We fear a massive cyber-attack. This is the only remotely valid reason for responding carefully, but inaction merely worsens the prospect of disasters to come. And the administration is doing precious little to improve our defenses in the meantime.
The more complex a socio-economic system becomes, the more vulnerable it is to any kind of attack. Our vast infrastructure offers countless target nodes, while our centralized systems for distributing everything from energy to foodstuffs rely on national networks and long-distance supply chains. An African village wouldn’t suffer much from a cyber-attack; a Chinese town would feel it, but not severely. An American city would shut down.
Which means you can’t play tit-for-tat and let the Chinese continue to escalate. You have to hit their military and intelligence computer networks with shocking force — demonstrating what we could do to their showcase cities, if they don’t behave.
They have to be punished for their massive theft of our secrets and intellectual capital — as well as for the direct damage they do.