China’s Grand Strategy: Part 4

Cyberspace
By Evan Dudik — edudik@evandudik.com

In Part 3 we looked at elements of China’s grand strategy to control the threat from the United States, at sea and in space. 

Then there’s China’s effort in the other space, cyberspace.


This is an even larger topic than the preceding, so I’ll try to hit the parts of China’s cyber strategy that illuminate the China’s strategy. But first a short anecdote. In 2007 my wife and I accompanied a high-school orchestra on a 5 city tour of China as supposedly responsible chaperones. To my dismay but not surprise, I found on the second morning that my personal laptop had been searched by the cleaning staff. It didn’t take any spy craft using tiny threads to figure this out.

China’s cyber strategy seems to have 3 prongs:

The first and most obvious is cyber espionage. Of course, nobody is surprised by this. It wouldn’t warrant a mention except for the vigor, cleverness and thoroughness with which it’s pursued. We should expect the basics, such trying to steal plans and technologies for weapons systems. An example is that “In 2007, 2009, and 2011, Chinese hackers entered the servers of the Pentagon and gained access to some fifty terabytes of data containing the designs and blueprints of U.S. stealth fighters, as well as other critical information.” [31]

A second prong is China’s infiltration of U.S. infrastructure. China’s state-owned rail industry seeks to supplant if not destroy U.S. rail car manufacturers by underbidding–often by 20%– using Chinese government subsidies. The Chinese-owned U.S. plants threaten to close if they’re not awarded their low-bidder contracts, playing the jobs-saved card with Congress. They’re loaded with electronic devices U.S. rail firms use to manage their rolling stock. When Chinese-owned manufacturers deliver these cars, their versions include tracking devices that can transmit to the People’s Liberation Army the type, amount, destination, route and timing of US freight traffic.  Perhaps amusing if it weren’t so dangerous, it is a front runner to supply passenger cars with the Washington, DC Metro light rail system. Some think it will equip the cars with the world’s most advanced facial recognition software. Thus, PLA intelligence analysts could track who is travelling say between the White House and the Pentagon [32].

Yet a third cyberespionage prong is the Chinese effort to take over the next generation of telecommunications technology, known as 5G. 5G technology offers greater bandwidth, quicker responsiveness (less ‘latency’) and more capable multi-device connectivity. Thus it’s an important enabler for the emerging Internet of Things (IOT) where everything from freight cars (see above) to refrigerators to cars to running shoes and sport shirts connect to the Internet.

Most eyes watch the Chinese tech giant Huawei.

The NATO analytical organization, NATO Cooperative Cyber Defence Centre of Excellence (CCDCOE), states that Huawei:

“…is currently the only company that can produce ‘at scale and cost’ all the elements of a 5G network, with its closest competitors Nokia and Ericsson not yet able to offer a viable alternative. Huawei’s ambition is to dominate the market for 5G wireless communications, and it has established cooperation with telecommunications companies in a number of countries in Europe and worldwide. Huawei and other Chinese telecommunications companies have obtained a visible and active role in the development of global 5G standards and have acquired a significant proportion of core patents for 5G. China currently holds an estimated 10% of the ‘5G-essential’ industrial property rights in radio access solutions; of these, Huawei has the most patents, followed by ZTE (Another Chinese tech colossus which is behind the export of population surveillance technology) . Chinese influence in the global standards organizations (ITU, 3G Partnership Project) has also grown in terms of the key positions held by Chinese representatives.  The growth of the global market power of Chinese technology companies is largely a product of focused government industrial policy and accompanying funding instruments.” ‘Funding instruments’ is NATO’s euphemism for ‘government subsidy,” enabling a now-familiar strategy of underbidding western companies, grabbing market share, and thus exploiting scale economies with the objective of eliminating competition. [33]

Does Huawei spy on the US and its allies? You decide. China has an explicit, public policy that all companies, public, private or collective have an enforceable legal duty to assist the government in collecting intelligence. They don’t have a choice. The 2014 Counter-Espionage law says that “when the state security organ investigates and understands the situation of espionage and collects relevant evidence, the relevant organizations and individuals shall provide it truthfully and may not refuse.”  Article 7 of the 2017 National Intelligence Law states that “any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law.” [34].

Not missing a trick, note the Chinese infiltration of the leading positions of the key committees in standards organizations including those concerned with 5G technology. [35] I’ve personally seen the tremendous competitive advantage that companies can obtain by leading crucial standards setting committees to adopt standards favoring their company.

EU countries seek the competitive and technical advantages of Huawei’s systems. So they have ignored U.S. calls to boycott the aggressive company. They seem unconcerned about the ability of Huawei itself or Huawei in obedience to China’s state intelligence cooperation law to penetrate their communications and information networks. The current spate of analyses and controversy over ‘who really owns Huawei’ (the answer is that legally, 98+ percent is owned by an employee organization that runs basketball games and the employee medical charity) seems to me beside the point. [36]

When I return next week I’ll look at how China’s Belt and Road Initiative is helping it to gain a strategic advantage in Latin America, Africa and other parts of Asia.

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