Louis Freeh, who ran the FBI for eight years until 2001, said the threat of criminal charges or jail time would do little to prevent state sponsored hackers from continuing to steal valuable intellectual property.

Free said that it was like trying to serve a subpoena on Osama Bin Laden.

He was talking in Australia where the country is getting a little bit miffed at Chinese hackers. An investigation by The Australian Financial Review and Nine News confirmed China's Ministry of State Security (MSS), was responsible for the recent wave of attacks on Australian companies.

These formed part of what is known in cyber circles as "Operation Cloud Hopper", which was detected by Australia and its partners in the Five Eyes intelligence sharing alliance.

The attacks on Australian companies are in breach of an agreement struck between Premier Li Keqiang and former prime minister Malcolm Turnbull in April 2017 to not steal each other's commercial secrets.

According to the Financial Review Freeh believes a formidable cyber deterrence capability is the best defence. He said that offensive cyber capabilities were similar to the doctrine of mutually assured destruction during the Cold War, which he said ultimately prevented nuclear weapons being used.

"All the major powers, including Australia, know the cyber capacity of their adversaries", he said.

"They can assess pretty accurately the capacity of their adversaries and allies and that is the single most reason why we have not seen a cyber war. it's the same reason nobody has fired a nuclear weapon in 75 years."

Freeh said countries had the capability to shut down power grids, transport networks and financial systems, but had not done so as it would potentially trigger a far larger retaliatory attack.

He said offensive cyber capabilities had been used after attacks in the past, but the response was proportionate.

"We've seen enough attacks that have given countries the basis to retaliate and they have in many cases, but the retaliation, if you look at it from 30,000 feet, is very proportionate and very measured given the initial attack."