This piece originally appeared in the Wall Street Journal in January 2012.

Only three months ago, it would have been a violation of national security rules for us to share what we are about to say, even though, as the former Director of National Intelligence (DNI), Secretary of Homeland Security, and Deputy Secretary of Defense, we have long known this to be true: The Chinese government has a national policy of economic espionage in cyberspace. In fact, the Chinese are the world’s most active and persistent practitioners of cyber espionage today.

Evidence of China’s economically devastating thefts of proprietary technologies and other intellectual property of U.S. companies is growing exponentially, and only in October 2011 were the details declassified in a report to Congress by the Office of the National Counterintelligence Executive. By contrast, as a matter of official national policy, the United States does not engage in or allow economic espionage.

The report is a powerfully frank summation of what we believe is the potentially catastrophic impact these actions could have on the U.S. economy and global competitiveness over the next decade. Evidence indicates that China intends to help build its economy by intellectual property theft rather than by innovation and investment in research and development, two strong suits of the U.S. economy. Indeed, the nature of the Chinese economy today offers a powerful motive to do so, potentially costing the U.S. our technological leadership, billions in capital and probably millions of jobs.

For the last two years, we each have been speaking and writing publicly about the growing threat of potential cyber attacks on our critical infrastructure – the ability of cyber terrorists to cripple our financial networks or power grid. But this report finally reveals what we could not say before: That the threat of cyber ‘economic espionage’ looms even more ominously.

According to 2009 estimates by the United Nations, China today has a population of 1.33 billion people, with 468 million, about 36 percent of the population, living on less than $2 a day. While Chinese poverty has declined dramatically in the last 30 years, income inequality has increased, with much greater benefits going to the relatively small portion of educated people in urban areas where only about 25 percent of the population lives.

The statistical bottom line is this: China has a massive, inexpensive workforce, ravenous for economic growth. It is much more efficient for the Chinese to steal innovations and intellectual property -- the ‘source code’ of advanced economies – than it is for them to incur the cost and time of creating their own. Instead, they can and do turn those stolen ideas directly into production, creating products faster and cheaper, and outselling the United States and others worldwide. There is ample public evidence this is already occurring.

Cyberspace is an ideal medium for the theft of intellectual capital because of the ability to easily penetrate systems for transfer of large amounts of data, and the difficulty in confirming specific perpetrators.

Unfortunately, it is also difficult to extrapolate an estimated economic cost of these thefts to the U.S. economy – the report to Congress calls the cost “large,” and notes that this includes corporate revenues, jobs, innovation and impacts to national security. Although a rigorous assessment has not been done, we think it is safe to say that “large” easily means billions of dollars and millions of jobs.

So how do we protect ourselves from this economic threat? First, we must acknowledge the threat's severity, understanding that the impacts are more long term than immediate. And we need to respond to this ‘economic espionage’ with all of the diplomatic, trade, economic and technology tools at our disposal, enhancing them as needed.

The report to Congress notes that the U.S. Intelligence Community (USIC) has improved its collaboration to better address cyber espionage in the military and national security areas. Yet today’s legislative framework severely restricts the USIC from fully addressing domestic economic espionage. The USIC must have a stronger role in collecting and analyzing this economic data and making it available to appropriate government and commercial entities.

Congress and the administration must also create the means to actively force more information sharing. Frankly, while organizations proclaim to share information, it is usually the opposite, and this must be actively enforced.

The U.S. also must make the broader investment in education to produce many more workers with science, technology, engineering and math (STEM) skills. Our country reacted to the Soviet Union’s 1957 launch of Sputnik with math and science education investments that launched the age of digital communications. Now is the time for a similar approach to build the skills our nation will need to compete in a global economy vastly different from 50 years ago.

Finally, Corporate America must do its part, too. If we are to ever understand the extent and impact of cyber espionage, companies must be more open and aggressive about identifying, acknowledging and reporting cyber theft incidents. Already, Congress is considering legislation to require this, and the idea deserves support. Additionally, companies must invest more in the training of staff in cyber skills; it is shocking how many cyber breaches result from simple human error.

In this coming election year, debate over the U.S. economy will be on center stage, as will China and its role in issues such as monetary policy. If we are to act quickly to prevent irreversible long term damage, the economic issues behind cyber espionage must share some of that spotlight as well.