Welcome back to our series on the ties between corporate security and China’s Five Year Plan (FYP), which serves as the country’s national economic and policy roadmap. The FYP’s five key themes are Innovation, Coordinated Development, Green Growth, Openness, and Inclusive Growth.
To read the previous post in this series, please see:
- Part 1: Overview
- Part 2: Innovation-Driven Development
Why Corporate Leaders Should Read China’s Five Year Plan: Part 3
China’s Green Growth Initiatives
When American Superconductor (NASDAQ: AMSC) lost $1 Billion of Intellectual Property as a result of a 2011 IP-theft operation by the Chinese government, it put AMSC onto its heels. Not only had China successfully stolen its proprietary code to run wind turbines, it also began to undercut the global market,making it even harder for AMSC to regain its place in the market. For China, the theft of AMSC IP was not only a strategically important economic opportunity, it also dovetailed with national efforts to address China’s pollution problem using an advanced energy-saving technology. This green theme is key in China’s 13th Five Year Plan and should help industry leaders to think critically about their own cyber risk posture.
China’s Pollution Problem
China’s pollution problem is prolific. As the world’s top carbon dioxide polluter, China emits over one-quarter of the world’s carbon dioxide. China made significant efforts to address its environmental degradation and invest in its clean energy industries; first in its 12th FYP – hence the AMSC incident – then carried forward with its 13th FYP. Ten of the 25 targets in the 13th FYP are environmentally related, and all ten are binding targets that must be achieved by 2020.
China’s efforts to promote green growth can be categorized into four main initiatives:
- Expand Nationwide Monitoring and Evaluation Metrics
- Set Energy and Carbon Dioxide Emissions Intensity Reductions
- Improve Air, Soil, and Water Quality
- Support Domestic Green Industries
These specific initiatives have potential implications for U.S. businesses. While clearly everyone can benefit from living in a less-polluted environment, that is not the issue. The issue comes, in part, with the means to the end—it has everything to do with how China will successfully meet its binding environmental targets by 2020.
A Lean, Green, Cyber Machine
In order to meet its environmental targets, China must be more proficient at measuring, evaluating, and forecasting pollutants and the solutions put in place to address identified issues. They also will need stronger regulation and stricter enforcement for any violators. Lastly, they need to incentivize and invest in green industry and technologies. So what’s China’s plan?
China’s 13th FYP calls out the intention to support its domestic, energy-saving and protection industries into globally competitive firms, especially two strategic and emerging industries: new energy vehicles and advanced energy-saving technologies and equipment. Industries involved with soil remediation are also singled out for special support in the FYP. The support for these green-related industries overlaps with some of China’s innovation-driven development efforts discussed in Part 2 of this blog series.
China has previously been successful in creating global dominance for Chinese companies in identified strategic emerging industries. Over the past decade—through state-directed subsidies, focused innovation, and illicit cyber activities—China established its global dominance in the solar and wind sectors. Ultimately this created overcapacity, distorted the market, and unfortunately, pushed many non-Chinese firms off the cliff of bankruptcy. From 2009 to 2014, 112 U.S. and European solar companies have declared bankruptcy, closed, or were acquired due to weakened market conditions.
We know that China blatantly violates the IP rights of other companies, and as we have seen with AMSC, SolarWorld, and many other companies. Hacking has become an important Chinese tool to achieve national goals. It is clear that China’s focus on new energy vehicles and advanced energy-saving technologies and equipment will mean that U.S. business leaders must protect their companies and prepare for the worst case scenario.
Turn Over a New Leaf
To defend against advanced adversarial cyber operatives like China, today’s business leaders need to strive for resilience. A resilient organization has the capability to tolerate a wide-array of risks and challenges without faltering. So how can you create more cyber resiliency for your organization?
Today’s most cyber resilient companies have knowledgeable leadership teams that understand the business implications of the nuanced cyber risk issues that affect their strategy, operations, stakeholders, and their bottom line. While everyone has a shared responsibility when it comes to cyber risk, corporate leaders have the greatest responsibility; and those responsibilities vary with each leadership position.
If you want to learn more about how to build and execute a risk management strategy that considers all types of cyber issues, contact us to schedule a Cyber Resolve training session in your boardroom or c-suite. We will help you mitigate cyber risk and confidently manage and oversee your cyber strategy.
Our next and final blog in this series will focus on China’s Inclusive Growth initiatives and highlight the interplay of China’s cyber operations with its efforts to create a “harmonious society” focused on addressing issues related to poverty, healthcare, and education.
To read the previous post in this series, click here.