Hey look, another story about the Chinese government spying on foreign companies through the internet, hacking accounts, and dropping malware on people!

This time the British intelligence agency MI5 warned a large range of British companies in 2008 about the threat of Chinese espionage and methods used by Chinese spies to entrap foreign executives.

But a starkly different picture emerges from the document circulated by MI5, Britain’s domestic security service. The Sunday Times account, quoting from the document, said that officers from the People’s Liberation Army and the Ministry of Public Security had approached British businesspeople at trade fairs and exhibitions with offers of “gifts” that included cameras and computer memory sticks that were found to contain bugs that provided the Chinese with remote access to the recipients’ computers.

“There have been cases where these ‘gifts’ have contained Trojan devices and other types of malware,” the document said, according to The Sunday Times. The accuracy of the paper’s citations from the document was verified by the two people contacted by The New York Times who said they had seen the document.

The MI5 report described how China’s computer hacking campaign had attacked British defense, energy, communications and manufacturing companies, as well as public relations companies and international law firms. The document explicitly warned British executives dealing with China against so-called honey trap methods in which it said the Chinese tried to cultivate personal relationships, “often using lavish hospitality and flattery,” either within China or abroad.

“Chinese intelligence services have also been known to exploit vulnerabilities such as sexual relationships and illegal activities to pressurize individuals to cooperate with them,” it warned. “Hotel rooms in major Chinese cities such as Beijing and Shanghai which have been frequented by foreigners are likely to be bugged. Hotel rooms have been searched while the occupants are out of the room.”

At this point, I’d be shocked if American intelligence agencies haven’t distributed robust documents warning of the threat the Chinese government poses to their industrial secrets and risks associated with traveling in China. The bigger question, though, is how long will the press, the public, and Western governments treat this as they do now – just the cost of doing business with China or a predictable byproduct of China’s rise as an economic power. Spying, hacking, cheating, stealing, and blackmail are not appropriate or acceptable behaviors for any member of the global community, be it individuals, nations, corporations, or terrorist cells. Some things are just plain wrong and need to be identified as such. Moreover, if Chinese spy agencies are the ones hacking and blackmailing foreign business leaders as MI5 suggests, Western governments need to deal with this directly and have it impact the outcome and progress of dealings with the Chinese government.

Kowtowing to the Chinese economy is not going to produce desired outcomes on human rights and peace – that has long been clear. But this sort of espionage and blackmail perpetrated by the Chinese government shows that obsequiousness towards China will not give Western corporations or governments any advantage in the pursuit of economic success with Chinese markets. As a result, the pretense of economics superseding all other needs must be dropped when it comes to Western dealings with China. The Chinese government must be dealt with directly and on our terms – regarding human rights, labor rights, and the rule of law. Anything less is blind idiocy in the face of the lie of balanced economic progress.