China invests in cyberwarfare to compete with U.S. military

China’s government is sharply increasing its investment in cyberwarfare programs in what U.S. intelligence officials say is a major attempt to compete with superior U.S. military cyber capabilities.

The new spending priority was described by U.S. officials as a long-term, large-scale reallocation of resources by the Chinese, which is considered, along with Russia, to be among the most capable cyberwarfare nations.

“There is now data we have that suggests that they have redirected as much as 20 [percent] to 30 percent more funding to cyber than they have in previous years,” said a U.S. official familiar with details of the Chinese effort.

New intelligence reports indicate Beijing has “made a long-term strategic commitment” to bolstering cyberwarfare efforts, the official added.

According to U.S. officials who spoke on condition of anonymity, the major increase in Chinese efforts was set off after the Chinese concluded that their military cyberprograms lag behind U.S. strategic cyberwarfare efforts in significant ways. Details of the amount being spent on the People’s Liberation Army cyberprogram could not be learned. 

But private analysts said the funding increase by up to a third over past spending could be valued anywhere from the hundreds of millions to billions of dollars.

Rep. Mike Pompeo, Kansas Republican, said China, through the PLA, has developed one of the most sophisticated cybercapabilities in the world.

“They have stolen hundreds of billions of dollars of intellectual property from U.S. businesses and continue to commit this theft,” Mr. Pompeo said. “The Chinese have now increased their capacity to conduct massive attacks and continue to consider this weapon as a primary tool in their arsenal.”

A CIA spokesman declined to comment. 

Chinese Embassy spokesman Zhu Haiquan declined to directly address China’s increased cyber spending.

But Mr. Zhu said: “China advocates for the peaceful use of cyberspace. Efforts should be made by the international community to prevent militarization of cyberspace and cyber arms race.”

The increase in cyberwarfare funding is part of what China’s military calls its “information warfare” program and was outlined in the latest defense budget unveiled in early March. Beijing announced March 4 that defense spending this year will increase by 10 percent from last year’s budget to around $143.6 billion.

That official figure, however, excludes China’s spending on strategic nuclear forces, foreign weapons imports, military space programs and research and development. The Stockholm International Peace Research Institute estimates that actual Chinese defense spending could be 55 percent higher than official figures.

China has been sharply increasing its defense spending nearly every year by double-digit percentages as part of an effort to modernize its military.

The boost in Chinese cyberwarfare programs followed a meeting in September of the Communist Party Politburo when General Secretary and President Xi Jinping called for a new information warfare strategy.

State-run Chinese television reported Sept. 2 that Mr. Xi called for “more military innovation in China and a new strategy for information warfare amid a global military revolution.” The directive was made during a Politburo meeting Aug. 29.

“Xi Jinping encouraged the army to change fixed mind-sets on mechanized warfare and create a concept of information warfare as the country faces escalating tensions on intelligence issues with other countries,” the report stated.

Chinese military hacking into both government and private sector U.S. computer networks prompted the Justice Department to indict five PLA hackers last May.

Difficult to calculate

Defense specialists said determining the amount China spends on cyberwarfare programs is difficult as the programs are among China’s most secret operations.

Richard A. Bitzinger, a specialist on Chinese defense issues at the S. Rajaratnam School of International Studies in Singapore, said China does not disclose details of its military budget, although it has said that about a third of its spending, or around $45 billion a year, is spent on “equipment,” including research and development and procurement.

“How much of this is for cyber, I can’t begin to guess,” he said. “I can imagine that it’s in the billions nationwide, and certainly in the hundreds of millions within the Chinese military. It’s likely that even a ballpark figure is unobtainable, given how disparate China’s overall cyberactivities are.”

Cyberwarfare and intelligence activities also are spread out among the military and its electronic intelligence service, the civilian Ministry of State Security as well as semi-official technical institutes and universities. Paul Rosenzweig, a cybersecurity expert and former Department of Homeland Security policymaker, said China regards itself as a close competitor of the United States in the cyberdomain and views cybercapabilities as a way of “leveling the playing field.”

“They have previously devoted substantial resources to cyberespionage and theft,” Mr. Rosenzweig said. “It is unsurprising that they are, likewise, investing heavily in more ‘conventional’ cyberwarfare capabilities.”

Over the longer term, “China’s vision of combined operations, with cyber as a strong component of its capability, will significantly challenge American freedom of action in the Pacific,” Mr. Rosenzweig added.

While the cyberwarfare and cyberespionage programs are secret, Chinese military writings have provided some insights into Beijing’s thinking.

“It is anticipated in the foreseeable future that it is extremely likely for cyberwarfare to assist or even replace conventional firepower damage means as a major player in modern and future wars,” states an Oct. 1, 2013, technical paper in the journal China Military Science.

“In conventional warfare, material media associated with kinetic energy, such as knifes, bullets, artillery shells and missiles are used as the damage media,” the report said. “In cyber warfare, computer technology represented by the Internet, or ‘information flow’ is used as the warring media. Warring parties only need to click a mouse to complete the entire attacking process.”

Cyberattacks also are not limited to military personnel but can also be carried out by civilian hackers, and can be conducted anonymously in order to complicate efforts to respond, the report said.

The Snowden factor

Another factor that may have contributed to the decision by Chinese leaders to increase cyberwarfare capabilities was disclosures of U.S. cyberoperations by renegade National Security Agency contractor Edward Snowden.

Late last year, NSA documents provided to Germany’s Der Spiegel revealed that the NSA has developed extremely capable cyberpenetration capabilities. The documents revealed that NSA is so proficient at cyberoperations that it can break into the communications networks used by foreign spy agencies and steal the data they are collecting clandestinely from agents. 

The technique was called “I drink your milkshake” in the NSA documents, a reference to a line in the 2007 film “There Will Be Blood” about covertly drilling oil from someone else’s well.

Rick Fisher, a China military affairs expert with the International Assessment and Strategy Center, said gauging Chinese cyberwarfare efforts is difficult because of Beijing’s lack of transparency. However, the Chinese effort could be related to the Snowden disclosures, Mr. Fisher said.

“Snowden’s revelations, obtained by Chinese and then Russian intelligence services, which they likely shared, also likely betrayed superior U.S. cybercapabilities — some detailed in subsequent press reports — that China is now trying to match or exceed,” Mr. Fisher said.

“China today already poses the most pervasive cyberthreat to the world in terms of its rapacious appetite for government, corporate and financial information,” he added, noting the increased effort could be dubbed a “Snowden effect” that will increase the cyberthreat to the United States.

The U.S. military is seeking $5.5 billion for cyberactivities in the fiscal 2016 budget, a figure that was questioned last month by Sen. John McCain, Arizona Republican and chairman of the Senate Armed Services Committee.

“Unfortunately, as it turns out, the budget is disproportionately focused on network infrastructure, with only 8 percent of that $5.5 billion allocated for Cyber Command and the development of our cybermission forces,” Mr. McCain said on March 19.

Adm. Mike Rogers, head of the U.S. Cyber Command, testified that cyberthreats are “pervasive,” and he said adversaries are growing in sophistication.

“Our military networks are probed for vulnerabilities literally thousands of times per day,” Adm. Rogers said at a Senate hearing last month. “The very assets within our military that provide us formidable advantages over any adversary are precisely the reason that our enemies seek to map, understand, exploit and potentially disrupt our global network architecture.”