How China uses cyber theft and information warfare

Beijing is leveraging increasingly sophisticated cyber operations and widespread theft of technological secrets in the digital domain as one of the key pillars of its military modernization strategy, a new Pentagon report finds.

Cyber and information operations are two areas that are seeing increased investment and emphasis from the Chinese military, according to the report. While traditional intelligence gathering remains an important goal, the use of cyber capabilities to conduct economic espionage has taken greater precedence in recent years.

This strategy not only helps to fuel the technological modernization of the People's Liberation Army (PLA) and other military and intelligence branches, but by targeting the U.S. defense industrial base, it simultaneously closes the gap in capability between China and its greatest military rival.

That reality has forced policymakers in Washington to respond by more aggressively prosecuting and confronting Chinese-directed extralegal activity targeting U.S. technology while giving greater scrutiny to more legal avenues, such as foreign direct investment and research partnerships between U.S. universities and Chinese entities.

While discussing the report, Assistant Secretary of Defense for Indo-Pacific Security Affairs Randall Schriver characterized the threat posed by China's cyber capabilities as "persistent."

"The Chinese remain very aggressive in their use of cyber," Schriver said. "What's changed is our level of awareness and the steps we're taking to reduce our own vulnerabilities and working with partners and allies to do the same."

The report argues that the Chinese government is slowly incentivizing its civilian sector to align its goals and activities with the defense market. The report maintains that the Made in China 2025 plan -- a list of technologies and industrial sectors that China aims to dominate by 2025 -- "directly support[s] military modernization goals by stressing proprietary mastery of advanced dual-use technologies."

U.S. officials also believe the plan is driving cyber and espionage-related theft of U.S. trade secrets. A Navy report earlier this year documented how Chinese hackers were stealing so much intellectual property and classified secrets that it was "materially eroding" U.S. economic and military advantage. Further, FBI officials have claimed that since 2015, the Department of Justice has charged Chinese individuals and entities for stealing trade secrets in eight out the 10 sectors listed in the Made in China 2025 plan.

"China uses a variety of methods to acquire foreign military and dual-use technologies, including targeted foreign direct investment, cyber theft, and exploitation of private Chinese nationals' access to these technologies, as well as harnessing its intelligence services, computer intrusions, and other illicit approaches," the report states.

The PLA also centralized its space, cyber, electronic and psychological warfare operations under a new organization -- the Strategic Support Force -- in 2016. The restructuring seeks to remedy operational coordination challenges that hindered information sharing under the pre-reform organizational structure, and the Pentagon believes it will help yield greater synergy among the different domains. It will also make it easier for the PLA to implement "information blockades" during or prior to a conflict, denying the enemy the information awareness needed to set the conditions for ground or air superiority later on.

Offensive cyber operations are viewed by Beijing as an "effective" means for countering a stronger foe. Chinese cyber operations target critical military and civilian nodes, such as command and control servers and logistics networks, to "deter or disrupt adversary intervention, and to retain the option to scale these attacks to achieve desired conditions with minimal strategic cost."