The South China Sea is an increasingly dangerous place to be in cyberspace. And as China is involved in territorial disputes over the area that bears its name with virtually all of its neighbours, there are no shortages of targets for its army of state-sponsored operatives.
F-Secure is the latest security vendor to confirm what most of us know already – that Chinese hackers, most likely working for the state, have been systematically stealing data from organisations with interests in the region for years now. It’s new report, NanHaiShu: RATing the South China Sea, details a new piece of information-stealing malware used in campaigns targeting government and private sector firms. Why? They were all involved, directly or indirectly, in a recent UN tribunal over ownership of a group of rocks in the South China Sea. Victims included the Department of Justice of the Philippines, the organisers of the Asia-Pacific Economic Cooperation (APEC) Summit and a major international law firm involved in the tribunal
F-Secure cyber security adviser, Erka Koivunen, told me he suspects a nation state was behind the attacks, although definitive attribution is always hard.
“Admittedly the malware itself may not be the most sophisticated piece of code there is. That doesn’t however mean that the operation wasn’t sophisticated,” he said via email. “The lack of zero-days and bleeding edge alien technology may admittedly seem a bit boring, but in fact is a sign of cold calculation and professionalism on the level of execution.”
This report is the latest of a long line of similar intelligence highlighting extensive cyber espionage in the region related to Beijing’s interests in the South China Sea and the rocks, reefs and islands that dot the landscape. Late last year a ThreatConnect report revealed an alleged PLA cyber espionage campaign dating back five years and targeting the Philippines, Singapore, Thailand, Vietnam and many others in the region. US interests have also been attacked.
William Glass, threat intelligence analyst at FireEye, believes this is just the beginning, as China begins to flex its muscles in the region.
“More recently, we have seen the list of targets expand to energy companies, legal firms, and even GitHub, targeted by China’s Great Cannon in March 2015,” he told me. “Beyond simply stealing information, Beijing has found there are benefits to using cyberspace to propagandise and attempt to influence behaviour.”
He claimed that the army’s new Strategic Support Force may see disputes in the area as the perfect opportunity to test its significant capabilities, which could range from range from “typical cyber espionage to learn of plans and intentions of commercial companies to efforts designed to influence companies’ decisions to invest or operate in the South China Sea.”
“Recently, the Chinese media has singled out Australia and Japan for particularly harsh criticism following the tribunal ruling,” Glass explained.
“It’s possible that China-based groups—with or without official government backing—will target Australian and Japanese commercial interests in retaliation for perceived interference or in an attempt to force Canberra and Tokyo to more carefully consider any follow-on action.”
For starters, firms working in the energy, logistics and shipping, and political and legal advocacy sectors in the region would do well to redouble their cyber security efforts. But the truth is that any organisation that deals with China or works in an industry where Chinese companies have interests – which is virtually every organisation – should consider the threat of state-sponsored attacks from the East. Yes, it’s more likely they’ll encounter ransomware than an info-stealing RAT guided by the PLA. But the threat is there, and as UK organisations increasingly look to the Middle Kingdom in this post-Brexit world, it’s one they should all take seriously.
How much do you think Chinese state-sponsored cyber spies steal from the US each year? No, you’re way off. It’s in the region of $5 trillion – 30% of GDP – according to one expert interviewed in a new exposé of Beijing-backed cyber attacks by the Epoch Times.
I covered this one for Infosecurity and IDG Connect because although most of the info for the article came from publicly available sources, it had some interesting insight from various industry experts and tied together the whole shadowy web of guanxi-tinged goings-on in the Middle Kingdom very well.
Particularly illuminating were claims that there are hundreds of state-backed “tech transfer centres” whose mission is to earmark IP they want, send scientists abroad to study in relevant industries and then reverse engineer products from stolen IP. It’s China investing in state-sanctioned theft because it’s quicker, easier and way cheaper than doing R&D the legal way. It’s happening on an industrial scale, to feed the country’s military aspirations and economic growth – many of the products are produced cheaply and sold back to the West at a fraction of the cost of the originals.
It’s thoroughly depressing but fascinating stuff and will make for frustrating reading if you’re a US tech CEO. If you haven’t been breached yet, you will be – or maybe you just haven’t found out about it yet.
China can do this, of course, because there’s a very fine line between government, academia, military, state-owned enterprise and even private business. All organisations must have a CCP committee which some believe sits even higher than the board. And all are expected to pull together for the betterment of Team China. But while the report calls out state-owned enterprises, there is in fact little in the way of evidence that private businesses have capitalised on stolen IP to accelerate R&D and produce cheap kit with which to flood Western markets.
Report author Josh Philipp told me that evidence was hard to find – even the US indictment of five PLA hackers last year referenced only SoEs. IP theft does happen, however, especially by contract manufacturers making products for US firms, although this is slightly different from the cyber espionage/tech transfer cycle mentioned in the report.
“Any private company involved would likely be running a small-scale counterfeit operation, which would be hard to pin down,” Philipp told me.
What is clear is that despite recent exhortations from the top to create an “innovation driven” country – an admission in itself that hitherto China’s economic growth and military might has been built on theft – the Chinese communist regime is unlikely to change things around anytime soon.
Western firms must get better at deflecting these attacks – and in so doing force up the size of investment needed by Beijing into cyber espionage activity, so that attack campaigns are just not worth the return in many cases. If they don’t, we can expect the same old breach headlines to continue ad infinitum.
I seem to have chosen the wrong time to come back from Hong Kong. Just a fortnight after landing back in Blighty, the US raised the stakes between the two superpowers, and mortally offended China’s honour, by indicting five PLA soldiers on charges of hacking US firms for economic gain.
I’ve written enough about it here and here already, so I won’t go into the pros and cons of this high risk strategy again. Safe to say that Beijing already appears to be retaliating in the most effective way possible; by making things decidedly difficult for US tech firms in the Middle Kingdom. Already reports have emerged that Cisco and IBM could be in trouble.
Is a new Cold War about to begin?
Well, if it does, one company it might be worth keeping an eye on is threat intelligence firm Cyber Squared. The firm’s ThreatConnect Intelligence Research Team has an interesting and very thorough analysis of new APT-style cyber attack campaigns in the disputed South China Sea (SCS) region, as I wrote about here.
“What’s that got to do with us?” you might ask. Well, potentially quite a lot, according to Cyber Squared chief intelligence officer, Rich Barger.
“There is a risk of increased data loss for Western firms that routinely work with Vietnamese, Filipino, and other SCS region companies,” he told me. “Unit 61398/APT1 operates on the whim of the PRC, and cyber espionage has been adopted as the preeminent ‘low risk – high payoff’ medium for strategic intelligence collection.
“We typically see companies that are infrastructure related being targeted. Industries such as energy, oil & gas, mining, and transportation may find themselves directly or indirectly impacted.”
The message is loud and clear; if you have any military, economic or geopolitical stake in the SCS region, be aware that Chinese cyber operatives are increasing their activity.
“China has had a long standing national and regional interest within the South China Seas region,” explained Barger.
“It offers them a strategic economic advantage in terms of regional and global energy development and trade. From a military perspective, a strong Chinese presence within the SCS also counters the US pivot to South East Asia where China’s military modernisation, especially its navy, and regional assertiveness have come to an intersection.”
Barger argued that the various disparate groups at risk in the SCS need to start sharing information on attacks and “observing both the technical picture and the geo-political context”.
“It is important for those within these targeted industries to actively invest in threat intelligence processes as a standard business practice that supports internal information security operations,” he concluded.
“It is equally important that technical leaders effectively interpret and articulate regional threats and the context surrounding them to corporate business leaders.”
Last week I finished off an analysis of the China/cyber espionage stories that have been flying around in recent months, with a surprising conclusion – in many circumstances the country may well be as much a victim of attack as a perpetrator.
We are unlikely to ever find out the extent of state-sponsored cyber attacks on the US and its allies, although thanks to several high profile reports which name and shame Beijing it’s clear that the tip of the iceberg is well and truly showing.
However, we can be more clear about how secure or otherwise China’s IP address space is and make some general observations.
I spoke to several information security experts about this and they were all in agreement that China is a particularly attractive place to launch attacks from, simply because there are so many compromised PCs as well as enough bulletproof hosting firms there to use with impunity.
HKCERT senior consultant, SC Leung, explained to me how compromised computers, of bots, in China are helping cyber criminals from outside the country.
“The zombie computer, or bot, steals the data (using its IP address) and sends it back to the attacker. When tracing the compromise police can only find the bot computer IP address. The attacker can further command the bot to send the data to Dropbox or a third party forum, and then retrieved it directly or indirectly. This long chain of investigation of different servers (probably in different jurisdictions) hampers the investigation.”
It’s also worth mentioning that not all attacks are being carried out by external forces to compromise Chinese IP addresses which are then used as a staging point to attack other countries. China has a massive internal problem with home-grown cyber crims targeting their own – stealing data, IP, bank credentials and even blackmailing by DDoS or other means.
It’s interesting to note that a week or so after I published this story, the FT ran an interesting piece which reached the same conclusions, claiming that the government is failing to provide coherent oversight on information security matters and that the forensics industry is virtually non-existent in China.
Apart from changing these two problems, there needs to be greater user education and awareness to ensure fewer PCs are vulnerable to outside attack, and a crack down on bulletproof hosters.
At the moment, the Party seems to be happy to close down porn sites in high profile raids, willfully censor its citizens and hit out at any US accusations of cyber subterfuge, but not to get its own house in order.
Cleaning up its address space first would would surely improve China’s standing internationally and may even help foster more cross-border co-operation, rather than the relentless mud-slinging of late.