China, Cyber Warfare and Challenges for the Future

Monday, April 09, 2012

Pierluigi Paganini

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(Translated from the original Italian)

When discussing cyber warfare, we cannot ignore the role played by nations such as China, U.S. and Russia.

In particular, the Beijing government has distinguished itself in recent years for two key aspects:

  • the aggressive strategy cyber conducted towards foreign countries
  • the country's willingness to become independent technologically

The second aspect is crucial and strongly correlated to the first, as in recent years the technology push in China was alarming and it's one of the principal reasons for its success.

Despite the situation inside the country, such as considerable economic hardship in rural areas, the central government has invested and encouraged private companies to invest in various capacities for developing and acquiring advanced technological know-how.

As I said the two aspects are highly correlated; China, through private companies and groups of sponsored hackers, has promoted several operations for the purpose of acquiring sensitive information on foreign technology projects, and on more than one occasion has been conducting cyber espionage against companies and the governments of other nations.

The aggressive strategy has not spared anyone and sometimes has produced devastating consequences for victims, as in the case of Nortel which ended up in bankruptcy.

The crux of this strategy is espionage, the concerted actions planned with meticulous attention against strategic objectives, the use innovative techniques of espionage that have introduced the widespread use of malware to infect targeted systems, the use of operations as a diversionary DDoS attacks to conceal other operations, and the choice of auxiliary vulnerable targets such as contractors to access data from governments and government agencies.

China has and is doing everything possible to be independent from other countries like the US and Japan for critical technologies, and the espionage is just the dark side of this effort.

The Chinese 2006 Medium to Long Term Plan on Science and Technology (MLP) announced:

“Facts have proved that, in areas critical to the national economy and security, core technologies cannot be purchased.”

There is a strong commitment to develop inside the country sensitive technology in an effort to not cede any kind of advantage to foreign industries. Let's consider another crucial factor, the relatively low cost of manufacturing in China has attracted several foreign companies and their production in the country is giving China a great advantage. In my opinion, once the production is decentralized in other countries, it is difficult to try to maintain any trade secrets.

Reducing costs is essential for a globalized business, but is could also be a high risk, as a thriving business today could be compromised in the future due to production secrets exposure.

The MLP sets the goal of China becoming an “innovative nation” by 2020 and a “global scientific power” by 2050, and the objectives are really ambitious but feasible in my opinion.

"Looking into the future projection which scenario we should expect?"

China's growth in terms of technology and strengthening its presence in cyber space will no doubt result in an increase in cyber operations against the nation itself. Many industry experts believe that due to the imbalance between a cyber offense strategy that is so aggressive and its cyber defense capabilities, it could be the origin of significant technological problems for China.

China over the years has benefited from a surprise effect due to the lack of government capabilities in cyber security and a lack of awareness cyber threats. Today the scenario has changed profoundly, every nation is striving for the establishment of a cyber strategy that can guarantee the security of the nation in terms of technology.

In this context, cyber operations are more complex than in the past, and China will certainly improve its defensive capabilities to preserve the knowledge acquired through years of hard work, research and espionage.

The rise of China economically and its attempt at consolidation of power may be hampered by a range of phenomena though, which I will try to summarize in the following list:

  • Counterintelligence activities against Chinese companies is an obvious consequence of the expansionist policy of China in the technology sector. Chinese companies will surely be the target of cyber espionage campaigns no less aggressive than those conducted by China in previous years. Technological innovation will play a key role in this regard, for example the possibility of using Zero-Day exploits.  Espionage will not only directly affect companies, but also their final products and their users. The hack of a product distributed on a global scale would have devastating consequences.
  • The pressures exerted by the phenomena of Hacktivism, could absorb considerable energy on the technological front. The phenomenon is new, widespread and unpredictable in its growth. Groups like Anonymous have the proven ability to attack the main computing resources of a country, though the attacks are largely confined to defacement of websites, in future they could steal and disclose classified information.
  • The western approach to the Chinese was mainly driven by the will of the West to penetrate promising new markets. Any shift in the center of gravity in the global economy might collapse the Chinese economic model, impacting the leading companies in the country who have a history of suspicious state involvement in their enterprises. An emblematic case is that of Huawei, China's emerging technology superpower, which has been dogged by allegations of its close links to Chinese military intelligence, and for this reason the its partnership with Symantec has been ended.
  • The desire of the new Chinese generation to full opening of the nation characteristic of the Western life style, and that China has always rejects this effort acts of censorship. The pressure is growing and will demand more and more effort on the part of the government  in terms of domestic politics.

These four components are the real challenge for the future of a country that has grown like no other... Is China really ready?

Cross-posted from Security Affairs

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