For a little background
Google's Eric Schmidt has a new book out that has been quoted in The Wall Street Journal. In the book, Schmidt says the Chinese government is "the most sophisticated and prolific" hacker of foreign companies.
He zeros in on the danger of state-sponsored industrial espionage, which is that if the Chinese government continues to be rewarded for this behavior (in terms of getting away with and profiting from using hack attacks to steal intellectual property and other information) then the only way to compete will be for all governments to do the same.
Schmidt's views on China's large-scale cracker program come amid revelations that Chinese hackers (almost certainly run or sponsored by the Chinese government) have been routinely hacking and stealing information from The New York Times, The Wall Street Journal, Bloomberg News and The Washington Post.
From the Times: "Among those targeted were journalists who had written about Chinese leaders, political and legal issues in China and the telecom giants Huawei and ZTE."
Also this week: Twitter announced that it had been hacked and that the private information from a quarter of a million accounts had been stolen. The "extremely sophisticated" hack was "not the work of amateurs" and Twitter security specialists do "not believe it was an isolated incident." They also know the attack originated in China.
Of course, Schmidt has intimate knowledge of Chinese industrial espionage. When he was CEO of Google, Chinese hackers infiltrated Gmail to target pro-Democracy writers, and probably also stole Google intellectual property that would be of great value to its Chinese competitors: http://en.wikipedia.org/wiki/Operation_Aurora
The Chinese government, meanwhile, is shocked -- SHOCKED! -- to have been accused of any kind of wrongdoing. (See video for the Chinese government's reaction, or something like it.)