The Chinese cyber threat is increasing rather than diminishing

China Won’t Back Down on Cyber Espionage Anytime Soon 

Highlights 

China’s efforts to control its cyberspace will only increase as the central government tries to defend against ideological and organizational threats from near and far.  The growing economic and technological competition between the United States and China will encourage Beijing to maintain policies that enable it to catch up with U.S. cyber capabilities. 

Concerns that Western intelligence agencies and hackers could exploit backdoors in its networks will prompt China to keep promoting policies aimed at developing indigenous versions of foreign hardware and software. 

The race is on between the United States and China for economic and technological supremacy. One of the main arenas for this competition is cyberspace, and the two countries have drastically different visions for how to manage it at the global level. While Chinese President Xi Jinping’s government has advocated the right of individual nation states to control their own cyberspace and the infrastructure to support it free from foreign interference, the United States supports a more liberal model. U.S. policy promotes open access to the internet and condemns government censorship. Washington, moreover, considers Beijing’s calls for cyber sovereignty disingenuous, since China still uses cyber espionage as a tool against other countries, violating the very principles it purports to espouse.

Moral arguments aside, the fact is that the United States and China will keep using the internet and cyberspace against each other. A 2015 agreement stipulating that neither would engage in cyberespionage to steal trade secrets or intellectual property from the other has reduced but apparently not eliminated these practices. In November 2017, for example, the United States charged three Chinese hackers working at an internet security firm based in China with eight separate counts of conspiring to commit computer fraud and trade secret theft. As U.S. President Donald Trump’s administration takes aim at China’s economic and industrial strategies through tariffs and trade investigations, Beijing will use cyberspace to insulate itself from the United States.

The Big Picture

Competition between the United States and China is increasing in trade, defense, business and technology. Cyberspace, too, will be an important facet of this rivalry, in no small part because the two world powers diverge in their views of how to govern internet use. As the competition steadily heats up between the two, their cyber and economic strategies will continue to clash.

A Focus on Defense

Despite the criticisms of China’s offensive actions online, such as industrial espionage, Beijing’s cybersecurity policy focuses predominantly on defensive strategy. It’s no secret that the Chinese government has been working to control the domestic flow of information since long before the dawn of the internet era. One of Beijing’s greatest fears is that opposition groups or enemies of the political leadership will use the media, including the internet, to propagate their ideas and to organize against the government. Even unfavorable news or economic data could trigger protests that may be difficult for the government to control, given China’s large population. Beijing, likewise, is concerned that outside rivals such as the United States could invade its cyberspace to spread disinformation or subvert the state through asymmetric attacks. In fact, it views the internet as a tool that the United States has created to exploit to its benefit — and to the detriment of its adversaries. It’s hardly surprising, then, that one of the main priorities behind China’s internet strategy is keeping unwanted information and intruders out of its cyberspace with the Great Firewall.

That effort is all the more important to Beijing as the internet becomes more essential to China’s economy. In 2015 Premier Li Keqiang launched the Internet Plus initiative, a plan to incorporate the internet across nearly all sectors of the Chinese economy. The central government hopes that the integration campaign, coupled with its lax standards on data privacy, will enable China to amass an unrivaled store of data that it can use to strengthen its networks and technologies.

The Drive Toward Self-Sufficiency

In light of the internet’s economic and security significance, China today is more worried than ever about securing its cyberspace. Revelations that the U.S. National Security Agency collected data from major internet service providers and telecommunications companies only reinforced to Beijing that the United States, while publicly blasting China’s cyber espionage practices, was engaged in the same activity. The Chinese government then realized its reliance on foreign-made hardware and software — including semiconductors, smartphones, routers and internet services — was a vulnerability. The devices and programs, after all, may well include backdoors that the United States could exploit. (For much the same reason, the United States is wary of telecommunications equipment produced by Chinese firms such as Huawei and ZTE.)

To shore up its national security, Beijing is working to wean the country off foreign internet and cyberspace technology through Made in China 2025, an effort to match and surpass Western innovations. The plan is as much a strategic initiative as an economic one, and it will help the central government protect China from its rivals, both at home and abroad. In addition, China enacted a cybersecurity law in 2017 that gives the government a legal basis for forcing foreign companies to relinquish control of their data and to submit source code for review. The reviews enable Beijing not only to search for potential vulnerabilities in foreign software and hardware but also to poach proprietary information about their design.

Keeping an Eye on the Competition

Cyber espionage will continue to be a critical part of China’s internet strategy. The country will probably keep prying into U.S. servers to find out what politicians in Washington are talking about and to steal military secrets — such as the plans for supersonic anti-ship missiles that Chinese-sponsored hackers allegedly stole from a U.S. Navy contractor earlier this year. (Western intelligence agencies, including those in the United States, conduct the same kind of surveillance.) It will also continue infiltrating foreign companies to collect trade secrets to help it become technologically self-sufficient, despite the U.S. government’s objections and threats to retaliate. Its emphasis on cyber strategy notwithstanding, though, China still worries that it lags behind the United States, Russia and Israel. Hoping to catch up to, and eventually pass, these countries, Beijing is reorganizing its cyberwarfare apparatus under the People’s Liberation Army Strategic Support Force to better fund and develop its asymmetric capabilities.

As the world’s powers find themselves in competition with one another once again, Beijing is realizing that cyberspace is at once a vulnerability and an opportunity. China is the only country with the economic and military capacity to truly challenge the United States and to disrupt the international system it presides over. The internet is an increasingly critical part of that system. Consequently, cyberspace will be an important battlefield between Washington and Beijing.