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One third of the world's cyberattacks come from China, Chinese government feigns ignorance

In a newly published document entitled "ADMINISTRATION STRATEGY ON MITIGATING THE THEFT OF U.S. TRADE SECRETS" [PDF], the White House threatens China and other countries with both trade and diplomatic consequences if cyberattacks on U.S. corporations, media, and advocacy groups continue to be traced to their doorstep.

I. Brazen Attacks by Chinese Continue

At a White House press conference, Attorney General Eric Holder paints a grim picture of the state of cyberdefense, commenting, "There are only two categories of companies affected by trade-secret theft: those that know they've been compromised and those that don't know it yet.  A hacker in China can acquire source code from a software company in Virginia without leaving his or her desk."

Many top companies, including General Motors Comp. (GM), E. I. DuPont De Nemours and Comp. (DD), Google Inc. (GOOG), and American Superconductor, Corp. (AMSC), have seen trade secrets stolen by hackers in China.  At the press conference John Powell, general counsel for American Superconductor, shared a particularly troubling tale of how a big Chinese wind company -- formerly the largest client of his firm -- recruited a former employee and used their knowledge to remotely steal trade secrets.  He comments, "It's a real threat and it's a really costly threat."

Eric Holder
AG Eric Holder blasted Chinese cyberagression and called for tough action if attacks continue.
[Image Source: AP]

Pressure is mounting on the U.S. federal government, particularly the Obama administration, to give a stronger response in the wake of brazen attacks from China on U.S. media agencies including The New York Times and The Wall Street Journal.  

Reports have emerged that these attacks may all have been the work of an elite unit of Chinese military hackers.  While the U.S. works hard to imprison many of its most talented "black hat" hackers, China reportedly goes to great lengths to recruit its own black hats, lavishing them with rock star salaries and other perks.

II. Government Struggles With How to Counter Chinese Aggression

The document is ambiguous on how the U.S. will respond, but it makes it clear that Washington D.C. is well aware of the attacks from China on top U.S. corporations.  Currently, the ability to mount a strong counteroffensive is stifled by the relative "greenness" of America's cyber-fighting force. This force is composed mostly of straight-shooting college IT types, many of whom have never hacked into a system they weren't allowed to.  

Over the last year, the National Security Agency (NSA) has been showing up at top hacker conventions trying to convince more talented hackers to join its ranks -- but such efforts remain in their infancy and are being heavily stifled by animosity from the hacker community over punitive computer crimes law enforcement.

Security firm Akama Technologies, Inc. (AKAM) estimates that in 2012 33 percent of attack traffic originated from China.  By contrast, the U.S. -- in second place -- only claimed 13 percent of global attack contract.  Chinese government officials claim that hacking is illegal in China and that its own companies are also victimized by their domestic hackers.  However, many of the attacks appear to be geared towards suppressing dissidents or attacking U.S. media entities that expose secrets of Chinese politicians.

China hackers
Chinese hackers are responsible for a third of the world's cyberattacks. [Image Source: Kealtu]

The result is that the cyberwar between the U.S. and China is playing out as a classic bully-victim situation.  China denies everything while constantly abusing both U.S. government agencies and private companies.  And experts believe the U.S. is doing far precious little to fight back.

Last week, President Obama signed a cybersecurity executive order calling for voluntary corporate information sharing on security risks.  Congress is in the process of establishing a more rigid framework for the sharing.

James Lewis, a former top State Department official who is now a cybersecurity specialist at the Center for Strategic and International Studies, praised the Obama administration's actions in an interview with The Wall Street Journal, stating, "This is what you have to do to get the Chinese to behave differently.  You've got to keep pushing on them; you've got to keep grinding."

Trade pacts like the Trans-Pacific Partnership may provide a forum to push for stricter intellectual property protections.  And Mr. Lewis suggests that the U.S. could put pressure on China by denying Chinese companies access to American banks, or by denying Chinese researchers visas, if attacks continue.

Sources: The White House {PDF], The Wall Street Journal



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RE: The US needs to take action
By MadMan007 on 2/21/2013 11:26:14 PM , Rating: 2
I see people say 'The US needs China' all the time but very rarely do I see the flip side - China needs the US. And it's true. If relations were to go to hell quickly, China's economy would be in deep doodoo. As for the debt they hold, although they might use it as a threat sometimes, the truth is China would be as screwed as the US if they stopped buying Treasuries - it would severely damage the value of their current holdings.

It's MAED - mutually assured economic destruction.


RE: The US needs to take action
By Jeffk464 on 2/22/2013 12:27:57 AM , Rating: 2
So why does both the US and China behave like China has all the leverage?


RE: The US needs to take action
By BifurcatedBoat on 2/22/2013 1:35:42 PM , Rating: 2
The US does not really need China. The average American worker would be ultimately more prosperous if he didn't have to compete with Chinese labor, even though goods would be typically more expensive.


RE: The US needs to take action
By MadMan007 on 2/24/2013 2:14:03 AM , Rating: 2
You're right, as a whole the US would be better off. The 1% wouldn't, and they've managed to convince a lot of the 99% to believe things that are against the 99%'s best interests. But hey, cheap stuff!!


RE: The US needs to take action
By Ramstark on 2/22/2013 6:50:46 PM , Rating: 2
And China really doesn't need the US. They can just outgrow US companies and move their products through Asia, Europe and Latin America. Chinese companies are the ones gaining traction in all this markets, and don't forget that they are also competing against small (if high tech) countries like South Korea and Japan.
Don't be too hasty to name your country as necessary to another one...


RE: The US needs to take action
By knutjb on 2/23/2013 12:58:52 AM , Rating: 2
This comment is apparently spam and we do not allow spam comments.

really,


RE: The US needs to take action
By knutjb on 2/23/2013 1:00:01 AM , Rating: 2
This comment is apparently spam and we do not allow spam comments. Fix your filters


RE: The US needs to take action
By MadMan007 on 2/24/2013 2:16:24 AM , Rating: 2
China needs consumers for its exports. The US is still the biggest economy and 70% of it is consumer. The rest of the world won't make up for that and China is already doing the other exports you mentioned.

Until China's domestic demand gets large enough, they are dependent upon their trade partners and without them China's economy would collapse.


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