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Hidden Dragon: The Chinese cyber menace

'Any decent government does industrial espionage'

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Recent reports have painted a conflicting picture of Chinese cyber-warfare capabilities. A recent report [PDF] by The Office of the National Counterintelligence Executive (ONCIX), which was presented to Congress, named and shamed China and Russia for running cyber-espionage campaigns geared towards stealing the US's technology and economic secrets. The report, straightforwardly titled Foreign Spies Stealing US Economic Secrets in Cyberspace, described China as the source of the majority of intrusions without blaming its government directly.

Some observers suggest that the US intelligence community has decided to publicly finger China and Russia over cyber-espionage only after diplomatic efforts failed to yield a result.

China routinely and angrily denies any involvement in cyber-espionage, arguing that it is frequently victimised by these types of attacks itself, and most recently said that it wanted to help improve cyber-security defences across all nations.

Regardless of what's happening elsewhere we've frequently heard praise for the staffers of China's computer emergency response centres. Over several years various businesses and teams in the country have been more pro-active and helpful in working with organisations, such as Spamhaus, in dealing with spam.

However evidence showing that Chinese denials over the use of hacking tools ought not to be taken at face value emerged unexpectedly earlier this year. An extract from a propaganda film illustrated the use of custom tools to hack websites run by the banned spiritual movement Falun Gong. The video named the PLA's Electrical Engineering University as the source of the utility.

Security experts who have visited China praise its universities. HD Moore, the developer of Metasploit and chief security officer at Rapid7, said: "They are focused on defending China and malware research."

Moore, who toured computer science departments in universities in Beijing and elsewhere, found students frequently had an aptitude for malware analysis, and saw the potential for work in this area. However those with expertise in exploit development were "few and far between", he said. "Not that many people in China are doing penetration testing work either," he added.

A recent report by the Australian National University concludes that China's cyber-warfare capabilities, at least, are actually mediocre at best. Desmond Ball, a professor at the Australian National University, argues China's offensive capabilities are limited. Local internet systems are notable for their deficiencies and vulnerabilities, he adds.

Information security experts, particularly with an intelligence background remain wary of China's capabilities.

Prescott Winter, chief technology officer for the public sector at HP ArcSight and former NSA associate deputy director of national intelligence for information integration, said that China remains a major threat.

"China is a major player in cyber-espionage. It has a well-constructed underground economy that is targeting intellectual property. Western governments are also at the front line," he said, adding that hackers often cause collateral damage when they access and ransack targeted networks.

Other former intelligence officials argue that the focus on China hides the greater truth that everyone is engaged in cyber-espionage.

"Every country (especially China, Russia, and even our allies), engages in industrial espionage against the United States and each other," writes Marcus Carey, who worked for the NSA for eight years before joining Rapid7 as a security researcher and community manager.

"For these countries, cyber-espionage is likely just the tip of the iceberg, very much complementing the main areas of espionage being conducted in the physical world," he said. "It’s much cheaper for foreign governments to 'borrow' research and development information and go straight into production, particularly in countries like China and India where there is a strong supply of industrial low-wage workers to crank out products. For this and other reasons, espionage is certainly not a new practice, rather the internet has simply made it more visible and traceable."

"The truth is, a good espionage program is vital to a country's success, as we saw during WWII and the Cold War. It is the responsibility of governing agencies to perform espionage against other countries, as well as helping their own citizens with counter-espionage and cyber defense strategies," he added.

Carey, paraphrasing baseball legend Mark Grace on cheating, concludes "countries that aren't engaging in espionage aren't trying hard enough!" ®

Hacknote

Dexter fans may like to know that the Chinese characters for hacker transliterate to Dark Visitor. A blog of the same name is one of the best online resources keeping hype-free tabs on the Chinese cybercrime scene.

Internet Security Threat Report 2014

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