Is Washington to Blame for Chinese Cyberterrorism?

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Last week's bombshell story – an American cyber-security firm's report linking the Chinese military to scores of hacking attacks on American businesses – had the distinction of simultaneously being deeply troubling and completely unsurprising.

Troubling, because of the size of this hacking campaign. But unsurprising, if we judge by Washington's reaction to the news.

(Read More: A New Cyber Cold War Tests US Ties to China)

Consider the report. Virginia-based Mandiant Corp. found that spying on the U.S. by the People's Liberation Army reaches far beyond targets of "routine" interest. Though there are examples of security breaches from all corners of the economy, the Army's target list reveals an enthusiasm for companies that monitor domestic U.S. oil and gas pipelines – which means, China is probing for access to the controls of our energy infrastructure.

(Read More: Protecting the Nation's Electric Grid From Cyberattacks)

But official Washington was not caught off guard by these revelations. House Intelligence Committee Chairman Mike Rogers (R.-Mich.) called the study "entirely consistent" with his committee's prior findings.

And consider the White House's tepid response.

In the face of evidence that the Chinese government is treating industrial espionage as a military campaign, the Obama Administration reiterated to the press corps just how serious it takes cyber crime, issuing an executive order for government agencies to share more information on hacking attacks, and releasing a list of best practices for companies to guard against online predators. But it didn't do anything, unfortunately, to actually deter China from this behavior.

(Read More: China to US on Hacking: You've Got No Proof)

You'll have to forgive the White House if it was barely roused from its slumber on this issue because it is no secret that hacking happens. And it happens a lot. A recent Washington Post article revealed that nearly every institution, business interest, and non-governmental organization in the district (including yours truly at the Alliance for American Manufacturing, since 2009) has been the victim of hacking attacks from Beijing in recent years. According to Shawn Henry, who until recently oversaw major crime and cyber-security investigations for the FBI, there are two types of organizations in the world: Those that know that their networks have been breached, and those that don't.

(Read More: Why Companies Keep Quiet About Cyberattacks)

But acknowledging this must not serve as an excuse to roll over. Our government acts as if China's policy stance is just an unfortunate fact of life, when instead it could respond accordingly. And doing so isn't nearly as complex as some suggest.

Do we want to stop the Chinese military from stealing trade secrets and compromising our infrastructure? Yes. So how about we stop funding it?

(Read More: Americans Willing to Spend More to Thwart Cyberattacks: Survey)

Remember, our huge trade deficit with China — worth a few hundred billion dollars annually, and $315 billion in 2012 alone — effectively bankrolls its massive police state.

And when we actually threaten to put an end to this imbalanced trade relationship — whether by a procedural Senate vote in 2005 on legislation to address Chinese currency manipulation, or by mounting international pressure ahead of a G-20 meeting in 2010 — Beijing has responded, and not with the all-out trade war predicted by many economic pundits. No, when it comes to China's egregious currency peg, Beijing has actually, and quietly, adjusted its exchange rate.

So if we made Beijing worry about the source of the funding for its spying and hacking campaigns, we'd see an end to much of this bad behavior. And we'd also move closer to a level playing field for U.S. exports.

As recent history makes clear, Beijing actually backs down in those rare instances when we call them out their cheating. It's a baffling shame, then, that we so rarely do so.

(Read More: 5 Ways to Protect Your Business From a Cyberattack)

Scott N. Paul is President of the Alliance for American Manufacturing (AAM), a partnership established in 2007 by some of America's leading manufacturers and the United Steelworkers union. Mr. Paul and AAM have worked to make American manufacturing a top-of-mind issue for voters and our national leaders through effective advocacy, innovative research, and a savvy public relations strategy.