US military warns of increasingly active cyberthreat from China

US military warns of increasingly active cyberthreat from China

As Google, Go Daddy reconsider China, will other businesses think again?

On the same day that Google Inc. and the GoDaddy Group Inc. complained about China to a congressional committee, U.S. Navy Admiral Robert Willard appeared before the U.S. House Armed Services Committee with an even stronger warning about cyber-threats posed by China.

Willard's comments about China received little press attention but were stronger than anything said by either company.

"U.S. military and government networks and computer systems continue to be the target of intrusions that appear to have originated from within the PRC (People's Republic of China)," said Willard.

He said that most of the intrusions are focused on acquiring data "but the skills being demonstrated would also apply to network attacks."

Willard testified on the military's operations in its Pacific command, which he said "faces increasingly active and sophisticated threats to our information and computer infrastructure."

"These threats challenge our ability to operate freely in the cyber commons, which in turn challenges our ability to conduct operations during peacetime and in times of crisis," Willard said in prepared remarks (PDF document). He said the military was responding in near real-time to threats.

It's not just the military saying that the cyber-threats coming from China are on the rise. Appearing before the Congressional-Executive Commission on China Thursday, Christine Jones, an executive vice president and general counsel at domain registration giant GoDaddy, said that "in the first three months of this year, we have repelled dozens of extremely serious DDoS attacks that appear to have originated in China."

Although GoDaddy and Google cited China as a source of cyber-attacks, they didn't blame the government. But these firms are taking action to limit their dealings with China because of other government policies concerning privacy and censorship.

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But will the experiences of GoDaddy, Google and for that matter, the U.S. military, prompt other companies to act similarly and take steps to limit their business in China?

Robert Vambery, a professor of international business at Pace University's Lubin School of Business in New York, said this kind of behavior going on a while and it's naïve not to expect it. While he sees the possibility of action by Google and other firms having some short-to-intermediate term impacts on other businesses in their dealings with China, they won't be major, he said.

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"Unless there is some serious military encounter between China and the United States, then this is not likely to change significantly in the near future," Vambery said.

University of Notre Dame professor John D'Arcy, who conducts research on information security and computer ethics, says Google decisions puts a little pressure on China, and said if U.S. firms feel any pause at all in dealing with that country, it is because more and more cyber attacks are being linked back to China.

"Companies would be a little bit suspicious because in general the Chinese government has not done anything to curb this activity," he said.

But China's importance to U.S. firms is huge, and Dell Inc. is only the most recent company to illustrate why.

There was a brief eye-opening moment this week when it appeared as if the Google's exodus from China was about to escalate in a big way.

India's Prime Minister, Manmohan Singh, was reported to have said in speech that Dell was planning to shift some production out of China because it wanted safer environment. CEO Michael Dell had recently met with Singh.

The statement came from account distributed by the India Press Information Bureau, according to various press reports. But David Frink, a Dell spokesman said in an interview, that was a "misinterpretation of his remarks."

Dell has 5,000 employees in China and two manufacturing facilities. In a statement released by Dell, the company said in that in its meeting with Singh, they discussed "ways of building India's hardware manufacturing eco-system."

In this context, Mr. Dell said that the company spends about $25 billion annually on sourcing components from its suppliers in China. With the right kind of progress, Mr. Dell said that he believes India also has an "opportunity to become a hardware manufacturing hub, generating employment and adding to that country's impressive growth."

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