China and Cyber Espionage

The Chinese government has a national policy of economic espionage in cyberspace. In fact, the Chinese are the world's most active and persistent practitioners of cyber espionage. (1)

The US government is thought to field up to 40,000 attempts each day by Chinese hackers to access its information technology systems. A spy network dubbed GhostNet, believed to be controlled from China, is alleged to have compromised nearly 1,300 computers used at NATO foreign ministries, embassies, banks and news agencies across the world. Today China has an estimated 100,000 hackers capable of stealing R&D on weaponry and incapacitating the command and control systems needed to deploy most modern armies that depend on these platforms, reports Dambisa Moyo. (2) China intends to help build its economy by intellectual property theft rather than by innovation and investment in research and development. China struggles with innovation as discussed on this page on October 11, 2012. (3) As Daniel Altman has said, “China has a long way to go before it will be anything like the US in its ability to foster innovation or entrepreneurship.”

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So, as Mike McConnell and colleagues report, “The bottom line is this: China has a massive, inexpensive work force, ravenous for economic growth. It is much more efficient for the Chinese to steal innovation and intellectual property—the source code of advanced economies—than to incur the cost and time of creating their own. They turn those stolen ideas directly into production, creating products faster and cheaper than the US and others, and cyberspace is an ideal medium for stealing intellectual capital. Hackers can easily penetrate systems that transfer large amounts of data, while corporations and governments have a very hard time identifying specific perpetrators.” (1) American think tanks are also key targets in a 'furious wave of cyber espionage' aimed at US government and business by China and other countries, according to the chairman of the House Intelligence Committee, as reported in USA Today. (4) Shawn Henry, the FBI's former top cyber security official, said overall cyber attack complaints reported to US authorities were increasing by 20% annually. (4) For a good review of the Chinese issue, check CNBC's 30 minute YouTube film, “Cyber Espionage: The Chinese threat.” Cyber issues with Iran are also very concerning. Defense Secretary Leon Panetta's recent warning that the United States will strike back against online hacking attacks underscores the Obama administration's growing concern that Iran could be the first country to unleash cyber terrorism on America. Panetta's unusually strong comments on October 11 came as former US government officials and cyber security experts said the United States believes Iranian-based hackers were responsible for cyber attacks that devastated computer systems of Persian Gulf oil and gas companies. The presumed Iranian cyber attacks hit the Saudi Arabian state oil company Aramco and Qatar natural gas producer RasGas using a virus known as Shamoon which can spread through networked computers and ultimately wipes out files by overwriting them. (5) References

1. Mike McConnell, Michael Chertoff, and William Lynn, “China's cyber thievery is national policy— and must be challenged,” Wall Street Journal, January 27, 2012
2. Dambisa Moyo, How The West Was Lost, (New York, Farrar, Strauss and Giroux, 2011), 110
3. Jack Dini, “China struggles with innovation,” Canada Free Press, October 11, 2012
4. Chuck Raasch and Kevin Johnson, “Think tanks hit by hackers from China, other nations,” USA Today, October 4, 2012
5. Associated Press, “US warning on hacking attack centers on Iran,” San Francisco Chronicle, October 13, 2012