NEWS AND ANALYSIS:
American companies doing business in China will face a continuing threat to their intellectual property under Chinese President Xi Jinping‘s security policies, according to a State Department security report.
China’s large-scale information hacking is not limited to recent incidents like the theft of Office of Personnel Management records on 2.1 million federal workers, according to the report by department’s diplomatic security office produced for the Overseas Security Advisory Council.
Hacking is part of a much broader trend with an estimated 80 percent of all cyberattacks against Americans coming from China, the report says, noting that, despite the recent agreement by Mr. Xi to curb intellectual property theft, “threats to [intellectual property] are unlikely to disappear soon.”
The report adds, “Visitors to China should have no expectations of privacy. Taxis, hotel rooms, and meeting spaces are all subject to on-site and remote technical monitoring. Furthermore, the Chinese government’s access to infrastructure means that all forms of communication, including phone calls, faxes, emails and text messages, as well as Internet browsing history, are likely monitored.”
The threat is not limited to travelers and the information they are carrying, but could be used by Chinese hackers as an entry point into companies’ secured networks.
“Upon successful intrusion, threat actors may enjoy continued network access long after the traveler has departed, facilitating the theft not only of trade secrets (e.g., formulas, designs and chemical compounds), but of any information that would give an organization a competitive advantage (e.g., contacts, finances and business models).”
DOCUMENT: XI ways Xi is changing Chinese security
China also imposed a new regulation that threatens information held by foreign businesses. It contains a provision that “could require IT companies to transfer proprietary source code to authorities, create backdoors in existing platforms for third-party access, and house Chinese citizens’ personal data on Chinese servers.”
The measure may be a “subtle means of exacting concessions from foreign firms and forcing technology transfer.
“Ultimately, this may leave U.S. companies faced with a difficult choice: comply and receive access to Chinese markets on the one hand, or refuse to comply and miss a potentially lucrative opportunity on the other.”
Censorship and curbs on press freedom are increasing under Mr. Xi. Company employees who violate repressive Chinese media restrictions face fines, lawsuits and arrest. Major foreign news sites also are blocked in China. Social media also are being blocked to prevent political change in China, with some 2 million Communist Party censors working to scrub blog posts and shut down controversial unofficial websites.
On China’s maritime disputes, the State Department analysis warns that growing government-fueled nationalism could lead to a conflict and bellicose rhetoric and saber-rattling are likely to continue.
“Public sentiment could lead to anti-U.S. or anti-claimant demonstrations, as was the case with anti-Japanese protests in China in 2012, and this bears monitoring,” the report said, noting that authorities will probably limit any unrest that might undermine stability.
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The report warns that Mr. Xi’s sweeping anti-corruption campaign that has netted tens of thousands of party officials is not aimed mainly at creating a more honest and open system. Instead, the campaign is based on fears the ruling Communist Party will be weakened or overthrown.
“Xi appears concerned about threats to the party and anxious to reassert control,” the report says.
The anti-corruption campaign is tightly controlled by Mr. Xi and his subordinate Wang Qishan who are carefully targeting certain corrupt officials while ignoring others. The controls are making it difficult for foreign companies to conduct due diligence on prospective Chinese business partners.
As a result of the new economic slowdown in China “the Communist Party of China, led by President Xi Jinping, appears to be heightening measures to consolidate control and minimize any threats to its authority,” the report says.
“While suggestions that the party is facing an existential crisis may be premature, the terms and conditions of operating in China are likely to become more difficult for the private sector.”
The report, “XI Ways Xi is Changing Chinese Security,” lists 11 factors behind the more difficult operating conditions in China (osac.gov/Pages/Home.aspx).
Islamic State Tweets on Paris attack
The Islamic State terror group this week issued a propaganda assessment of its Nov. 13 shooting and bomb attack on Paris.
The infographic produced by the jihadi group’s media arm Al Naba provides additional proof the deadly terrorist attack was an Islamic State operation.
The group claimed that its “direct results” left more than 200 dead and more than 300 injured, and that a curfew and state of emergency were imposed on Paris and all of France. The attack also brought more than 1,500 French troops to the capital and forced the closing of borders and airports.
The group stated that eight armed jihadis were outfitted with explosive belts and automatic weapons and struck six different locations in Paris in a coordinated attack.
Actual numbers for the attack were 130 killed and 368 injured.
The Islamic State infographic also gloated over “follow-on results” that included requiring the French government to add thousands of positions to police and security forces and other measures that will cost $638 million. It said France canceled plans to reduce the size of the armed forces.
Islamic State propagandists also said French airstrikes against targets in Raqqa, Syria were carried out on empty locations.
The graphic claimed Russia was forced to take cumbersome security actions as a result of the Paris attack, including shutting down some subway and train stations. Sporting events in Germany and Holland were canceled and security forces were called in to a soccer match in Britain.
“The raid in Paris, praise be to God, resulted in the creation of a state of instability for the European nations, and this will have long-term effects,” the graphic said, noting “strict security measures and the overall state of fear” on the continent that will cost billions for the economy.
The Tweet was posted by user Abu Muhammad (@abo_m_54) on Nov. 23, with a link to the graphic bearing the logo of Islamic State’s Al Naba newsletter.
Turkey Day for overseas troops
The Defense Logistics Agency, the Pentagon’s supplier, has shipped more than 15,000 pounds of turkey and 1,854 pies, including sweet potato and pumpkin, to U.S. troops in Afghanistan for Thursday’s Thanksgiving holiday.
“Being away from home and their families during the holidays is tough enough without considering the difficult and dangerous conditions our service men and women face,” said Anthony Amendolia, an official with DLA’s Troop Support Subsistence supply chain.
“Since they can’t be home for the holidays, our employees are dedicated to bringing the holidays to them.”
American forces based in Afghanistan, Iraq, Jordan and Kuwait will be feasting on a total of 51,699 pounds of turkey, 25,970 pounds of beef, 17,130 pounds of ham, 706 gallons of eggnog and 3,360 pounds of marshmallows.
• Contact Bill Gertz on Twitter at @BillGertz.