Germany's domestic intelligence service has warned the country's companies that China is increasingly using electronic espionage to get trade secrets.
The Internet's increasingy being used as a tool for industry espionage
"We have noticed increased activities by Chinese hackers of late," Elmar Remberg, the vice president of Germany's Federal Office for the Protection of the Constitution told the Financial Times Deutschland newspaper.
Other Western states have also reported an increase in industrial espionage by China, he added.
The Russians still prefer classic espionage
Experts say industrial espionage costs German companies billions of euros each year. Russia and China -- two of Germany's most important trading partners -- are the worst offenders, according to Remberg.
"Whereas the Russian services operate primarily in the classic form, with agents, the Chinese are mainly active in the electronic sector," he said.
One problem is the increasing use of Internet telephony by companies, Remberg said.
"This is where two dangers are coming together: communication per se and the Internet," Remberg said, adding that interns might also pose a problem.
Companies that develop or distribute high technology are especially prone to being spied on, according to the Consortium for Industry Safety (ASW). Smaller and medium-sized firms that develop highly specialized products are also targets, according to ASW's executive director, Berthold Stoppelkamp.
Security at the gate isn't enough
He said that smaller companies were also more vulnerable to spy attacks as the larger ones had already established security departments for the most part.
"Security is not only about having a guard at the door," Stoppelkamp said, adding that IT systems had to be protected and employees needed to receive training in how to behave when suspicious things happened.
Chinese groups not welcome?
Espionage and counterfeiting contribute to China's huge export success, according to the German Office for Foreign Trade (bfai), a government agency.
"An increasing number of German companies no longer want to host Chinese delegations, because the danger of lifting trade secrets is too high," said the bfai's China expert, Corinne Abele.
German original (left) vs. Chinese counterfeit
She added that no numbers on product piracy are available. While Chinese customs officials are meant to stop counterfeited products from leaving the country, they appear to only do random checks.
"We'll certainly have to deal with the problem for another couple of years," Abele said.
China to surpass Germany
China is expected to surpass Germany as the world's leading exporter next year. German officials announced Thursday that the country was the world's biggest exporter in 2006, with a record foreign trade surplus of 162 billion euros ($209 billion).
Germany is still shipping more goods abroad than anyone else
Exports climbed 13.7 percent from a year ago to 893.6 billion euros while imports rose 16.5 percent to 731.7 billion euros, officials for the federal statistics office said.
The 162-billion-euro surplus was around 2.5 percent more than the 2005 surplus of 158.2 billion euros.
Exports remained a driving force in the German economy, which grew at a faster than expected 2.5 percent in 2006 -- the best performance in six years.