Risky Bulletin Podcast Summary

Episode: Between Two Nerds: Should US Spies Steal Chinese Commercial Secrets?
Host: risky.biz
Release Date: May 12, 2025

Introduction

In this episode of Risky Bulletin, hosts Tom Yu Ren and Grok delve into a provocative topic: Should US spies steal Chinese commercial secrets? Drawing inspiration from Stuart Baker's article in Lawfare titled "Should American spies steal Chinese commercial secrets?", the discussion navigates the ethical, practical, and strategic dimensions of state-sponsored economic espionage.

Background of the Discussion

Tom introduces the episode by referencing his previous conversation with James Pope from Corelight about network defense at Black Hat. He then shifts the focus to Stuart Baker’s controversial stance favoring US engagement in commercial espionage to counter China's intellectual property (IP) theft. Baker argues that as China has benefited from state-supported IP theft to ascend as an economic powerhouse, the US should adopt similar tactics to reclaim its technological edge.

Tom Yu Ren ([00:22]): "China has risen to be an economic powerhouse. And part of the reason they've done that is because of state support to their industry that has included a lot of intellectual property theft by state-backed actors."

Stuart Baker's Argument for US Espionage

Baker posits that the US needs to respond to China's IP theft with equal vigor. He suggests that the US should adopt industrial policies that might include stealing back the secrets China initially appropriated. The rationale is that by reclaiming these technologies, the US can bolster its own industries and maintain global competitiveness.

Grok ([02:12]): "Be stealing back the secrets that the Chinese stole the first time."

Examining the Case for US Espionage

The hosts explore whether there are indeed secrets worth stealing and the complexities involved in executing such operations effectively. Tom reflects on previous discussions about the rights and wrongs of IP theft, expressing skepticism about the US imposing norms against stealing due to its historical IP advantage.

Tom Yu Ren ([03:08]): "I had thought that in some indictment I'd read there was theft from a solar company at some point, but long ago."

Grok counters by highlighting the moral ambiguity in state actions, noting that state motivations are typically self-serving.

Grok ([03:27]): "The morality is like it basically always is for states. It's whatever is self-serving."

Challenges and Ineffectiveness of Espionage

Tom and Grok analyze the sectors where China excels and targets its espionage efforts. They note that China's technological leadership in areas like drones, solar panels, graphene, and high-speed rail does not overlap significantly with the sectors where it conducts most of its IP theft, such as agriculture, biotech, healthcare, and robotics. This disparity suggests that espionage may not be as effective a strategy as Baker proposes.

Grok ([04:45]): "China is now a global leader in five tech industries: Drones, solar panels, graphene, and high-speed rail."

The conversation further reveals practical issues in state-sponsored IP theft, such as the difficulty in identifying valuable secrets, establishing effective collection pipelines, and ensuring that stolen information translates into tangible economic benefits.

Grok ([08:54]): "You're looking at the output end of this sort of espionage pipeline... you need guidance from your own people in that commercial sector who can tell you what's important."

Comparing International Practices

The hosts discuss Baker's assertion that only the US has renounced commercial espionage, challenging this claim by pointing out that other allies like the UK, France, and Israel do engage in economic intelligence to some extent. However, they agree that most countries either do not engage in such practices or find them inefficient compared to other strategies.

Grok ([23:21]): "I don't think that it's fair to paint that broader brush. I think there are many countries who do not engage in economic espionage."

Ethical and Moral Considerations

A significant portion of the discussion centers on the ethical implications of state-led IP theft. Tom voices concerns about the morality of using espionage for economic gains, questioning whether such actions align with broader national values and legal frameworks.

Tom Yu Ren ([20:14]): "One of the quotes Baker has, he's quoting former CIA Director Robert Gates... 'I'm prepared to give my life for my country, but not for a company.'"

Grok reinforces this by emphasizing that states inherently act in self-interest, often justifying questionable actions under the guise of national benefit.

Grok ([03:35]): "It's morally correct that you shouldn't steal from me, but it's morally okay that I should appropriate from you."

Risks of Corruption and Practical Implementation

The conversation highlights the potential for corruption in state-sponsored economic espionage. Baker speculates that transferring espionage duties from the People's Liberation Army (PLA) to the Ministry of State Security (MSS) in China was partly motivated by a desire to curb corruption among military officials.

Tom Yu Ren ([21:26]): "Baker talks about... shifting to the MSS... perhaps why Xi Jinping took that role away from the PLA because he realized that it was right for corruption."

Grok expresses doubt about the effectiveness of such measures, suggesting that corruption merely shifts rather than resolves underlying issues.

Grok ([22:15]): "It seems more likely... that he had a problem with the power that was accruing to these corrupt generals."

Alternative Strategies: Industrial Policy over Espionage

The hosts advocate for focusing on robust industrial and economic policies instead of relying on espionage. They argue that direct investment in strategic industries, akin to China's approach, is a more reliable and ethical means to maintain technological supremacy.

Grok ([27:55]): "Stealing commercial secrets is the least effective way of doing that... preserving strategic industries via industrial and economic policy is a better idea."

Tom concurs, emphasizing that industrial policy can directly support industries without the moral and practical pitfalls associated with espionage.

Tom Yu Ren ([29:30]): "Stealing secrets is not going to help if your companies go broke... fix the problem with your industry with plain old industrial policy rather than trying to steal things."

Conclusion

Tom and Grok conclude that state-sponsored economic espionage is fraught with ethical dilemmas, practical inefficiencies, and risks of corruption. Instead of pursuing dubious avenues of IP theft, they advocate for strengthening domestic industries through intentional industrial policies and strategic investments. This approach not only aligns better with ethical standards but also offers a more sustainable path to maintaining technological and economic leadership.

Grok ([32:16]): "There we go. There's the answer, Stuart. States shouldn't do it, but every bloody company should."

Through a comprehensive exploration of Stuart Baker's proposition, the hosts provide a nuanced perspective on the complex interplay between national security, economic policy, and ethical governance in the realm of international espionage.