Enemy of the State: China’s Relentless War of Cyber Espionage & Cyber Attacks Against the United States

China United States Cybersecurity
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China has long been a thorn in America’s side when it comes to nation state attacks, and for some various obvious reasons. China wants to be in the know about everything America does, as China feels threatened by America’s technology might.  Their quest for global domination requires China to learn everything they can about how America’s infrastructure works, which means stealing valuable information at any cost.  According to U.S. Senator Mark Warner, Democrat from Virginia, “Especially concerning have been the efforts of big Chinese tech companies – which are beholden to the CCP (Chinese Communist Party) – to acquire sensitive technology, replicate it, and undermine the market share of U.S. firms with the help of the Chinese state.”[i]  Republican Senator Jim Risch notes how “China is going to be a major competitor of ours in every way that there is…”[ii]

China and Cybersecurity

China clearly saw the role of high technology in the aftermath of America’s stunning victory in Gulf War I, in 1991. Impressed by the United States military power, China adopted a strategic policy  aimed at “winning local wars in conditions of modern technology, particularly high technology” regarding future military encounters.  In 2004, just a year after the start of Gulf War II, China’s strategy shifted to that of “winning local wars under conditions of informationization.” As the Chinese saw it, “informationization has become the key factor in enhancing the warfighting capability of the armed forces.”[iii]

A Rising Power in Cybersecurity

Then, in 2013, a study by the Academy of Military Science, titled, “The Science of Military Strategy”, emphasized the importance of cyberspace as a new, yet essential domain in today’s growing military affairs.  And in 2015, China further expressed the importance of cybersecurity in a Ministry of National Defense paper, titled “China’s Military Strategy,” defining cyberspace as a “new pillar of economic and social development, and a new domain of national security,” while also stating that “China is confronted with grave security threats to its cyber infrastructure” as “international strategic competition in cyberspace has been turning increasingly fiercer…” and “…countries are developing their cyber military forces.”[iv]

Two of China’s core objectives for cybersecurity are; (1). national security interests, (2). along with maintaining social order at home.  From a social order perspective, China’s leaders are well aware of the power social media can play for billions of people, and the consequential changes that can come about.  From the Arab Spring to Occupy Wall Street, China knows full well the power of the Internet in creating change, but potentially also, social unrest.  In the eyes of Chinese leaders, they only have to look back to 1989 and the Tiananmen Square protests as evidence of the power of public persuasion.  Who can forget the brave soul who stood firmly in front of a column of tanks as they advanced across the square, shifting his position each time the front tank tried to maneuver around him? The video was smuggled out of China and given to a worldwide audience for all to see. This, all well before the dawn of the Internet and social media platforms such as Facebook, Twitter, and Instagram.

China & Cybersecurity

From a national security perspective, protecting its critical infrastructure at home is of top concern for China. Interestingly, while countless publications have been authored detailing China’s cyber assault on the United States, China itself knows full and well that their country is a prime target also. In recent years, the Chinese government has taken steps to better protect its own “critical information infrastructure” (CII).  For example, operators of CII are instructed to follow specific security procedures, to store certain data within mainland China, along with utilizing new security review processes when acquiring IT equipment and services.[v]

New Law of the Land

In 2017, China enacted the Cyber Security Law of the People’s Republic of China, commonly referred to as the China Internet Security Law, as further evidence of pushing forward with robust requirements relating to cybersecurity. Notable highlights of the law include the following:

  • Clearly states requirements for the collection, use and protection of personal information.
  • Frequently mentions the protection of “critical information infrastructure”.
  • Requires personal information/important data collected or generated in China to be stored domestically.
  • Critical cyber equipment and special cybersecurity products can only be sold or provided after receiving security certifications.
  • Enterprises and organizations that violate the Cybersecurity Law may be fined up to RMB1,000,000.[vi]

As more Chinese gain access to the Internet and the luxuries of the new digital China, vulnerabilities to cyber threats are increasing also, prompting the country’s leadership to adopt aggressive cyber defense measures as a top priority.  China may very well be home to some of the largest technology firms in the world – regardless – they still rely heavily on other companies all throughout the world. Chinese leadership is pushing hard to build a true and viable cybersecurity ecosystem, one that supports cyber defense initiatives at home, while allowing for rapid and growth and expansion abroad for Chinese technology firms.

Recently, one such firm, Qihoo 360, heeded the call for a return to China in hopes of helping further the country’s cybersecurity agenda as a world leader.  Qihoo 360 actually delisted from the New York Stock Exchange in 2016, subsequently relisting in 2018 on the Shanghai exchange.  And while Qihoo 360 and countless other Chinese tech companies are vying to be leaders on the world stage, they often face heavy criticism for their questionable business activities.

Cyber Espionage at Unprecedented Levels

What’s on China’s wish list when it comes to nation state attacks? Almost anything, the experts say. Anything that can disrupt our economic way of life. Anything that can give the Chinese an upper hand over the Unites States.  In late January, 2019, the United States Justice Department announced criminal charges against Huawei Technologies, the largest communications equipment manufacturer in the world.  Included in the litany of charges in the court filings were bank and wire fraud, violating U.S. sanctions on Iran, along with conspiring to obstruct justice relating to the actual investigation.  FBI Director Christopher A. Wray noted how “firms like Huawei “pose a dual threat to both our economic and national security, and the magnitude of these charges make clear just how seriously the FBI takes this threat.”[vii]

Wray also stated how China is trying to “to get secret information about our trade, our ideas, and innovations…” using “…an expanding set of unconventional methods each time to achieve their goals.” Wray warned that the threat of cyber espionage from China “affects companies in all regions and in all sectors of the US economy.”[viii]

Authorities also unsealed a separate 10-count indictment in Washington state, charging two affiliates — Huawei Device Co. and Huawei Device USA — with conspiring to steal trade secrets from T-Mobile regarding a phone-testing robot.  According Annette Hayes, first assistant U.S. attorney for the Western District of Washington. “Huawei clearly knew it was part of an organized effort to steal technology…This is part of Huawei’s M.O.”[ix]

In the summer of 2020, Wray was on the offensive again, unleashing a blistering attack on the Chinese, arguing that their cybersecurity attacks amount to one of the largest transfers of wealth in human history.”  Said Wray during an address at the Hudson Institute, “The stakes could not be higher, and the potential economic harm to American businesses and the economy as a whole almost defies calculation.”

When asked if the United States had any idea of the financial damage incurred on America’s economy due to Chinese Cybersecurity attacks, Wray said he didn’t know of an exact number, but added that “every figure I’ve seen is breathtaking.”[x] Wray also added that “To achieve its goals and surpass America, China recognizes it needs to make leaps in cutting edge technology, but the sad fact is that instead of engaging in the hard slog of innovation, China often steals American intellectual property and then uses it to compete against the very American companies it victimizes, in effect, cheating twice.”[xi]

A Thirst for Global Power and Dominance

So, how did the world’s most populous country (1.4 billion) become such a force in cyberterrorism?  For starters, more than half of China’s population is online, so that’s quite a few hackers to choose from when the government goes looking for the best and brightest.  And China has been launching cyber-attacks for the last two decades, with great success.  As far back as 1999, the Chinese government was busy hitting foreign websites with a series of Denial of Service (DoS) attacks.  But that was child’s play compared to China’s current cyberterrorism climate – state sponsored, covert cyber espionage.  Over the years, China has been able to steal highly sensitive source code from Google, break into government databases, and much more.

Even more alarming was a report from the nonprofit Institute for Critical Infrastructure Technology describing how China’s espionage essentially supports the country’s 13th Five-Year Plan for the 2016 to 2020 period, which calls for technology innovations and socioeconomic reforms. China’s goal? An “innovative, coordinated, green, open and inclusive growth.” Even more disturbing from the report is the charge that most of the technology needed to make China’s plan a reality will come from theft of trade secrets from companies in other countries.[xii]

According to Michael Fuchs, senior fellow at the Center for American Progress, a think tank.[xiii] “I think it is very fair to say that China sees this cyber espionage for economic purposes as a necessary component of its national strategy to grow economically and to become a more powerful country, and that it is not going to stop — at least not with the current set of pressure that is being exerted by the U.S. and others.”

China shows no slowing down with its extensive list of cyberterrorism and cyber espionage measures.  It continues to attack America’s critical infrastructure, going after aerospace, technology, and much more.  Though there is not an exact number on the financial damage inflicted on the United States from China’s cyber-attacks, an independent commission recently reported the costs to be as high as $300 billion, with approximately 50 to 80 percent of the attacks coming from China.[xiv]

America’s response to the growing cyber threats from China – and other nation-state cyber attackers – has to be multi-faceted, and must include collaboration with the U.S. government and the private sector.  A recently issued United States Department of Defense Cyber Strategy noted that “we must ensure the U.S. military’s ability to fight and win wars in any domain, including cyberspace. This is a foundational requirement for U.S. national security and a key to ensuring that we deter aggression, including cyber-attacks that constitute a use of force, against the United States, our allies, and our partners.”[xv]

A History of Cyberattacks that Keeps Growing

Make no mistake, China has an army of hacker’s intent on attacking the United States with sophisticated methods in the ever-escalating cyber war.  Some of the more recent attacks tied to China include the following:

A Chinese national by the name of Lizhong Fan who worked for an Arizona counterterrorism center reportedly stole a massive amount of sensitive American security information and then suddenly disappeared.  Fan was hired by the Arizona Counter Terrorism Information Center in 2007, subsequently given access to large amounts of data – such as Arizona’s driver’s licenses list, police databases, and possible intelligence information.  Fan walked out of the building one day, never to return, but took with him a number of laptops and hard drives.  Not surprising, the Chinese have vehemently denied any of the charges levied against them.[xvi]

And a Shanghai-based group of hackers based in Shanghai with reported ties to the People’s Liberation Army in China had, in recent years, undertaken dozens of cyber-attacks on U.S. companies, such as Coca-Cola, Lockheed Martin, and others.  Embassy officials have once again denied that China’s involvement with thy cyber-attacks, stating such allegations were “unprofessional.”[xvii]

William Carter, deputy director of the Technology Policy Program at the Center for Strategic and International Studies (CSIS), views the professionalization of China’s cyber capabilities as another way to delegitimize the United States.  Specifically, not only is China seeking to gain influence in Asia, it desperately seeks to raise its standing in the international arena for all things related to cyber. In its push toward professionalization, China is therefore consolidating its private-sector capabilities with its military intelligence services, effectively focusing on long-term strategic goals, rather than disruptive attacks that are the norm for countries like Russia, North Korea, and Iran.  China wants to have its cake and eat it too. They want to be seen as good guys, but also a country with formidable cyberwarfare skills that can be unleashed at a moment’s notice.[xviii]

Pushing Aside America

China seeks a methodical, deliberate, and calculated approach to cyber warfare against the United States. Instead of making front page news with likes of the Sony attacks and WannaCry ransomware attacks like North Korea, the China are the “silent dragon”, pushing forth with a plan to seamlessly infiltrate America’s economic engine by any number of means.  According to security expert Kevin Townsend, “China is conducting a low and slow cyberwar, attempting to stay under the radar of recognition in the same way that individual hackers use low and slow techniques to remain hidden.  If this analysis of the long-term goal of China is correct, then the threat from Chinese cyber operations is more dangerous and insidious than commonly thought. The policy is not one of direct confrontation but more designed to slowly maneuver the global economy until dominance shifts from the U.S. to China.”[xix]

Further evidence of China’s aggressive tactics against the United States are highlighted in a recent report (2018) report from the National Counterintelligence and Security Center. Titled, “Foreign Economic Espionage in Cyberspace,” the report offers a scathing indictment of China’s nefarious activities:

“China has expansive efforts in place to acquire U.S. technology to include sensitive trade secrets and proprietary information. It continues to use cyber espionage to support its strategic development goals—science and technology advancement, military modernization, and economic policy objectives. China’s cyberspace operations are part of a complex, multipronged technology development strategy that uses licit and illicit methods to achieve its goals. Chinese companies and individuals often acquire U.S. technology for commercial and scientific purposes. At the same time, the Chinese government seeks to enhance its collection of U.S. technology by enlisting the support of a broad range of actors spread throughout its government and industrial base.”[xx]

The report’s most damming statement; “We believe that China will continue to be a threat to U.S. proprietary technology and intellectual property through cyber-enabled means or other methods. If this threat is not addressed, it could erode America’s long-term competitive economic advantage.”[xxi]

Shell companies.  Cyber espionage. Attacks on America’s critical infrastructure. Aggressive tactics on the world stage. China is flexing its muscles – make no mistake – a serious concern for America.

Avoiding Direct Conflict

As of now – and this may change – China’s intent is not to provoke direct conflict with the United States, rather, to observe, survey, and gain access to America’s technologies for helping China compete against the West.  No question, China wants to dominate the world in almost every imaginable way – economically, militarily, socially – yet they’re playing the game with a certain element of elusiveness.  At a Senate Judiciary Committee, assistant attorney general John Demers noted the following regarding the Chinese, “The playbook is simple — rob, replicate and replace. Rob the American company of its intellectual property. Replicate the technology. And replace the American company in the Chinese market and one day in the global market.”[xxii]

Almost every military, economic, and cybersecurity expert agrees that China is America’s biggest long-term strategic threat.  China wants to be what the United States has been for the past century – the world’s leading superpower, and it will use every available resource it has to achieve this lofty goal. Its military is growing, its economy is modernizing, and its technology capabilities are rapidly improving. China is on the move and the United States should be very concerned in terms of its long-term impact.

China’s defense spending is second only to the United States. It’s built and launched its first aircraft carrier.  It’s developing advanced defense systems. It’s also establishing overseas military bases.  Chinese President Xi Jinping has grand ambitions for his military, such as a pledge to fully complete the modernization of China’s armed forces by 2035, and by 2050, he wants a military in place capable of winning wars all throughout the world.

Huang Xueying, a member of the Chinese People’s Political Consultative Conference confidently stated how “We [China] are now more focused on boosting indigenous research and development capabilities in all possible ways, especially precision…”.[xxiii] That’s because in the no-so-distant past, China relied heavily on foreign technology, and when it couldn’t get it, it would simply try and copy it as best as possible. The Chinese are now pulling away from being an importer of other technologies, instead, pushing hard to design, develop, manufacture, and put to use their own intellectual property.  It’s based on national pride, and also a sounding to the world that China has arrived and is ready to dominate – at least in their eyes.

And according to Vice President Mike Pence, “China wants nothing less than to push the United States of America from the Western Pacific and attempt to prevent us from coming to the aid of our allies”.[xxiv]

Muddying the waters even more between the United States and China is the ongoing trade wars that have erupted in recent years. With the election of Donald Trump in 2016, the White House has become fixated on slapping China with a barrage of tariffs – and to no surprise – China retaliating back with their own financial muscle.  The back and forth tariffs and tough-talk seems to have no real end in sight, and while scores of studies have been published both embracing and criticizing the Trump’s tough stance on trade with China, some experts worry about that the real issue is being overshadowed – China’s growing cyber-espionage measures.

Perhaps the most ominous reflection regarding China came from FBI Director Wray, who in 2018 stated that “China’s goal, simply put, is to replace the U.S. as the world’s largest global superpower.”[xxv]

Trade wars. Cyber wars. The real battle for America in the new millennium will be with China.

About Charles Denyer

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Charles has helped thousands of businesses throughout the world in designing and implementing a wide-range of information technology & cybersecurity solutions. And he’s helped these very businesses grow by identifying their niche, launching new services, and ultimately obtaining a true competitive advantage in the marketplace.

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REFERENCES:

  • [i] Patricia Zengerle, CIA Says China, Russia, Pose Biggest Cyber Attack Threats to U.S., http://bit.ly/2Bmnl8I, Accessed on February 6, 2019.
  • [ii] Patricia Zengerle, CIA Says China, Russia, Pose Biggest Cyber Attack Threats to U.S., http://bit.ly/2Bmnl8I, Accessed on February 6, 2019.
  • [iii] Lyu Jinghua, “What are China’s Cyber Capabilities and Intentions?”, https://bit.ly/2WXnsSQ, Accessed on July 27, 2020.
  • [iv] Lyu Jinghua, “What are China’s Cyber Capabilities and Intentions?”, https://bit.ly/2WXnsSQ, Accessed on July 27, 2020.
  • [v] Paul Triolo, Rogier Creemers, and Graham Webster, “China’s Ambitious Rules to Secure ‘Critical Information Infrastructure’, https://bit.ly/2CPJRuI, Accessed on July 29, 2020.
  • [vi] KPMG Overview of China’s Cybersecurity Law, https://bit.ly/2EptCok, Accessed on July 29, 2020
  • [vii] Ellen Nakashima and Devlin Barrett, Justice Dept. charges Huawei with fraud, ratcheing up U.S.- China tensions, https://wapo.st/2Bos9KM, Accessed on February 7, 2019.
  • [viii] China Represents biggest, long-term threat to US Interests – FBI Director, http://bit.ly/2CtKDdn, Accessed on March 20, 2019.
  • [ix] Ellen Nakashima and Devlin Barrett, Justice Dept. charges Huawei with fraud, ratcheting up U.S.- China tensions, https://wapo.st/2Bos9KM, Accessed on February 7, 2019.
  • [x] Amanda Macias, ‘FBI Chief Slams Chinese cyberattacks on U.S. calls is ‘one of the largest transfers of wealth in human history,” https://cnb.cx/2ErWigq, Accessed on July 30, 2020.
  • [xi] Amanda Macias, ‘FBI Chief Slams Chinese cyberattacks on U.S. calls is ‘one of the largest transfers of wealth in human history,” https://cnb.cx/2ErWigq, Accessed on July 30, 2020.
  • [xii] Dorothy Denning, How the Chinese Cyberthreat Has Evolved, http://bit.ly/2TzDFKh, Accessed on February 8, 2019.
  • [xiii] Huileng Tan, China Sees Cyber Espionage as a ‘necessary’ part of its national security strategy, https://cnb.cx/2TEOcDT, Accessed on February 9, 2019.
  • [xiv] Council on Foreign Relations, a New Old Threat, https://on.cfr.org/2THCeth, Accessed on February 9, 2019.
  • [xv] United States Department of Defense, Summary – Department of Defense Cyber Strategy, 2018, http://bit.ly/2THCCbd, Accessed on February 9, 2019.
  • [xvi] Ryan Gabrielson and Andrew Becker, Intelligence Gap: How a Chinese National Gained Access to Arizona’s Terror Center, http://bit.ly/2BtRhzy, Accessed on February 11, 2019.
  • [xvii] Hanqing Chen, A Recent History of China’s Cyber Attacks on the United States, http://bit.ly/2BtHOs6, Accessed on February 11, 2019.
  • [xviii] Paul Park, Experts examine Asia’s approach to Cybersecurity, https://brook.gs/2C85NgY, Accessed on March 17, 2019.
  • [xix] Kevin Townsend, The United States and China – A Different Kind of Cyberwar, http://bit.ly/2Cp1D4q, Accessed on March 17, 2019.
  • [xx] 2018 National Counterintelligence and Security Center. Titled, “Foreign Economic Espionage in Cyberspace, Accessed on July 13, 2020.
  • [xxi] 2018 National Counterintelligence and Security Center. Titled, “Foreign Economic Espionage in Cyberspace, Accessed on July 13, 2020.
  • [xxii] Ellen Nakashima, Top FBI Officials warns of strategic threat from China through economic and other forms of espionage, https://wapo.st/2CpJYd0, Accessed on March 18, 2019.
  • [xxiii] Kristin Huang, China Steps up Efforts to Develop Military Technology to Challenge US Dominance, http://bit.ly/2VpPJii, Accessed on April 4, 2019.
  • [xxiv] Frank Langfit, Pence Delivers Inflammatory Speech Against Chinese Government, https://n.pr/2CXuAo9, Accessed on April 4, 2019.
  • [xxv] Huileng Tan, China Sees cyber espionage as a ‘necessary’ part of its national strategy, experts say, https://cnb.cx/2TEOcDT, Accessed on March 20, 2019.
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