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

June 21, 2018 6:27 PM
NASA Photo

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.”

Ben Werner

Ben Werner

Ben Werner is a staff writer for USNI News. He has worked as a freelance writer in Busan, South Korea, and as a staff writer covering education and publicly traded companies for The Virginian-Pilot in Norfolk, Va., The State newspaper in Columbia, S.C., Savannah Morning News in Savannah, Ga., and Baltimore Business Journal. He earned a bachelor’s degree from the University of Maryland and a master’s degree from New York University.

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