A New Cold War, in Cyberspace, Tests U.S. Ties to China

When the Obama administration circulated to the nation’s Internet providers last week a lengthy confidential list of computer addresses linked to a hacking group that has stolen terabytes of data from American corporations, it left out one crucial fact: that nearly every one of the digital addresses could be traced to the neighborhood in Shanghai that is headquarters to the Chinese military’s cybercommand.
That deliberate omission underscored the heightened sensitivities inside the Obama administration over just how directly to confront China’s untested new leadership over the hacking issue, as the administration escalates demands that China halt the state-sponsored attacks that Beijing insists it is not mounting.
The issue illustrates how different the worsening cyber-cold war between the world’s two largest economies is from the more familiar superpower conflicts of past decades — in some ways less dangerous, in others more complex and pernicious.
Administration officials say they are now more willing than before to call out the Chinese directly — as Attorney General Eric H. Holder Jr. did last week in announcing a new strategy to combat theft of intellectual property. But President Obama avoided mentioning China by name — or Russia or Iran, the other two countries the president worries most about — when he declared in his State of the Union address that “we know foreign countries and companies swipe our corporate secrets.” He added: “Now our enemies are also seeking the ability to sabotage our power grid, our financial institutions and our air traffic control systems.”
Defining “enemies” in this case is not always an easy task. China is not an outright foe of the United States, the way the Soviet Union once was; rather, China is both an economic competitor and a crucial supplier and customer. The two countries traded $425 billion in goods last year, and China remains, despite many diplomatic tensions, a critical financier of American debt. As Hillary Rodham Clinton put it to Australia’s prime minister in 2009 on her way to visit China for the first time as secretary of state, “How do you deal toughly with your banker?”
In the case of the evidence that the People’s Liberation Army is probably the force behind “Comment Crew,” the biggest of roughly 20 hacking groups that American intelligence agencies follow, the answer is that the United States is being highly circumspect. Administration officials were perfectly happy to have Mandiant, a private security firm, issue the report tracing the cyberattacks to the door of China’s cybercommand; American officials said privately that they had no problems with Mandiant’s conclusions, but they did not want to say so on the record.
That explains why China went unmentioned as the location of the suspect servers in the warning to Internet providers. “We were told that directly embarrassing the Chinese would backfire,” one intelligence official said. “It would only make them more defensive, and more nationalistic.”
That view is beginning to change, though. On the ABC News program “This Week” on Sunday, Representative Mike Rogers, Republican of Michigan and chairman of the House Intelligence Committee, was asked whether he believed that the Chinese military and civilian government were behind the economic espionage. “Beyond a shadow of a doubt,” he replied.
In the next few months, American officials say, there will be many private warnings delivered by Washington to Chinese leaders, including Xi Jinping, who will soon assume China’s presidency. Both Tom Donilon, the national security adviser, and Mrs. Clinton’s successor, John Kerry, have trips to China in the offing. Those private conversations are expected to make a case that the sheer size and sophistication of the attacks over the past few years threaten to erode support for China among the country’s biggest allies in Washington, the American business community.
“America’s biggest global firms have been ballast in the relationship” with China, said Kurt M. Campbell, who recently resigned as assistant secretary of state for East Asia to start a consulting firm, the Asia Group, to manage the prickly commercial relationships. “And now they are the ones telling the Chinese that these pernicious attacks are undermining what has been built up over decades.”
 
By David E. Sanger
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