Nation-State Cyberthreats: Why They Hack

This is the first in a series exploring the motivations that drive nation-states to participate in nefarious cyber activity. 

We know that hackers hack for a variety of reasons. Some hack because they are greedy or have criminal motives. Some hack to satisfy their egos or gain peer recognition. Some hack alone, and some hack in groups. But many hackers, or more accurately “hacktivists,” join groups like Anonymous in order to demonstrate their dissatisfaction with powerful organizations such as corporations and governments who fail to share their world views.

These hackers don’t consider themselves to be bad actors. They see their activity in a positive light, viewing themselves as contributing to a greater body of knowledge, or furthering a good cause, and often hacking without a clear vision of the second- and third-order effects of their actions.

Another category of hacker supports nation-state strategy by operating in the cyberdomain. These hackers are difficult to categorize, since they may be directly employed by an arm of a national government, the Chinese PLA for example. Or they may be form organized crime entity employed by a national government. Think recent hacks against JP Morgan Chase, attributed to an undefined group in Russia. Understanding the motivation of hackers and the organizations with whom they are associated is essential to understanding their tactics. Knowing one’s enemy is a fundamental concept in kinetic warfare and is equally important, albeit more difficult, in the cyber environment.

Find out more about nation-state cyber espionage in The New Target For State-Sponsored Cyber Attacks: Applications.

I think it is valuable to explore nation-state and nation-state-sponsored hackers because they are generally resourced the best, and their collective motivations run across the spectrum. Because nation-state-supported hackers are funded extremely well relative to small groups and individuals, they can be particularly formidable adversaries for other countries and for commercial industry, regardless of vertical. In short, nefarious nation-state-sponsored cyber activity can have devastating effects on a country’s national security and its economy.

All nation-states are not created equal, and like individual hackers, each has a different motivation and level of cyber capability. As we look at the cyber terrain from a global perspective, we see several countries that surface in the media most often: China, North Korea, Russia, Iran, Israel, and the US.

Leading the Eastern Pacific: China
If you read the daily news you can usually find a story related to China conducting some form cyber exploitation -- often against the United States. There are a number of tangible examples of intellectual property (IP) owned by someone in the US making its way to China. Cleared defense contractors supporting the US Department of Defense have been ideal cybertargets for the Chinese government to exploit. It’s important to understand that the Chinese don't limit targets to the US Military or government. Indeed, every sector of the economy is at risk. So it’s worthwhile to understand why the Chinese government seemingly operates on the wire with little regard for the ethical implications of its actions.

There are two overarching reasons why the Chinese have the dubious distinction of being global leaders in cyber espionage. First, the government is trying to establish a regional hegemon in the Eastern Pacific. Second, the Chinese government has been bitten by the capitalism bug, and realizes that to be a true global economic power it needs to be an innovation leader -- solely being a mass producer isn’t enough.

Following World War II, the US established itself as one of two global superpowers, and arguably the only superpower in the Pacific region. At the same time China, after resolving its civil war, which had been raging prior to World War II, was firmly established as the second major Communist country in the world, along with USSR. Like USSR, China developed an acute mistrust of Western democracy, and of Western capitalism in particular. In reality, the mistrust already existed during the colonial period in the 19th century and the early part of the 20th Century.

Communist philosophy elevated the mistrust to a much more significant level. If we connect the dots, we see China, a Communist government with an innately paranoid view of the rest of the world, squaring off against the symbol of democracy and capitalism in what the Chinese perceive as its own backyard. So over the past 60 years, China has been trying to establish itself as the regional power by trying to catch up to the US, militarily and technologically. The Internet has made it infinitely more convenient for the country to close the technological gap with the U.S. military.

Now let’s talk about innovation
In spite of the obvious ethical implications of stealing intellectual property, the Chinese government is comfortable with pilfering intellectual property for the greater good of its society and economy. China has the unenviable task of providing healthcare to over 1.4 billion citizens. Facing this challenge, the government is forced to turn to technology in order to reduce the burden on its healthcare system. It is no surprise that China looks to the West for technology solutions, and as the recognized leader in medical technology innovation, the US is a primary target. Between 2013 and 2014, Chinese hackers targeted 18 companies, forcing the healthcare sector to invest an additional $160M in security for medical and pharmaceutical companies. Interestingly, this apparent surge in healthcare cyber exploitation events coincides with Chinese government investment in healthcare and with the subsequent boom in the Chinese healthcare sector.

From a broader perspective, we know that the Chinese government is the driving force behind the country’s impressive economic growth over the past 30 years. Since 1978, following the shift to a market-based economy, albeit still under Communist Party control, China has averaged about 10% GDP growth per year. To feed the engine of economic growth, China recognized the need to ramp up its ability to innovate. To meet that demand, the China has demonstrated a willingness to close the innovation gap with peer competitors by stealing intellectual property, as demonstrated by the indictment of five Chinese nationals last year for conducting cyber espionage against prominent US companies representing the energy and utility, services, and technology sectors.

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