-exiting-china-and-what-leaders-can-do-about-it/.
Recent revelations about pervasive state-sponsored espionage have intensified these concerns. For companies sourcing electronics from China (as well as consumers buying electronics from China, like music-syncing disco balls that we ourselves may or may not have recently acquired) this new reality demands a thorough reevaluation of their risk exposure.
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Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet and technology. Open the Future℠.