China Targets U.S. Computers For Espionage, Report Warns

Chinese cyberattacks on civilian, government, and military networks are rising, a congressional advisory committee warned in a report released Thursday, and the United States needs to bolster its defenses and engage with allies and Chinese authorities to clarify the consequences of aggression in cyberspace.

"China is targeting U.S. government and commercial computers for espionage," says the U.S.-China Economic and Security Review Commission's (USCC) 2008 Annual Report to Congress. "Alan Paller from the SANS Institute, an Internet security company, believes that in 2007 the 10 most prominent U.S. defense contractors, including Raytheon, Lockheed Martin, Boeing, and Northrop Grumman, were victims of cyberespionage through penetrations of their unclassified networks."

Citing examples of Chinese espionage, the report looks back to 2005 at an incident in which hackers from China stole files related to NASA's Mars Reconnaissance Orbiter that detailed the space vehicle's propulsion system, solar panels, and fuel tanks. It also cites an incident that same year in which the aviation mission planning system for Army helicopters and related software were stolen from the Army Aviation and Missile Command at Redstone Arsenal in Alabama.

More recent examples abound. On Nov. 18, Quan-Sheng Shu, a Chinese-born scientist who worked in Virginia, pleaded guilty to selling U.S. military rocket technology to China.

Earlier this month, The Financial Times, citing an unnamed senior U.S. official, reported, "Chinese hackers have penetrated the White House computer network on multiple occasions, and obtained e-mails between government officials."

In June, U.S. Rep. Frank Wolf, R-Va., said that four computers in his office had been compromised in 2006 and that computers used by other members of Congress and by the House Foreign Affairs Committee had also been hacked.

"These cyberattacks permitted the source to probe our computers to evaluate our system's defenses, and to view and copy information," said Wolf. "My suspicion is that I was targeted by Chinese sources because of my long history of speaking out about China's abysmal human rights record."

In February, the U.S. Department of Justice announced the arrests of four individuals -- Tai Shen Kuo, Yu Xin Kang, Gregg William Bergersen, and Dongfan "Greg" Chung -- and accused them of stealing military and aerospace secrets and sending them to China. The Justice Department linked those cases to that of Chi Mak, a former engineer for Anaheim, Calif.-based defense contractor Power Paragon, who was arrested in 2005 and convicted last year of spying for China, his native country. The USCC report also warned about the risks posed by IT hardware manufactured abroad.

"The global supply chain for telecommunications items introduces another vulnerability to U.S. computers and networks," the report says. "Components in these computers and networks are manufactured overseas -- many of them in China. At least in theory, this equipment is vulnerable to tampering by Chinese security services, such as implanting malicious code that could be remotely activated on command and place U.S. systems or the data they contain at risk of destruction or manipulation. In a recent incident, hundreds of counterfeit routers made in China were discovered being used throughout the Department of Defense. This suggests that at least in part, Defense Department computer systems and networks may be vulnerable to malicious action that could destroy or manipulate information they contain."

Such concerns have been circulating for years in government security circles. But action may be at hand. On Tuesday, civilian and defense procurement groups published a notice in the Federal Register seeking comment on whether federal acquisition rules should be revised to require that "contractors selling information technology (IT) products (including computer hardware and software) represent that such products are authentic."

In February, the FBI announced that its ongoing anti-counterfeiting campaign had resulted in more than 400 seizures of fake Cisco equipment worth more than $76 million. A five-page FBI PowerPoint presentation dated Jan. 11, 2008, summarizes some of the agency's findings in its investigation of fake Cisco gear. It notes that fake hardware is vulnerable to supply chain subversion and attack, and could allow others to access to systems meant to be secure.

For more security insights, InformationWeek has published its 2008 Strategic Security Survey. Download the report here (registration required).