Intel officials warn of China’s growing threat to American tech secrets

By: Nathan Strout  

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Intel officials say 5G is just the tip of the iceberg when it comes to the threat China poses to national security, American intellectual property and consumer data.

As the United States works toward 5G capabilities, both the intelligence community and elected officials have raised concerns about Huawei, a Chinese company at the forefront of 5G technology. Due to the close relationship between the company and the Chinese government, some worry that the presence of their technology in U.S. infrastructure could give China access to American data or worse, the ability to disrupt American telecommunications.

“When we look at Huawei and 5G ... we’re really talking about access to the data and the integrity of communication systems especially in times of crisis,” said John Demers, assistant attorney general for national security at the Department of Justice. “What would be the ability of the Chinese government to affect our telecommunications infrastructure if we did get into a conflict with China at some point?”

Demers remarks were delivered at the Defense One Tech Summit June 27, where he and other intelligence officials warned of the threat China poses through the next-gen wireless technology supply chain.

“It’s not just the kind of backdoor worries that you have; it’s also the worry that they could compel information crossing those networks to be provided to a foreign government, and I think that is a huge privacy, as well as national security question,” said Principal Deputy Director of National Intelligence Sue Gordon, who called China America’s greatest geopolitical threat right now due to its mass and ambition.

“We don’t understand as a society ... the mindset of our adversaries and their ability to not only target the 5G capabilities, the software updates, the ability to disrupt the data, stop the data flow, manipulate the data flow. All of those capabilities are real and exacerbated by 1,000 times in the 5G network,” said William Evanina, director of the National Counterintelligence and Security Center at the Office of the Director of National Intelligence. “The ability to move data at speeds we can’t contemplate with software updates at speeds we can’t contemplate, we can’t handle it now.”

Spurred by these concerns, the Trump administration has taken action. In May the administration put Huawei and other companies on a blacklist, effectively barring American companies from doing business with them. The White House has since relaxed those restrictions.

But as big of an issue as Huawei is purported to be, Evanina said it’s just a symptom of a bigger issue: China’s ongoing effort to steal American intellectual property to further their own authoritative security state and intelligence efforts.

“The Chinese government, led by Xi Jinping, has been able to strategically look at how to steal that and how to use data that we want as consumers for military use, for economic achievement and to be able to do the semiconductor business, the nanotechnology — anything global tech — and take over that market,” said Evanina.

Demers added that the integrated approach taken by China allows them to target American companies, universities and research institutes.

“You have the Ministry of State Security intelligence officers who are being tasked by a Chinese research institute that’s working with the Chinese commercial airplane manufacturer in an iterative process to take technology. The manufacturing guys are saying, ‘Well, we need X, Y and Z to develop this,’ and the research people say, ‘Well, we have Z, but we still need X and Y,’ and then the intelligence officer is going out and getting X and Y,” said Demers.

“Ninety percent of our espionage cases that [are] the theft of intellectual property or state secrets on behalf of the state itself involve China,” said Demers. “What you see when you look at those cases is a very well-organized, well-resourced, top-down effort [by the Chinese] intelligence services to steal intellectual property and using the same tools and techniques that they would use have used for years against government secrets, trying to get company secrets in order to develop their domestic capabilities.”

According to Demers, China is targeting intellectual property across a wide diversity of areas, from artificial intelligence to high-speed rail to agriculture.

“If you want to know where they’re looking, look at the main China 2025 plan. If your company has technology that falls into any of those areas of advanced technology ... then you have a risk,” said Demers.

In addition to the theft of traditional IP, Demers said he is increasingly focused on China’s acquisition of large data sets, which the government can use in advancing their security state and developing AI.

“If we’re developing AI here in the US, we have to find data sharing agreements to test a lot of these algorithms. The People’s Republic of China does not have to do that because they have petabytes upon petabytes upon petabytes of stolen data ... that they can use,” said Evanina.

One way the intelligence community is working to fight this is by meeting with groups of CEOs from American companies to explain the threat China poses to their IP. So far they’ve been able to meet with 500 CEOs, together with intelligence leaders in the Senate.

In order to combat the growing threat China poses to American businesses, Sen. Mark Warner, D-Va., says that the United States needs to declassify more intelligence so that officials can more clearly communicate the challenges American companies face from China.

Demers noted that the academic community presents a harder challenge than the commercial sector when it comes to outreach because they have a culture of sharing information. But China is exploiting that openness, he said, to advance its own efforts.

“You could see photos of a lab in the United States. X researcher is there doing even legitimate research and all of a sudden you have a lab in China that looks exactly like the lab in the United States. So they’re there doing other things,” said Demers.

For Evanina, the battle for data and IP security has to start at the individual level.

“Basic cyber hygiene starts with us as individuals, and as Americans we have an amazing inability not to click a link. If we could somehow solve that, we could solve the supply chain problem,” said Evanina. “We have to make the American people understand not only what they can do to protect themselves but also why it matters.”