Report: WH drafting possible sanctions against China for hacks

The Obama administration is drafting an unprecedented series of economic sanctions designed to punish China for its persistent hacks on U.S. networks, according to The Washington Post.

The newspaper, citing anonymous sources, reported that the administration has not decided whether or not it will issue these sanctions. Officials are expected to make the decision in the next few weeks.

“It sends a signal to Beijing that the administration is going to start fighting back on economic espionage, and it sends a signal to the private sector that we’re on your team,” an official told The Post. “It tells China, enough is enough.”

The move comes ahead of Chinese President Xi Jinping’s official state visit in September. China’s cyber behavior is on the docket, with Secretary of State John Kerry and White House officials confirming that the president will address concerns about Chinese hacking during the meeting.

This sensitive visit might delay the implementation of any potential sanctions, officials told The Post.

“I can see the White House saying, ‘Let’s not do [sanctions] while the head of state is here,’” one administration official told the newspaper. “I can see maybe they’d shift the timing by a few days … but I can’t imagine they’d shift the overall decision.”

If the White House moves forward with the sanctions, it would be the first use of an executive order signed by the president in April that gave the Treasury Department the authority to impose sanctions on individuals or entities behind cyberattacks and cyber espionage.

In order to be designated for sanctions, an individual or entity must carry out a significant and malicious cyber action, such as attacking critical infrastructure, disrupting major computer networks or stealing and benefiting from intellectual property or trade secrets.

Officials say a number of different agencies are contributing to the designations, including the Treasury and Justice departments, intelligence agencies and the White House. The Justice Department is contributing evidence that it has gathered to support possible indictments for economic espionage against Chinese entities, officials said.

The sanctions, however, would not be in retaliation for China’s alleged hack on the Office of Personnel Management revealed this spring. Despite mounting pressure from lawmakers and others, the White House has declined to publicly attribute the massive attack to Beijing.

There are risks associated with placing sanctions on China.

Experts say that China would be likely to retaliate for any imposed sanctions, possibly by freezing American companies out of its markets.

Others say China’s preferential appropriations policies already effectively discriminate against U.S. firms.

Other countries besides China may be targeted in the sanctions package, including Russia, which is thought to be behind the hack of the Pentagon’s Joint Staff unclassified email system earlier this month.