Cyber War

Looming Chinese Informatized Warfare

Like the United States and the Europe, India is staring at heightened `Informatized warfare’ China has mounted in a big way in its march toward global dominance.  Beijing has integrated its internet based espionage with its military command structure. And in line with the Confucian strategy of hiding capabilities from the preying eyes of the enemy, it is quietly placing under its shadow the cyber networks across the world to further its foreign and security policies.

India is `practicing ground’

Whether India likes to admit, much less concede, this big country with long borders and large population has been Chinese cyber wayfarers’ training, testing and sharp-shooting ground right from Day One. From expertise gained on this soil, Beijing has been spreading its cyber operations across the globe. It’s all a part of its strategic “Revolution in Military Affairs” (RMA) concept, launched at the turn of this century.

How China went about its India business makes an interesting study on how the Bamboo Capitalist regime carries out its modern day espionage operations. Using the cover of a Hong-Kong based internet service provider, and a Port Luis (Mauritius) based shell company, it set up its Indian venture, ‘Now India’ in 1999.  Those were the early days of Internet boom in the Indian capital.

The Chinese company offered `compact discs’ that helped an eager netizen quick access to the Internet. I have seen the disc on sale at a throw away price at the most unlikely places. Pan shops, neighbourhood kirana stores and roadside petrol pump – you name it, the Chinese were everywhere with their disk tantalizing the Indians whom the state-owned MTNL and BSNL were taking for a ride.1

Unknown to the Indian netizens, the disc had an embedded Remote Administration Tool (RAT).2 And it made the personnel manning the India centric servers based in Hong Kong work in multiple shifts. This `backdoor’ entry, needless to say, gave the Chinese a foothold in burgeoning internet market. Well, like all Chinese dreams, this dream of capturing the Indian space did not last long.   The Indian sleuths literally caught the Chinese with their pants down.

This exposure has not deterred the Chinese telecom companies suspected to have close links to their military intelligence. They have set up their branches in India and continue to expand their businesses supplying telecom products and services.  One such company is Huawei.

Founded by Ren Zhenfei, a former engineer in People’s Liberation Army, Huawei set up its first overseas R&D centre in Bangalore in the year 1999.  The Chinese and Indian employees were segregated. The Indian staff were made to confine their movements to the ground and the first floor of their sprawling complex. Many Chinese experts were brought in regularly. Some came to master IT intricacies. Some were there simply to learn English language.  The Chinese worked in such secrecy that the Indian staff had no clue whatsoever.3

Today, Huawei’s Bangalore R&D centre is the largest among all of its overseas centres.4  Huawei and other Chinese technical giants like ZTE have major presence in the countries around India, particularly in the areas bordering the country.  They are laying fiber-optic cable along the whole length of road network into Pakistan and further that China is building as part of its CPEC (China-Pakistan Economic Corridor) and BRI (Border and Road Initiative).

Chinese smart phone brands have come to dominate India, with leading Bollywood stars acting as their brand ambassadors. Xiaomi, Vivo, and Oppo are popping out of roadside shops, while  Huawei, with its Honor 9 Lite and Honor 7X doubled its sales to enter the top five league in the first quarter of this year. Together, the Chinese brands have grabbed 57 per cent of the Indian market.5   On its own Xiaomi has cornered 31.1 per cent share and is ahead of the pack, followed by Samsung 26 per cent, Vivo 5.8 per cent, and Oppo 5.6 per cent.  

These Chinese brands are now attempting to enter smart TV and IOT (Internet of Things) market in India, which give direct access to peoples’ living rooms. 

What is the cumulative effect of these Chinese market forces? On the one hand, it has met the animal instincts of the middle class that is forever on the look out to make a fashion statement. On the other hand, it has given the Chinese informative warriors the leeway they always wanted to gate crash into the land that is home to the Buddha.  

Africa had no clue to what Chinese largesse means

The African Union has recently found to its horror that all communications from its headquarters in Addis Ababa had been routinely monitored by the Chinese government since 2012, according to an investigation by French newspaper, Le Monde.

“Every night, between midnight and 2 am, there was a strange peak in data usage – even though the building was almost entirely empty. Upon further investigation, the technicians noticed something even stranger.  That data – which included confidential information – was being sent to servers based in Shanghai.”6  

South African daily, Mail & Guardian (29 Jan 2018) remarked: “The African Union’s shiny new headquarters was built and paid for by the Chinese government, as a gift to its African friends.  But when the building was officially opened in 2012, China left a backdoor into the African Union’s computer network, allowing it to access the institution’s secrets at will.”7    

China has built and donated such grandiose edifices, along with full-spectrum communication network, in many countries in Africa and South Asia. They may all be potential instruments for Chinese espionage, sabotage and informatized operations.  

It is possible, therefore, the Chinese spies have had a hearty laugh while viewing the `live coverage’ of closed door annual conference of the Committee of Intelligence and Security Services of Africa (CISSA) held at the Chinese-built Friendship Palace hall in Sudanese capital of Khartoum last year.  Senior officials of African and Western intelligence agencies attended the meet and exchanged notes on threat perceptions.8 

Corporate reluctance to disclose hacker attacks

The intelligence agencies, whose job is to keep tabs for national security, have picked up early trends of Chinese hackers targeting Indian telecom, pharmaceutical and IT companies.  Admittedly most companies have no clue of their systems being compromised; but reality is some ‘wounded’ companies prefer not to disclose fearing damage to their image and commercial losses.  

Like, the American rating agency, Equifax, which has ignored FBI advisory to sue the Chinese for hacking its system and stealing highly sensitive personal data on more than 140 million American consumers- all for fear of losing the image. In 2015. Some Equifax employees moved to China to take up local jobs. Many of them, if not all, are feared to have carried with them thousands of pages of proprietary information to the Chinese shores.9 Who said espionage is unidirectional.

Doklam border standoff finally stirred New Delhi to act 

The 2017 Doklam standoff has brought into open the latent concerns of Chinese penetration into Indian telecom services.  “The government has raised red flags regarding the use of Chinese equipment in telecom and other sectors. Indian telecom companies were sensitized about the vulnerability of equipment and products imported from China,” according to the then Union Home Secretary Rajiv Mehrishi.

India is home to 21 smart phone companies, most of them Chinese. The Ministry of Information Technology has since decided to audit the procedures and processes adopted by them to ensure security and privacy of users’ data.10  

As many as 42 Chinese apps are classified as ‘spyware’. ‘Mi Store’ (found on all Xiaomi smartphones), ‘ShareIt’ (apps for file transfer), and ‘WeChat’ (messaging app) are prominent among them. ShareIt is one of the most popular apps in India.   Last November the Indian armed force personnel were told to “remove and de-install” these Chinese apps.    

 “As per reliable inputs, a number of Android/IOS apps developed by Chinese experts or having Chinese links are reportedly either spyware or other malicious ware.  Use of these apps by our force personnel can be detrimental to data security having implications on the force and national security,” the defence ministry said. 11

Indian counter-measures were a sequel to the warnings from cyber-security firms.  Kryptowire, for instance, has raised concerns over a Chinese firm transmitting cell phone data, including contacts and text, to servers in China. “The company, Shanghai AdUps, by passed Android permission mode, executed remote commands with escalated privileges and was able to re-programme the device,” according to IT ministry officials, who know their onions. 

Huawei, ZTE, Apps banned in several countries

Only last week, India excluded Huawei from a group of companies that have been invited to join in trails for the launch of 5G technology in the country.12 Australia has already banned Huawei and ZTE Corp from supplying equipment to 5G telecommunication networks on national security grounds.  The Australian action followed British intelligence inputs that core switches installed by Huawei in one of its contracts were behaving suspiciously and were potentially letting data in and out to a third party.13  

Australian military has also banned WeChat since April on security grounds, saying “the Chinese messaging and e-payment app was caught sending data to intelligence servers located in Beijing”.    “About 30 gigabytes of data was stolen in a cyber-attack, including details of Joint Strike Fighter warplane and P-8 Poseidon surveillance plane,” according to Mitchell Clarke from the Australian Signals Directorate intelligence.14 He did not identify the source and time of attack but an Australian newspaper reported “the hacker was based in China.”15

A month after the Australian action, the US Dept. of Defense ordered a halt to sale of Huawei and ZTE phones at its military bases across the world.16  This is a sequel to concerns that Beijing could “order Chinese manufacturers to hack into products they make to spy on or disable communications.” Earlier in February, US intelligence chiefs cautioned even ordinary Americans against buying Huawei products.  Pentagon banned Huawei telecom products like routers since 2014 on espionage concerns.  

Expectedly, most of the detected Chinese cyber-operations against US industry focused on defense contractors or tech firms supporting government networks.  Early this year, China hacked a US Navy contractor and secured a trove of highly sensitive details on submarine warfare. They have stolen 614 gigabytes of material relating to a closely held project, Sea Dragon, as well as signals and sensor data, submarine radio room information relating to cryptographic systems, and Navy submarine development unit’s electronic warfare library.17  

Over the years, the Chinese have stolen designs of the F-35 Joint Strike Fighter, the advanced Patriot PAC-3 missile system; the Army system for shooting down ballistic missiles known as Terminal High Altitude Area Defense and the Navy’s new Littoral Combat Ship amongst other prized possessions. 

Most of these hackings were carried out by the Chinese Ministry of State Security, (MSS), a civilian spy agency, US investigations show.  The hackers operated out of an MSS division in the province of Guangdong, which houses a major foreign hacking department.18 

The Chinese were behind the theft in 2015 of more than 22 million American records on federal workers, including extremely sensitive data on security clearance holders that can be used by China for intelligence recruitment and future cyber-attacks.  Following this disclosure, CIA had to recall many of its officials operating from China. Many of CIA agents, who are Chinese citizens, were arrested. 

The Chinese hackers broke into the electronic system of US Securities and Exchange Commission (SEC) last year and gained access to public-company filings. They exploited a software vulnerability in a part of the agency’s data base may have traded on the information stolen. SEC has since sued three Chinese traders, who allegedly earned more than $4 million using stolen data of Cravath, Swaine & Moore LLP and Weil, Gotshal & Manges LLP, which represent Wall Street banks and Fortune 500 companies.19

US Immigration and Customs Enforcement Bureau also has raised red flag about the Chinese drones. The American and Canadian markets are dominated by drones made by Da Jiang Innovations Science and Technology Company, (DJI).  In a memo the Bureau said, they have moderate confidence that DJI’s commercial drones and software are “providing US critical infrastructure and law enforcement data to the Chinese Government.”20  

Symantec, FireEye, and several other net vigilantes have noticed in recent days revival of some old Chinese hacking groups like Thrip and Temp.Periscope with upgraded capabilities. Their target: defense and shipping companies.  Symantec Corp has warned as early as June that a sophisticated hacking campaign launched from China burrowed deeply into satellite operators, defence contractors and telecommunication companies in the US and South-east Asia.21

Chinese `lobby’ in Washington DC managed to lull any punitive reaction

Washington DC has always been in know of Beijing’s cyber exploits into the networks of the US military and technical research institutions.  However, Chinese `lobbies’ in the US managed to lull both the Democratic and Republican administrations to believe that `positive engagement’ with Peoples’ Liberation Army and other institutions would bring desired change in Chinese behavior.  

Alas! Contrary to desired change, that has given much greater access to the Chinese leading to heavy monetary losses and military compromise.  “Since the early 2000s, cyber espionage issues have increasingly strained U.S.-China relations… By 2011, the eye-popping scope of China-based cyber espionage catapulted the issue to center stage, as new intrusions into U.S. corporate and government networks were reported on a regular basis.”

The seriousness of American resolve to punish China for these activities convinced President Xi Jinping to sign an agreement in September 2015 with President Barak Obama to refrain from commercial cyber-espionage against the US.  Thus, averted any punitive action. China signed similar agreements, soon after, with the UK and Canada as well, indicating the extent of Beijing’s cyber penetration operations in Americas and Europe.

Curtains down on Sino-American Bonhomie

Against this backdrop, President Donald Trump’s anti- China tirade makes sense. You can find fault with his methods but not with the assertion that Beijing is taking undue advantage of American institutions, both economically and militarily.  US Congress too has applied close scrutiny of American companies partnering with Chinese telecom and technology firms. As a result, Facebook wound down its Huawei deal and it assured that no user data was stored on Huawei’s servers. AT&T too backed out of a deal to buy smartphones from Huawei.22 

Google and Twitter are also questioned about their partnerships with Chinese phone maker Xiaomi, and tech giant, Tencent Holdings Ltd.  Google has partnered with Xiaomi on several products, including phones in India. Google joined with Huawei earlier this year in a deal allowing devices made by the latter to use Google’s Android Messages service to send texts, photos and other media.   

In a series of moves, Trump administration and lawmakers have largely restricted the footprint of Huawei, ZTE and other Chinese companies in the US.  

What lies ahead

This Great Game of `Informatized Warfare’ is not going to end; it will become more and more sophisticated and even fierce. Agreed as of now, it is beneath a threshold to prevent punitive counter-measures; it will become a no-bar fight to finish in the event of military clashes. The one with better cyber-warfare capabilities wins the battle without a shot to fire.  

The only way a nation safeguards itself from informatized warfare is to build its own capabilities without becoming dependent on others. Countries like the US are placed at an advantageous position primarily because of their technical muscle. India is sadly nowhere in these sweepstakes. 

In fact, different wings of the government are working at cross purposes in matters relating to China. The business class is no exception. Motivated as they are of quick profits, the business class has allowed the Chinese to dump their low end products at throw away prices and thus kill India’s very own small and medium scale industries, which are the real job creators in the country.  While Chinese products cannot be entirely eliminated from Indian market because of their cost-effectiveness and technology, India should be in a position to advise its people if these products are trust-worthy.    

This flip-side notwithstanding, there is no denying that as a software power,   India has the capability in terms of human resources; it has edge in terms of technology. Domain expertise is spread over some security agencies and private corporations in the country as well.  But, what India is lacking is unity of purpose, effective leadership, large and purposeful governmental investments in R&D, and better utilization of expertise. It will do well to put together a coordinated program for a `strategized information warfare’ by co-opting selective private corporations, which individually have neither the vision, financial capability nor the motivation to think beyond quick profits. 

Put simply, the government must be the real driving force both for near term and long term requirements since the highly digitalized society has become an open play ground for China’s state-sponsored hacking groups, and spies alike.   

References

  1. Author’s personal observations
  2. Author’s discussions with former Telecom officials and technical experts
  3. Author’s conversations with IT experts whose friends worked in Chinese companies during 2000-2003 period.
  4. https://www.firstpost.com/tech/news-analysis/huaweis-india-rd-centre-in-bengaluru-emerges-as-the-largest-among-all-of-its-overseas-centres-4092253.html
  5. http://indianexpress.com/article/technology/tech-news-technology/vivo-oppo-lose-out-as-xiaomi-huawei-grow-in-indian-smartphone-market-counterpoint-5149206/
  6. https://thediplomat.com/2018/01/if-china-bugged-the-au-headquarters-what-african-countries-should-be-worried/
  7. https://mg.co.za/article/2018-01-29-how-china-spied-on-the-african-unions-computers
  8. http://english.alarabiya.net/en/features/2017/09/29/Sudan-hosts-largest-African-intelligence-conference-.html
  9. https://www.wsj.com/articles/before-it-was-hacked-equifax-had-a-different-fear-chinese-spying-1536768305?mod=hp_lead_pos1
  10. http://www.business-standard.com/article/economy-policy/21-smartphone-makers-majority-of-them-chinese-may-be-stealing-info-117081600751_1.html
  11. http://indianexpress.com/article/technology/social/defence-ministry-to-indian-armed-forces-uninstall-these-42-apps-including-mi-store-wechat-truecaller-4962876/
  12. https://www.zdnet.com/article/huawei-and-zte-excluded-from-5g-trials-in-india-report/
  13. http://www.atimes.com/article/australia-china-spar-on-new-trade-war-front/?utm_source=The+Daily+Report&utm_campaign=a673be16fc-EMAIL_CAMPAIGN_2018_08_27_11_45&utm_medium=email&utm_term=0_1f8bca137f-a673be16fc-31507313
  14. https://www.reuters.com/article/us-australia-defence-cyber/joint-strike-fighter-plans-stolen-in-australia-cyber-attack-idUSKBN1CH00F
  15. https://timesofindia.indiatimes.com/world/rest-of-world/north-korea-hacked-seouls-war-plan-report/articleshow/61020171.cms
  16. https://www.defenseone.com/threats/2018/05/pentagon-bans-sale-chinese-designed-phones-military-bases/147934/?oref=d-river
  17. https://www.washingtonpost.com/world/national-security/china-hacked-a-navy-contractor-and-secured-a-trove-of-highly-sensitive-data-on-submarine-warfare/2018/06/08/6cc396fa-68e6-11e8-bea7-c8eb28bc52b1_story.html?utm_term=.7fbdc1130ad5
  18. https://www.wsj.com/articles/sec-discloses-edgar-corporate-filing-system-was-hacked-in-2016-1505956552
  19. https://www.nytimes.com/2017/11/29/technology/dji-china-data-drones.html?&moduleDetail=section-news-0&action=click&contentCollection=Technology®ion=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=article
  20. https://www.business-standard.com/article/international/chinese-hacking-drive-targets-us-based-satellite-defence-firms-symantec-118062000138_1.html
  21. https://www.wsj.com/articles/after-scrutinizing-facebook-congress-turns-to-google-deal-with-huawei-1528378581

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