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Panel to Congress: American Data Is Not Secure From the Chinese Threat

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American military, high-tech and industrial technology is under constant threat from China, yet the U.S. government’s response is disjointed and far from robust, a panel of federal defense and intelligence community leaders told the House Armed Services Committee Thursday.

There is a vast and concerted Chinese effort to gain U.S. technology through legal or illegal means, HASC chair Rep. Mac Thornberry (R-Texas) said during his opening remarks.

China’s actions include industrial espionage, cyber theft on a massive scale, sending graduate students to study at U.S. research universities, collating open source information, Chinese-based technology transfer organizations and U.S. -based associations sponsored by the Chinese government to recruit talent, Thornberry said. He referred to a Defense Innovation Unit Experimental (DIUx) January 2018 report detailing the Chinese threat and a muted U.S. response.

“Most alarming, DIUx found that, again, I’ll quote, the U.S. does not have a comprehensive policy or the tools to address this massive technology transfer to China and the U.S. government does not have a holistic view of how fast this technology transfer is occurring, the level of Chinese investment in U.S. technology, or what technologies we should be protecting,” Thornberry said, quoting from the report.

The threat is real, and it’s occurring now, said Michael Griffin, undersecretary of Defense for Research and Engineering. China’s actions are adversarial, and the nation should be treated as such.

“The Chinese theft of technology and intellectual property through the exfiltration of the work of others is not unlike the Chinese construction of islands to encroach upon the geographic domains of international waters and those of other sovereign nations. It circumvents the autonomy of nations in a departure from a rules-based global order,” Griffin said.

The U.S. has not responded to the fact the rest of the world’s technical capabilities have improved significantly since the Cold War, a time marked by U.S. technological dominance and having only one great adversary, the Soviet Union, said Rep. Adam Smith, (D-Wash.), the committee’s ranking member.

“We don’t have a strategy to counter what has been happening,” Smith said. Then, illustrating this concern, Smith added, “We had a briefing yesterday on a cyber breach, and it was shocking how disorganized, unprepared, and quite frankly how utterly clueless the branch of the military was that had been breached.”

Smith did not offer more details about the briefing or the incident he referenced, and when reached after Thursday’s hearing, Smith’s staff said he couldn’t comment further on the incident.

However, USNI News and other media outlets recently reported a massive data breach occurred, leaking 614 gigabytes of material relating to a closely held project known as Sea Dragon, along with information including signals and sensor data, submarine radio room information relating to cryptographic systems, and the Navy submarine development unit’s electronic warfare library.

Preventing data breaches and other thefts of technology must become part of the federal contracting process, said Kari A. Bingen, deputy undersecretary of Defense for Intelligence.

“It is no longer sufficient to only consider cost, schedule and performance when acquiring defense capabilities,” Bingen said. “We must establish security as a fourth pillar in defense acquisition and also create incentives for industry to embrace security not as a cost burden but a major factor in their competitiveness for U.S. government business.”

Federal agencies also need to do a better job of educating industry about the threats they face when doing business in China, said Eric Chewning, deputy assistant secretary of Defense for Manufacturing and Industrial Base Policy. Companies might be drawn by the initial incremental increase in earnings from entering a new market, but they may not understand the risks.

“You’re going to do business someone who wants to eventually put you out of business,” Chewning said.

However, the very nature of manufacturing today means having to use products or raw materials originating in other countries, Smith said.

The challenge is trusting the end-to-end supply chain for both defense and commercial equipment and current trade policies are not helping build such trust, Griffin said.

“We are not drawing distinctions in our industrial policies between friends and allies and partners and people who behave in an adversarial manner,” Griffin said. “It is in our interest to make it easy for our allies and partners to cooperate and collaborate with us as opposed to for making it easy for them to collaborate with China and it is in our interest, in my opinion, for us to make it more difficult for the Chinese to work with us.”

In the past, the federal government was very clear about which nations industry should be doing business with, Griffin said.

“During the Cold War there was a whole-of-nation policy, such that the idea of doing a commercial deal with the Soviet Union were words that didn’t fit in one sentence,” Griffin said. “We don’t have such policies today.”

  • Zorcon, Fidei Defensor

    No kidding? Our friends, the ChiComs…

    • .Hugo.

      welcome to the global economy, maybe you just can’t adapt? 🙂

      • Zorcon, Fidei Defensor

        Adapting is fine, but it has been established that these phones have significant security risks. Business relationships are built upon integrity and trust. I see nothing in the Chinese SOP that implies either.

        • .Hugo.

          like what risk? where’s the proof? the risk of the u.s. spying on them has been more realistic and it has been proven.

      • muzzleloader

        What America needs to adapt to is the reality of what a nation of thieves your people are, Wang.

        • .Hugo.

          nations of thieves or you simply can’t keep up? it’s quite different. 🙂

          • muzzleloader

            America keeps up very well, Wang. It is the kleptocracy of your country that is the problem.

          • .Hugo.

            if america can really keep up well, then it won’t to feel threatened by chinese competition and try to kill it with sovereign power. 🙂

  • Jay

    Trump’s doing his best with ZTE. Where are the plans to get Trump’s other close friend and lien holder Putin on this gravy train?

    • Ctrot

      Repeating this ignorant Putin/Russia meme ad nauseum only serves to brand you as one with little rgrasp on reality and not a serious commenter.

  • publius_maximus_III

    Chinese Communists messing with our junk? Why does this surprise anybody? The land that invented death by a thousand cuts continues to destroy our national security with theft by a thousand breaches. Remember the OPM breach in June 2015. They now have the names and addresses of everyone with classified information access. Might they use that knowledge someday to threaten harm to some family member unless a badly needed secret is disclosed? No, No — say it not so!

    FYI, here is a related item showing some of their capabilities. This occurred on not the Yangtze, but our very own Hudson River, last September. Seems they took control of a Chinese billionaire’s yacht in an effort to sink him and his party since he was apparently sharing intel about them with the US. Use your favorite search engine to find the 09-08-2017 on-line article in the Washington Free Beacon with the following string (cut & paste):

    Beijing Suspected in Hacking Yacht Owned by Chinese Billionaire

  • Veronica Cartier

    In response and Support to Federal Agents and Intelligence community on CHINA THREAT report to Congress.
    Government and Americans as one nation should clearly move to secure Americans future from China threat abroad as well as at home. Chinese industrial, political espionage, lobbyists to the US congress growing fast and Congress moving slow in implementation new laws for monitoring Chinese move inside and outside the government and private sectors, because many other events are invented for this purpose. We were framed and dragged to fail. My advise U.S. Department of Communication should be protected from any suspicious agents affiliation and be strictly investigated, and to start, ironically location of US Dept. of Communication is next door to Mandarin Hotel in Southwest Washington D.C. Does it intentionally being set to have the access for cyber connection and convenient location to visit US Department of Communication officials? Where is the logic and our homeland security advise on this matter?
    Our military readiness abroad to challenge possible conventional strike is high, but I am very concern the readiness at home. Chinese agents, Chinese sympathizers community in the US, are getting rapidly moving towards strategic working and business positions in government, private sectors, media, including security sectors. We have to quickly screen and clear any possibility of invasion in the case of Chinese conventional military attack. US-China Business Tariff war is a vague to cover up the real Military threat we have not solve yet. Future military engagement ‘Fog of War’ may soon become the worst ‘Rain of war’ domino’s effects may happen.
    Present administration and Congress should immediate demand for North Korea, China declaration on their Military activities and Nuclear position in writing under International Law guidelines, not only by close meeting that favor China agenda and political behavior. To the facts that ‘inconceivable’ threat is really ‘conceivable’ right in our front yard.
    Political parties are not focusing of the real threats, and analyze the indicators how cyber threat can take over United States at no time.