By Bernard Mark Thompson

Australian and Chinese free trade agreement (FTA) negotiations are under threat after revelations Chinese espionage units have actively hacked Australian corporations and federal parliament emails.

This follows the U.S. government’s move to indict five Chinese military officers of cyber economic espionage.

Video uploaded by CNN  of Attorney General Eric Holder talking about the indictment of 5 PLA unit 31968 officers for corporate espionage (Source: Youtube CNN)

Previous talks last year stalled after the Australian government rejected Huawei, a Chinese state owned entity (SEO), from bidding on the National Broadband Network (NBN).

This was coupled with the Snowden leaks which revealed ASIO agents were using Australian embassies to spy on its Asian neighbors, including China.

Intelligence experts now question whether the Australian government is jeopardizing national security by potentially signing an FTA.

However, economists and business advocates say a FTA is vital for the Australian economy.

Extensive threat to Australian interests

Allegations center on the People’s Liberation Army (PLA) unit 31968 officers who are accused of engaging in corporate espionage.

Officers allegedly hacked U.S. corporations to obtain private business information and intellectual property to help Chinese SEOs gain commercial advantage.

Deakin University international relations senior lecturer Craig Snyder agrees China’s cyber espionage program is a potential threat.

But Mr Snyder says China is not the only threat to Australia.

“We should be concerned about the threat whether it is from China, from other countries or from another source, the hacktivist community, the individual or the organized crime net works,” Mr Synder said.

“We have governments of all sorts trying to gain intelligence through traditional physical means and other espionage activities.”

Bond University international relations assistant professor Malcolm Davis goes further saying the PLA extensively uses cyber espionage operations against Australia at the corporate and governmental level on a daily basis.

“They’ve been treating Australia the same way they treat the United States, they same way they treat Japan, the same way they treat other countries,” Mr Davis said.

“They use cyber espionage to gain corporate or strategic advantage over those countries so of course we should be concerned.”

Mr Davis says Chinese SEOs are as grave a threat to national security as cyber espionage and argues it is critical to ensure they don’t gain control of key assets.

“You have to recognize that there is potential risk that it’s being done in part to allow the PLA’s information warfare unit to gain access to critical information,” Mr Davis said.

“They will use it and they will use it against us if we enter a conflict.”

American-based Nautilus Institute associate Roger Cavasos agrees and says Chinese cyber-attack groups and SEOs attacks can easily be switched towards Australia.

He says Chinese backed economic cyber espionage against Australia is a very real danger.

“Scratch U.S. and write in Australia, write in any other country, it can happen to any of those other countries,” Mr Cavasos said.

“China wants to buy a lot of those resources as cheaply and efficiently as possible so certainly it would make sense that Australia would be high on their list.”

FTA facing substantial issues

However, economists and industry advocates argue events between China and the U.S. have little bearing on an FTA with China which they say is crucial to the Australian economy.

Australian Chinese General Chamber of Business CEO Chiu-Hing Chan says he understands the concerns around China’s cyber espionage program.

But Mr Chan questions the validity of singling out the Chinese when everyone else engages in espionage.

“Every country does cyber espionage, doesn’t matter if it’s Australia, United States or Canada or the U.K or even China,” Mr Chan said.

He also says it is impossible not to do business with a Chinese SEO as every major company in China is state owned.

“It’s very hard to deal with the Chinese if you can’t get over the fact a company is state owned or that half of its board is actually former military officers.”

University of Adelaide Economics Professor Kim Anderson agrees and says Australia and China are going to be pragmatic about the benefits of an FTA.

“Australia is going to want to push hard on these free trade agreements,” Mr Anderson said.

Mr Anderson said even without the public debate escalating over Chinese economic espionage, an FTA still faced substantial issues.

“Australia has a much broader set of interests to try and negotiate over,” Mr Anderson said.

“That’s why it becomes more complex for a bigger and more complex economy to sign on these agreements.”

Mr Chan agrees but stresses the Australian government must also address issues affecting business nationally.

“The government should help to cut company tax for example, or help subsidize fuel costs and so forth rather than let the fuel price continue to skyrocket to about $1.74 per litre,” Mr Chan said.

“It is ridiculous and also with company tax at the moment being about 30 per cent at the moment, with rumours it’s going to go even higher, it’s going to be another cause for concern for the manufacturing industry.”


Australian army soldiers

Picture uploaded by ADF Business of Australian soldiers on patrol (Source: Wikipedia)

White Paper needs to be realistic

Mr Synder says the government is moving decisively, highlighting it’s accomplishments in creating a Cyber Command.

Mr Snyder says portioning part of the military budget to buy more than just “fast jets” shows the government’s commitment to protecting cyber commerce and electronic networks.

“It will focus much more on defensive activities in terms of protecting our information and protecting our networks but we will have as much as an engagement in dissecting information from friends and potential enemies,” Mr Snyder said.

“The Australian government is doing the right thing in regards to cyber security.”

But Mr Davis says previous administrations’ efforts to pander to Chinese sensitivity had resulted in the previous White Paper being inadequate.

He argues the 2015 White Paper presents a real opportunity to ensure defense policy was shaped according to Australia’s needs.

“Our defense policy is a part of our national sovereignty and we should not kowtow to the Chinese in terms of shaping our defense policies according to their wishes,” Mr Davis said.

There is a chance to get the strategic outlook right and if it doesn’t, if it downplays China too much, then it’s a missed opportunity and it’s going to affect everything.”

The Department for Foreign Affairs and Trade declined to comment.

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