Exposing China's vast underground economy

Baidu responded to The Reg with the following lengthy statement stressing that it’s difficult for the firm to effectively monitor and track the slang used by cyber criminals on such a popular service.

With close to five million active discussion areas ("bars") on Baidu PostBar, naturally it would be challenging to monitor and control this kind of activity completely, especially when, as this report's authors point out, criminals use a patois or thieves cant that is difficult to parse. As a responsible provider of electronic bulletin board services, by law Baidu reminds PostBar users that they may only publish information in compliance with laws and regulations, and we provide a set of channels for complaints and fulfill with alacrity our obligation to remove any illegal postings that are reported or that we discover.

We're grateful to the authors of this report for helping to identify some of the ways that PostBar might be abused for criminal purposes. Baidu is committed to maintaining a clean and healthy internet environment and welcomes the cooperation of governmental and law enforcement agencies, users, the media, and independent researchers in those efforts.

Even more underground black markets are built on Tencent QQ chat groups, which participants can search for and apply to join, the report said. After searching for 84 jargon keywords, the researchers found a whopping 2,738 groups dedicated to underground markets.

At the time of writing Tencent had not responded to several requests to explain its position, although the firm is certainly not short on resources to address the problems identified in the report. Revenue for the first half of 2012 stood at 10.53 billion yuan (£1bn) up 56 per cent from the same time last year, while profits were over 3.9bn yuan (£390m).

Police urged to step up

However, the report's authors were keen to prove that Chinese police can have a genuine impact on the criminality swamping these platforms if they use the right tactics.

For example, the number of online underground posts, participants and threads stayed virtually the same from 2008-9, despite increasing sharply in every other year – a result of the passing of a new criminal law amendment and a police crack down on underground markets in ‘08, the report claimed.

Using court records, the researchers also searched for specific offenders online and found, in some cases, they had been active on QQ and Baidu for years before they were caught, revealing “critical tracing clues” including payment bank account numbers, which could have been investigated by police at the time.

We have grounds to believe that monitoring underground markets can help to identify, track and prevent a portion of on-going cybercrime activities, and can also provide critical evidence for criminal investigations.

Therefore, cybercrime emergency response teams and law enforcement agencies should continuously track and monitor the underground.

The report, however, stops short of investigating the more “high-tier aspects” of the underground economy such as trading of zero-day vulnerabilities or advanced persistent threat tools which it said are “likely to occur in even more hidden and secure communication channels between small groups with mutual trust”.

It warned that participation in such markets is growing rapidly and that monitoring and investigation efforts must be stepped up, alongside more stringent laws to guard the personal information of citizens.

Security experts from the region contacted by El Reg seemed to be in agreement that the police are well aware of the kind of activity described in the report.

However, despite launching numerous clampdowns on illegal online behaviour, it’s difficult to get an idea of what specifically is being targeted and with what success.

Any stats released by the authorities usually bundle traditional types of cyber crime in with other illegal activities like peddling pornography, running gambling sites, or, worst of all in the Party’s eyes, engaging in socially and politically disruptive behaviour.

Kenny Lee, principal for investigative response at Verizon Business APAC, argued that although more cyber crime co-operation between Chinese police and their international counterparts would be welcome, more legislation and regulation as recommended by the report is not necessarily the answer.

“Every country needs to adapt to the new realities of the internet economy. The technological innovations are changing at such a fast pace that by the time a law has been passed, those rules may no longer match its original intention,” he told The Reg.

“Law enforcement is already aware of these underground markets, just as they were aware of the physical ‘underground’ markets. It’s what law enforcement chooses to do with that information that makes the most impact on cybercriminals.”

Roy Ko, centre manager for the Hong Kong CERT, argued that the monitoring of public forums like PostBar and even messaging services like QQ is technically feasible, but said the difficult part comes when trying to track down the physical individuals behind the posts.

Although the Chinese government has forced a real-name registration policy on all Twitter-like weibos, the same is not true as yet of QQ and other similar services.

The government plainly realises there is a problem and recently released a lengthy information security action plan, although it remains to be seen how that is implemented. It’s fairly safe to assume that as the online economy generates an ever greater proportion of GDP in China, the authorities will devote the resources necessary to really tackle the problem. ®