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Cyberattacks by Unit 61398 resume

In a strategy dubbed "naming and shaming" by the media, the Obama administration bet that confronting China over cyberattacks traced to the Asian superpowers military --- the People's Liberation Army (PLA) -- would cause the nation to stop its brazen cyberlooting.  Now evidence is mounting that the strategy is failing, and that China has returned to its old ways, with the U.S. left as the helpless victim.

I. China Bullies "Weak" American Cybersecurity

Chinese cyberattacks may have been ongoing for a decade or more, but began to intensify in 2008 when President Barack Obama took office.  Those attacks led military officials to begin to target China with accusations, accusations that China, of course, denied.  China admits to having a large "cyber army", but claims it only uses the highly skilled unit for "self defense".

Meanwhile attacks on the private sector from Chinese IPs began to rise.  Many of the attacks appeared politically motivated, while others appeared aimed at stealing intellectual property, financial secrets, and military information.

In 2008, CNN reported repelling a major attack from Chinese IPs in the wake of a story about Tibet.  In 2009, Lockheed Martin Corp. (LMTgrappled with sophisticated intrusions from Chinese cyberspies.  Lockheed claimed that the spies did not successfully steal secrets, but soon after in 2011 China shocked U.S. officials fielding a fully function stealth fighter; prior to the hacks U.S. officials believed China lacked this technology.

Red Daw
Chinese attacks intensified around 2008. [Image Source: ScreenRant]

2011 marked a marked intensification of attacks from China on both the U.S. private and government sectors. Chinese hackers struck at online petition site after a petition was launched to free an imprisoned Chinese artist.  That same year Chinese hackers struck Google Inc.'s (GOOG) Gmail service, looking to scoop the accounts of Tibetan dissidents.  China's state-run newspaper mouthpiece then proceeded to threaten Google for stating the obvious -- that the attacks originated from Chinese IPs.

The U.S. Chamber of Commerce was hacked with Chinese IPs communicating with infected thermostats and internet printers.  The U.S. National Aeronautics and Space Administration was been hacked multiple times.  U.S. Embassies were attacked. The U.S. Department of Defense (DoD) was targeted by persistent attacksagain traced to China.  The White House's own networks were even attacked.

In a pair of publications Intel Corp. (INTC) subsidiary McAfee, a security industry giant, accused China either directly or indirectly of a massive "cyberwar" campaign.

II. Obama Administration's Noisy Rhetoric Yields Short-Lived Truce

President Obama responded in early 2009 ordering a security review.  Then in June 2009 he created a new "cyber command" department in the DoD to handle cyber defense.  But as the Chinese threat grew, DoD and intelligence agencies in the U.S. continued to struggle.  U.S. Cyber Command was understaffed with only around 500 "cyber-soldiers".  And an April 2011 study suggested a third of cybersecurity "experts" at the U.S. Federal Bureau of Investigations (FBI) were incompetent.

Unable to defend itself with cyber-might, the Obama administration turned its focus to defense via rhetoric.  In May 2011 the DoD warned cyberattacks could be construed as acts of war.  In March 2012 U.S. National Security Agency director Gen. Keith Alexander testified to the Senate Armed Services Committee, that the Chinese were destroying the U.S. economy with hacks.

The Obama adminstrations vowed this year to no longer be week and submissive towards China after confirming the PLA was behind cyberattacks. [Image Source: Reuters]

But the President himself was mostly silent until this year, when a series of attacks on The New York TimesBloomberg, The WSJ, and the U.S. Federal Reserve.  Around that same time security officials with the research firm Mandiat finally pinned the attacks on an elite group of PLA hackers -- dubbed Unit 61398 -- which were based out of a government-guarded 12-story white high-rise in Shanghai.  That report was confirmed by government officials earlier this month, which led to China responding that the U.S. was "the real ‘hacking empire.'"

Amid the confirmations that the PLA was behind the victimization of the U.S., President Obama responded to these developments with his toughest rhetoric yet, which led to counter-accusations from China.  The tough rhetoric from the Commander-in-chief seemed to work, though; Unit 61398 fell silent for nearly three months from February into May.

Top PLA hackers with handles like “DOTA,” “SuperHard” and “UglyGorilla" disappeared as their online footprints were purged.  Chinese hackers even began to remotely unplug the intrusion toolkits they had installed on 3,000 identified systems in the U.S.

III. Chinese are Back at It

But according to a report in The New York Times, that quiet armistice is over, and China has returned to its old ways, marking the failure of the administration's "naming and shaming" strategy.  With the U.S. unable to offer up any real consequences, the report suggests that the PLA sees no compelling reason to bow to its foe's hollow rhetoric, instead gleefully returning to battering the "helpless" U.S.

PLA hackers resumed their attacks on the U.S. this month after a three month armistice.
[Image Source: Unknown]

Kevin Mandia, the chief executive of Mandiant, warns, "They dialed it back for a little while, though other groups that also wear uniforms didn’t even bother to do that.  I think you have to view this as the new normal."

A source in the Obama administration is quoted in the report as expressing grim resignation that a resumption would occur, commenting, "This is something we are going to have to come back at time and again with the Chinese leadership have to be convinced there is a real cost to this kind of activity."

IV. How Can the Administration Respond?

The question is what kind of consequences the administration can really muster.  

The U.S. economy remains deeply dependent on China, to the extent that any sort of serious trade sanctions could plunge the nation's fragile economy into recession. At the same time, the military and intelligence community, having alienated most of the nation's skilled hackers with belligerent prosecution policies (versus China who actively recruits black hats), appears helpless to mount any substantial offense or defense.

And to boot, the administration is struggling over a deluge of domestic scandals ranging from drones, to U.S. Internal Revenue Service (IRS), to seizures of Associated Press phone records.

Still the administration's security advisor, Thomas Donilon, is expected to work what little leverage he has in a visit to China this month.

President Obama and Attorney General Eric Holder
Jon M. Huntsman Jr., a former ambassador to China, and President Obama's former director of national intelligence, Dennis C. Blair are reportedly drawing up a series of executive orders the President could use to attempt to "punish" China for continued hacking.  Mr. Blair is quoted as saying, "Jawboning alone won’t work.  Something has to change China’s calculus."

About the only positive development, thus far, has been independent efforts on apparently putting a face to the handle of some of the PLA hackers.  A blog was traced to UglyGorilla -- real name Wang Dong -- who between 2006 and 2009 wrote about his experiences with the PLA, bemoaning low pay, long hours and instant ramen meals.

Such positive identifications could allow the U.S. to step up international pressure on China, even as its own efforts continue to struggle.

Source: The New York Times

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easy solution
By invidious on 5/20/2013 12:31:04 PM , Rating: 2
This is something we are going to have to come back at time and again with the Chinese leadership have to be convinced there is a real cost to this kind of activity."
Slap them with temporary import tariffs until they stop attacking us, it's not like there aren't a dozen other asian countries eager to sell us cheap plastic stuff.

RE: easy solution
By BRB29 on 5/20/2013 1:22:00 PM , Rating: 2
and cause inflation? We have more invested in China than China have invested in us.

On the other hand, we can beef up security like we were supposed to years ago.

RE: easy solution
By NA1NSXR on 5/20/2013 10:24:49 PM , Rating: 1
If you think all we import from China is "cheap plastic stuff" you really need to catch up with the developments of the last 15 years.

RE: easy solution
By powerwerds on 5/21/2013 5:38:42 PM , Rating: 1
It's not a bad idea you suggest, and is a valid recourse for diplomacy for relationships in which our upper hand can confidently be disentangled from some others without our hand losing its "upper" stature.

But for some complex diplomacies such as this one by the US and China where each holds a noose around the others neck and each ready with a razor for the others wrist just in case, which side poised so would trigger such an inevitably suicidal cascade.

Briefly, here are a few reasons why we might be loathe to play your import tariff hand. A good place to begin considering the inseparable web of economic exchange between these leviathans is currency. The yuan does not float but is instead pegged at a certain value dictated by the Chinese government. Because the yuan exchanges in the real world against other real assets whose values do float, the Chinese government has to periodically adjust what the value of the yuan actually is. They choose to weight it against the US dollar. They choose the value of the yuan so that no matter what direction world economies may have drifted, the yuan retains its fixed distance below the value of the US dollar.

How do they do this? They fix any drift of the yuan by accumulating or distributing their positions in US bond markets. They own some of the debt that sadly our government depends on selling. They own 7-8 percent of the US Treasury's outstanding debt.

Yeah we could hike import tariffs and maybe send some of the 300 billion we send them every year through trade deficits to other competitors, and yeah they could call the Treasury on that 1.2 trillion debt position they own and buy something else instead. But why swing this debt knife of death on your own honey pot? And think of it what you may, but judging from the way our nation's wallet votes, its an untruth to say we don't love cheap shit from China.

What do you do when a crucial player doesn't want to play by the rules? Sometimes people like that ruin the game for everyone. Sometimes they change and adopt a common integrity that every healthy community has a right to expect from its denizens.

I have not the slightest clue as to which method we should employ to be efficaciously passive - aggressive. I cede I wasn't brief either. The lets just hike tariffs observation was just such a grossly incomplete consideration that even my own quite deficient sensibilities were affronted.

Some factual info herein is also more credibly represented at these links

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