Chinese security concerns scares away investors

What will the long-term effects of cybersecurity worries be?

Recent reports that China is the source of numerous cyberattacks is scaring off foreign investors, according to officials.

United States officials believe that China's credibility and attractiveness as a place to invest are being harmed by cybersecurity worries, as reported by Reuters. Robert Hormats, U.S. under secretary of state for economic growth, energy and the environment said on Tuesday at a U.S.-China Internet industry forum that the scale of hacking activity allegedly coming from China is not only breeding mistrust in the U.S. government, but is also causing businesses to reconsider investment opportunities.

Hormats commented:

"The cyber intrusions are particularly troubling because they've gotten so much visibility lately that the intensified visibility is really undermining a lot of business confidence of people who would otherwise invest here. So it's hurt Chinese interests. The Chinese really need to take a look at this and decide if it's in their interest for these policies to continue."

Although China has long been suspected as a main source of hackers and cybercrime rings, it wasn't until security firm Mandiant released a report stating that an "overwhelming" number of cyberattacks came from the country that the U.S. government began to really sit up and take notice. The research suggested that cyberattacks led the team to a military building in Shanghai, and that hacking groups involved may have been state-sponsored.

Chinese officials have staunchly denied these claims , and have stated that the report had little technical basis to come to such conclusions about governmental involvement in cybercrime rings. In addition, officials have repeatedly stated that the country's laws take a harsh view on cybercriminals, and the government does not support such activity. 

The country has also said that not only has it been a victim of cyberattacks, but that the United States is waging a cyber campaign against China. In the forum, China's vice minister of the State Internet Information Office told listeners that China suffered over 6,000 overseas cyberattacks in January and February this year, and that China does not abuse the Internet -- a habit that other countries should emulate.

It is hoped that the forum would serve as a field for both the United States and China to iron out their differences, but as Obama believes cybercrime is now a "key" topic in talks with the country and potential trade restrictions on Chinese products are being considered, both nations have a long way to go.