Tag Archives: security

China’s New National Security Law Emits An Icy Blast

CHINA HAS PASSED a National Security Law that sweeps a broad range of economic, political and social activities within its remit. The new legislation is far more all-encompassing than the counter-espionage law that it replaces. Pretty much anything Beijing wants to consider as a matter of national security it now has the legal footing to do so.

That can include ideology and culture, energy security, economic development, information, financial stability and just about everything in between. Civil rights campaigners have expressed disquiet about China’s growing crackdown on activism and dissent. Those concerns are only likely to be amplified by forthcoming counterterrorism and foreign NGOs legislation.

However, the greatest impact of the new law could be felt by companies. It requires that internet and information systems must be “secure and controllable” by the government. That makes foreign financial firms and IT companies extremely uncomfortable, but all foreign firms should be uneasy.

Much will depend on how discriminating China chooses to be in implementing the new National Security Law. Many ministries and agencies can make use of it to pursue policy objectives, including the promotion of domestic national champions. Some parts of government may use the new law aggressively, others sparingly.

The selectiveness of application can give foreign companies the impression that they risk having the law brought down on them seemingly randomly. That, in itself, will have a chilling effect.

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Wen In India: Little Changed After The Check Books Move On

The agreement between China and India to set a goal of raising their bilateral trade to $100 billion from the current $60 billion is the very deliberately headline grabbing centerpiece of Prime Minister Wen Jiabao’s visit to his Indian counterpart, Manmohan Singh. Though it is Wen’s first visit to India for five years, the two men have met almost a dozen times during that time. So each will be well versed in the contentious border and security issues that come between the two Asian giants and frame their relationship with the other.

For all the conciliatory statements being made, and the open check book diplomacy being deployed by the entourage of 400 Chinese businessmen attending Wen, there has been no substantive progress on the difficult issues. Both sides say that more time is needed to work out their border issues, but they offered no crunchy deadline as they did with trade. A joint communique affirmed no more than that the two countries would “work together to maintain peace and security”. Wen told a business conference in Delhi that “there is enough space in the world for the development of both China and India and there are enough areas for us to co-operate,” but we see little to change our pre-trip assessment of the relationship as a partnership based on mutual mistrust and rivalry.

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China And Its Double-Edged Cyber-Sword

The following is a guest post by Sean Noonan of the U.S. intelligence-analysis firm, STRATFOR. It is republished with permission.

A recent batch of WikiLeaks cables led Der Spiegel and The New York Times to print front-page stories on China’s cyber-espionage capabilities Dec. 4 and 5. While China’s offensive capabilities on the Internet are widely recognized, the country is discovering the other edge of the sword.

China is no doubt facing a paradox as it tries to manipulate and confront the growing capabilities of Internet users. Recent arrests of Chinese hackers and People’s Liberation Army (PLA) pronouncements suggest that China fears that its own computer experts, nationalist hackers and social media could turn against the government. While the exact cause of Beijing’s new focus on network security is unclear, it comes at a time when other countries are developing their own defenses against cyber attacks and hot topics like Stuxnet and WikiLeaks are generating new concerns about Internet security.

One of the U.S. State Department cables released by WikiLeaks focuses on the Chinese-based cyber attack on Google’s servers that became public in January 2010. According to a State Department source mentioned in one of the cables, Li Changchun, the fifth highest-ranking member of the Communist Party of China (CPC) and head of the Party’s Propaganda Department, was concerned about the information he could find on himself through Google’s search engine. He also reportedly ordered the attack on Google. This is single-source information, and since the cables WikiLeaks released do not include the U.S. intelligence community’s actual analysis of the source, we cannot vouch for its accuracy. What it does appear to verify, however, is that Beijing is regularly debating the opportunities and threats presented by the Internet.

A Shift from Offensive Capabilities

On Nov. 2, the People’s Liberation Army Daily, the official paper for the PLA and the primary medium for announcing top-down policy, recommended the PLA better prepare itself for cyber threats, calling for new strategies to reduce Internet threats that are developing “at an unprecedented rate.” While the report did not detail any strategies, it quoted a PLA order issued for computer experts to focus on the issue.

The Nov. 2 PLA announcement is part of a long trend of growing network-security concerns in China. In 2009, Minister of Public Security Meng Jianzhu emphasized that the development of the Internet in China created “unprecedented challenges” in “social control and stability maintenance.” In June 2010, the State Council Information Office published a white paper on the growing threat of cyber crime and how to combat it. Clearly, these challenges have been addressed this year. The Ministry of Public Security (MPS) announced Nov. 30 that it had arrested 460 suspected hackers thought to have been involved in 180 cases so far in 2010. This is part of the MPS’ usual end-of-year announcement of statistics to promote its success. But the MPS announcement also said that cyber crime had increased 80 percent this year and seemed to blame the attacks only on hackers inside China.

These were cases mainly of producing and selling “Trojan” programs (malware that looks legitimate), organizing botnets, assisting others in carrying out denial-of-service attacks and invading government websites. The MPS also closed more than 100 websites that provided hackers with attack programs and taught them various tactics.

The PLA already has two notoriously large and capable network security units: the Seventh Bureau of the Military Intelligence Department (MID) and the Third Department of the PLA. In simple terms, the MID’s Seventh Bureau is an offensive unit, responsible for managing research institutes that develop new hacking methods, train hackers and produce new hardware and software. The PLA Third Department, defensive in nature, is the third largest signals intelligence-monitoring organization in the world. STRATFOR sources with expertise in network security believe that China’s government-sponsored hacking capabilities are the best in the world. But this perception is based in part on the fact that China demonstrates these capabilities quite often. The United States, on the other hand, is much more restrained in exercising its offensive cyber capabilities and is not inclined to do so until there is a dire and immediate need, such as war.

Piracy Vulnerability

The details of China’s escalating effort to improve network security are still murky, but one recently announced campaign against software piracy is notable. On Nov. 30, Deputy Commerce Minister Jiang Zengwei announced a new six-month crackdown on illegally copied products in China. He said the focus was on pirated software, counterfeit pharmaceuticals and mislabeled agricultural products. The Chinese public has pushed for more regulation of pharmaceuticals and food due to a rising number of cases in which people have become sick or even died because of falsely labeled or tainted products, such as melamine-contaminated milk. But Beijing seems to be even more concerned about the vulnerabilities created by running unlicensed and non-updated software, and publicizing the crackdown is clearly an attempt by Beijing to appease Western governments and businesses that are placing growing pressure on China.

Indeed, China has a sizable counterfeit economy, much to the ire of Western businesses. While Beijing may placate Westerners by announcing crackdowns for the benefit of international audiences, it takes more forceful measures when it sees a larger threat to itself, and the security emphasis now seems to be on the threat of running insecure software on government computers. The problem with unlicensed software is that it does not receive automatic updates from the manufacturer, which usually are sent out to fix vulnerabilities to malware. Unlicensed software is thus left open to viral infiltration. It is also cheap and easy to get, which makes it pervasive throughout both government and private computer networks.

One of the measures Beijing has started to implement is requiring licensed software to be installed on new computers before they are sold, which also gives the government an opportunity to install censorship measures like Green Dam. One persistent problem is that much of the pre-installed software still consists of pirated copies. While China has released statistics showing that the use of legitimate software in China has increased dramatically, the Business Software Alliance, an international software industry group, estimates that 79 percent of the software sold in China in 2009 was illegally copied, creating a loss to the industry of $7.6 billion in revenue. Even more important to Beijing, these statistics mean the vast majority of Chinese computer systems — government and private alike — remain vulnerable to malware.

At the same Nov. 30 news conference at which Jiang announced the new anti-piracy initiative, Yan Xiaohong, deputy head of the General Administration of Press and Publication and vice director of the National Copyright Administration, announced a nationwide inspection of local and central government computers to make sure they were running licensed software. While this suggests Beijing’s major concern is the security of government computers, it also emphasizes how widespread the unlicensed software problem is.

This new focus on using legitimate software, however, will not be a complete solution to China’s Internet vulnerabilities. There has been little effort to stop the selling of copied software, and it is still very easy to download other programs, licensed and unlicensed, and malware along with them (such as QQ). Moreover, the new security measures are dealing only with the symptoms, not the underlying problem, of a counterfeit-heavy economy. A six-month crackdown will not undermine or eliminate software piracy in China; to do so would require an immense and sustained investment of time, money and manpower. Indeed, China has been a hub for pirating software, films and other copyrighted material for so long that the enormous domestic economic base that has grown up around it would be virtually impossible to dismantle. In any case, vulnerabilities still exist in legitimate software, even if it is better protected against novice hackers. New vulnerabilities are constantly being found and exploited until software companies come up with the appropriate patches.

From Nationalist Hackers to Dissident Threats

China’s highly developed hacking capabilities, more offensive than defensive, include Internet censorship measures like the infamous Great Firewall, and the official police force run by the MPS specifically to monitor Chinese Internet traffic and censor websites is 40,000 strong. China also has developed two unofficial methods of censorship. First, operators of private websites and forums must follow certain government regulations to prevent statements critical of the government from being disseminated, which encourages private operators to be their own censors. Second, there is a veritable army of nationalistic computer users in China that include “hacktivist” groups such as the Red Hacker Alliance, China Union Eagle and the Honker Union, with thousands of members each. They became famous after the 1999 “accidental” bombing of the Chinese embassy in Belgrade, which prompted China-based hackers to attack and deface U.S. government websites. The Chinese government, state-owned enterprises and private companies also engage public relations firms to hire, deploy and manage what have become colloquially known as “Party of Five Maoists.” These are individuals who get paid half a yuan (5 mao) for every positive Internet post they write regarding government policy, product reviews and other issues.

But as China’s Internet-using population nears 400 million, with nearly 160 million using social networking, Beijing recognizes the risk of all this spiraling out of control. Censors have not been able to keep up on the social-networking front. Even with limited or banned access to sites like Twitter and Facebook, their Chinese versions, Weibo and Kaixin, for example, are expanding exponentially. While the government may exercise more control over the Chinese-based sites, it cannot keep up with the huge number of posts on topics the CPC considers disharmonious. The recent announcement of Liu Xiaobo’s Nobel Peace Prize is an example of news that was not reported at first in Chinese media but through social networking sites, spreading like wildfire. And the censorship is not exclusive; even non-dissidents can be censored, such as Prime Minister Wen Jiabao when he recently called for limited political reform.

China’s large Internet population will not all be nationalists. And if those who learn skills from informal hackers turn into dissidents, Beijing would consider them a serious threat. The Internet presents exactly the type of tool that could pose a major threat to the CPC because it spans regions, classes and ethnicities. Most social grievances are local and economic or ethnic-based. The potential for one opposition group to be united nationwide over the Internet is one of Beijing’s gravest concerns. It has realized that a weapon it once wielded so deftly against foreign powers and business entities can now be used against Beijing.

Outside Issues

At the same time Beijing reached this realization, WikiLeaks demonstrated the possibility for sensitive government information to be spread globally through the Internet. Beijing saw that if the United States, with its expertise in signals intelligence and security, could be vulnerable to such a threat, so could China. Stuxnet demonstrated the vulnerability of important infrastructure to cyber attack, one reason for China’s new emphasis on licensed software (Iran is known to run unlicensed Siemens software). China’s recent emphasis on network security is likely linked to all of these factors, or it may be due to a threat seen but as yet unpublicized, such as a cyber attack or leak inside China that the government has been able to keep quiet.

Other countries have also been implementing new network security measures, most notably the United States. On Oct. 31, the Maryland-based U.S. Cyber Command became fully operational, and its commander is also the head of the National Security Agency, the premier U.S. government entity for signals intelligence. (Thus, China’s giving Internet security responsibility to the PLA should come as no surprise to the United States.) And as China realizes the difficulties of defending against attacks in cyberspace, which tends to favor the offense, the United States is wrestling with the same problems and complexities as it tries to shield government, civilian and commercial computer systems, all of which require different degrees of control and operate under different laws. As cyber espionage and cyber sabotage become even greater concerns, China will be forced to face the far more difficult task of not only pecking away at the Pentagon’s firewalls but also providing for its own internal system security.

These new efforts all contradict China’s long-standing policy of cultivating a population of nationalistic computer users. This effort has been useful to Beijing when it sees a need to cause disruption, whether by attacking U.S. sites after perceived affronts like the Chinese embassy bombing in Belgrade or preventing access from powerful foreign entities like Google. But China has also recognized that developing these public capabilities can be dangerous. Nationalist Chinese hackers, if motivated by the right cause and united through the pervasive Internet, can always turn on the government. And the situation seems to have more and more governments on edge, where simple mistakes can raise suspicions. China’s redirection of a large amount of Internet traffic in April caused an outcry from the United States and other countries, though it may well have been an accident.

It is hard to tell what Beijing sees, specifically, as a first-tier cyber threat, but its decision to develop an effective response to all manner of threats is evident.

China and its Double-edged Cyber-sword is republished with permission of STRATFOR.

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Cablegate: Details Of The Google Hack Published

The allegation that a Politburo member irked by finding critical comments after googling his name was behind the hacking of the U.S. search media company Google late last year was trailed when the publication of the U.S. State Department cables by WikiLeaks first started. Now the cables in question have been made public (via Guardian).

The source of the accusation is a “well placed contact” of an officer at the U.S. embassy in Beijing. The operation against Google was reported to have been coordinated out of the State Council Information Office without having “been discussed more widely in the Party”. It started with orders to the three big state-owned telecoms companies to stop doing business with Google. When this failed to get Google to remove the link on its (censored) Chinese site to (uncensored) google.com, the pressure was escalated into the December 2009 cyberattack. Google went public about the hacking, which was when, the cable suggests, the broad party leadership became aware of events.

The campaign, according to this contact was “100% political”. However, other contacts of the embassy claimed that a top leader was working with Google’s domestic rival Baidu against the American company and that there was a perception, promoted by the government, than the U.S. government and Google were working together to undermine Chinese government controls on the Internet and thus exerting “cultural hegemony” and interfering in the country’s internal affairs. U.S. Secretary of State Hillary Clinton’s speech last January on internet freedom in which she came down in support of Google, without giving any indication that her officials suspected a top-level Chinese leader as being behind the attacks on it, may, perversely have reinforced that view. Given the concerns in Beijing about about the high-resolution satellite imagery on Google’s mapping software, Google Earth, that would not have taken much doing.

The cable also reported that contacts in the technology industry had told embassy officials that that Chinese interference in the operations of foreign businesses is widespread and often underreported to U.S. parent companies.

[Name redacted] noted the pronounced disconnect between views of U.S. parent companies and local subsidiaries. PRC-based company officials often downplayed the extent of PRC government interference in their operations for fear of consequences for their local markets. Our contact emphasized that Google and other U.S. companies in China were struggling with the stated Chinese goal of technology transfer for the purpose of excluding foreign competition. This consultant noted the Chinese were exploiting the global economic downturn to enact increasingly draconian product certification and government procurement regulations to force foreign-invested enterprises (FIEs) to transfer intellectual property and to carve away the market share of foreign companies.

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The New World Of Security In East Asia

Word from our man in Tokyo throws some new light, for us, on the fishing trawler dispute between China and Japan. He says that there is a sense among officials that this is only the latest, if most serious, incident in a series of tests by Beijing over the past year of where Japan sees its security interests as truly lying: to what extent is the long-standing alliance with the U.S. weakening; and to what extent would a more Asia-focused security policy mean that Tokyo would see Beijing as a competitor or a rival?

While the governing DJP has been pushing improved relations with China and lessening Japan’s dependence on the U.S., the recent change of prime minister from Hatoyama to Kan has caused that pendulum to swing back a bit towards the alliance with the U.S., notably in terms of maintaining the existing agreements over the location of U.S. forces in Okinawa.

That swing is also reflected in Kan’s choice for foreign minister, Seiji Maehara, who falls squarely into the China-as-rival camp. Maehara has repeated that the islands in the East China Sea at the heart of the current dispute, the Senkakus (Diaoyus to China), are inalienable Japanese territory, though to be fair, even the most pro-Chinese Japanese politician holds the same line.

Japanese officials still believe that China will, after sufficient chest-thumping, accept that the rule of law holds in Japan and that Tokyo cannot overrule the legal process for political ends — as Beijing increasingly says publicly that it can’t with its own legal system. Fingers are crossed that the detained captain of the Chinese fishing trawler will be released by Japanese prosecutors with a warning. He faces up to three years in prison if court charges are brought and he is convicted; Beijing might not have enough invective left in that event. For all the belief in rule of law, as well as fingers being crossed, no doubt a few arms are being discreetly twisted, too.

A release would allow for face to be retained on both sides and the incident to be defused. It would not ease the underlying tensions, however. Japan is likely to continue its build up of ground and naval forces in and around the disputed waters of the East China Sea and to be sure that it keeps the U.S. over its shoulder. For its part, Beijing is likely to continue to keep probing a Japan still looking for its place in the new security environment of the western Pacific where a more assertive China is willing to test boundaries first and resolve disputes after.

Update: Xinhua is reporting that four Japanese have been detained for unauthorized entry into a military zone in Hebei.

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Security Cameras Blanket Urumqi

As the anniversary of last year’s deadly ethnic rioting in Urumqi approaches,  thousands of surveillance cameras have been installed across the city as part of a security clampdown that has also seen Xinjiang recruit 5,000 more police. The cameras, which have ‘riot-proof’ casings, have been installed at bus stops, schools, shopping malls and in more than 4,000 other public places in Urumqi, according to Xinhua. More than 3,000 buses have also been fitted with the cameras, which are being monitored by police around the clock.

The clashes between local Uighurs and Han Chinese on July 5 last year left 197 people dead and more than 1,700 injured, the most serious outbreak of violence in decades in China’s restive western reaches. Police in the city have been conducting drills over the past month to deal with a possible similar recurrence of trouble, and have launched a crackdown in recent weeks on what is described as violent crime, stepping up street patrols and vehicle searches. This seems to have included the break up of a group that is said to have planned terrorist attacks in southern Xinjiang last year around the time of the Beijing Olympics and which were behind the attack on a police station in Kashgar in 2008. Authorities linked the group to the banned East Turkestan Islamic Movement, a nebulous pro-independence organization long vilified as a terrorist group by Beijing.

At the same time a propaganda campaign is underway to promote the plans for economic development in the natural-resource-rich province announced earlier this year. Authorities are determined the anniversary will pass without significant disturbance but relations between the Turkic-speaking Uighurs and the Han Chinese newcomers remain tense, and unsettling for Beijing.

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