Google's Eric Schmidt calls China 'most sophisticated hacker' in new book

Executive chairman warns US companies of consequences of 'not taking the same path of digital corporate espionage'

The executive chairman of Google, has criticised China in his new book, describing the country as the world's "most sophisticated and prolific hacker".

According to extracts quoted by the Wall Street Journal, Schmidt's new book, The New Digital Age, paints a picture of a dangerous superpower using "illicit competition" to see off rivals.

"The disparity between American and Chinese firms and their tactics will put both the government and the companies of the United States at a distinct disadvantage," Schmidt writes, because "the United States will not take the same path of digital corporate espionage, as its laws are much stricter (and better enforced) and because illicit competition violates the American sense of fair play. This is a difference in values as much as a legal one."

Google has clashed repeatedly with the Chinese authorities. Beijing reacted furiously to the company's claims that Chinese authorities were hacking Gmail accounts; last year Google's service was blocked as the Communist Party appointed its first new leader in a decade.

Smith and co-author Jared Cohen call China "the world's most active and enthusiastic filterer of information" as well as "the most sophisticated and prolific" hacker of foreign companies.

But the technology China uses so effectively may well come back to haunt it, the authors believe. "This mix of active citizens armed with technological devices and tight government control is exceptionally volatile," they write, suggesting that that such a situation could lead to "widespread instability". China, they predict, will see "some kind of revolution in the coming decades."

Schmidt's comments come a day after the New York Times and Wall Street Journal revealed they had been the victim of Chinese hackers.

The book is likely to inflame the already tense relationship between Google and China. Last year, in an interview with the Guardian, co-founder Sergey Brin warned against China's attempts to censor the internet.

Last month Schmidt told an audience at Cambridge University that the internet would win out in the end. "There's no country where the situation has worsened with the arrival of the internet," he said. "Citizens can use their mobile phones to raise the cost of corruption. And even in China, the regime can be shamed – when there was a train crash recently the government tried to hush it up, but people began posting pictures on [the Twitter-like chat service] Weibo, and the story got out.

"The strike by journalists at Southern Weekly over censorship – the fact that they could do that and then go back without trouble shows that the government, even that autocracy, is sensitive to the fact that it can be shamed online."