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China ardently denies cyperspying accusations

Posted: 19 Jun 2014     Print Version  Bookmark and Share

Keywords:China  online espionage  cyber security 

"This is the biggest transfer of wealth in terms of intellectual property in history," McAfee VP of threat research Dmitri Alperovitch told Reuters after release of the Shady Rat report. "The scale at which this is occurring is really, really frightening."

Spying on the tech industry

A 2011 report from the U.S. Office of the National Counterintelligence Executive titled "Foreign Spies Stealing US Economic Secrets in Cyberspace" used the findings of 14 US intelligence agencies to conclude that "Chinese actors are the world's most active and persistent perpetrators of economic espionage" against US government agencies and private companies.

The Department of Defence, which had previously identified attacks as coming from within China but didn't say from whom, narrowed down the suspects enough to conclude in a 2013 report to Congress that "China is using its computer network exploitation capability to support intelligence collection against U.S. diplomatic, economic and defence industrial base sectors."

The theft of intellectual property costs U.S. businesses more than $300 billion per year, close to the total value of all U.S. exports to Asia, according to a 2013 report from the White House-appointed Commission on the Theft of American Intellectual Property.

Russia, India, and other countries contribute to the problem, but China is responsible for between 50 per cent and 80 per cent of all IP theft from U.S. companies, according to the commission, which based its conclusions on reports from the U.S. Trade Representative and research from private companies.

In 2013, Verizon's annual Data Breach Investigations Report, which examined data on more than 47,000 attacks and 621 confirmed breaches that compromised 44 million records, estimated that 20 per cent of successful data breaches were attempts by state-sponsored intelligence agencies to steal trade secrets.

Of the approximately 124 cyber espionage incidents it examined, Verizon concluded, China was behind 95 per cent.

China is so persistent and aggressive about "technology transfer" by fair means or foul play that there's no doubt it is heavily involved in online industrial espionage against U.S. companies, according to Jeffrey Carr, author of Inside Cyber Warfare: Mapping the Cyber Underworld and founder of Taia Global, a security firm specialising in cyberwar research.

It is not clear, however, how much of that spying is being done on the orders of the Chinese government, how much is being done by PLA hackers working on private side projects, or by the legions of civilian "hobbyist" hackers, or even by hackers whose only presence in China is a malware-infected machine enlisted as a proxy to hide the attacker's actual whereabouts, Carr said. He continued:

Both the PLA and hackers are causing problems, and not just for the U.S. China has a huge problem with hacking against its own networks, so there could be any number of rogue actors involved in the attacks listed in the indictment. But, in China, more than half the computers are running pirated software or are infected with malware – so it's pretty easy to own a computer inside China's IP space, which means you don't know what the actual origin [of the attack] is.

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