The Complex

The technology China wants in order to catch up with Western militaries

The Pentagon's latest report on the capabilities of the Chinese military mentions an important aspect to its buildup: China's efforts to develop advanced technologies that have both civil and military use. This means that China is trying to acquire tech that can be used to drive modern aerospace, computing, and transportation industries -- as well as 21st-century military equipment.

How does it get this information? Everything from outright cyber theft to old-fashioned espionage to legitimate business partnerships.

As the report says:

The Chinese utilize a large, well-organized network to facilitate collection of sensitive information and export-controlled technology from U.S. defense sources. Many of the organizations composing China's military-industrial complex have both military and civilian research and development functions. This network of government-affiliated companies and research institutes often enables the PLA to access sensitive and dual-use technologies or knowledgeable experts under the guise of civilian research and development. The enterprises and institutes accomplish this through technology conferences and symposia, legitimate contracts and joint commercial ventures, partnerships with foreign firms, and joint development of specific technologies. In the case of key national security technologies,
controlled equipment, and other materials not readily obtainable through commercial means or academia, China has utilized its intelligence services and employed other illicit approaches that involve violations of U.S. laws and export controls

Here's a look at a handful of interesting cases of Chinese efforts to get a hold of technology -- both military and civilian -- that could help its military catch up with its Western counterparts.

First up is China's biggest chunk of modern military hardware, its sole aircraft carrier, the Liaoning.  Chinese investors bought the Soviet-built ship -- sans engines, electronics, or weapons -- from Ukraine in 2001 with the stated purpose of turning it into a floating gambling den. We all know how that worked out. Instead of becoming a casino (or luxury hotel like the former Soviet carrier Kiev) Liaoning was commissioned into the PLA Navy last year and it'll serve as China's starter carrier, a floating lab where the navy can master carrier operations before it commissions at least two more carriers in the next decade or so. These ships -- and a crop of modern destroyers and other ships -- are meant to help China project power throughout the Western Pacific.

Then, there's its development of stealthy jets that strongly resemble (on the outside, at least) U.S.-made F-22 Raptors and F-35 Joint Strike Fighters.  Remember, Chinese hackers reportedly broke into the networks of defense contractors working on the F-35 (including Lockheed Martin, maker of both the F-35 and F-22). In an interesting coincidence, China revealed its J-20 stealth jet in late 2010 boasting a nose section that looks a lot like the F-22's, right down to parts of the canopy design and what might be a 3-D heads up display.  Then, last year, China unveiled its second stealthy fighter, the J-31 (below). That plane bears a way-too-close-for-comfort resemblance to the F-22 and the F-35. (Last year, a U.S. Air Force official pointed out that the F-35's computerized maintenance system containing tons of information about the jet had to be redesigned after it was found to be vulnerable to hackers.)

In September 2012, the United States convicted Sixing Liu, a Chinese citizen working for a U.S.  defense contractor, of bringing electronic files containing "details on the performance and design of" guidance systems for missiles, rocket target-designators, and even UAVS, the Pentagon's latest report points out. The document also recounts that two Taiwanese nationals were charged in March 2012 with planning to get their hands on "sensitive U.S. defense technology" and passing it to China. The pair, Hui Sheng Shen and Huan Ling Chang, were allegedly going to take pictures of the technology, delete the images from their cameras, and then bring the memory cards back to China where the images would be recovered.

The DOD report also lists the case of aircraft engine-maker, Pratt & Whitney Canada (a subsidiary of U.S. defense giant United Technologies Corporation) illegally giving engine control software to China for use in its latest attack helicopter, the Z-10. UTC and two subsidiaries ended up having to pay a $50 million fine and had some of its export license privileges suspended temporarily as part of a settlement deal with U.S. authorities. 

Then there's the case of U.S. defense giant General Electric's partnership with China's state-owned aviation firm COMAC -- a program aimed at developing digital avionics for China's first domestically made jetliner, the COMAC 919 (shown below).  GE came under fire from Virginia congressman Randy Forbes, who claimed the technology used to develop next-generation airliner avionics was inked to the same technology used in the U.S. Air Force's premier fighter, the F-22. Forbes worried that sharing information on even a civilian version of these avionics would allow China to develop them for military use. The deal remains on, but given the news we've heard in the last year or so about Chinese hackers, one hopes that GE is being extra vigilant in protecting its most sensitive information.

The predecessor of the avionics deal is GE's partnership with AVIC (COMAC's parent firm) to develop modern jet engines in China. It might seem like decades-old technology, but building jet engines, especially those used in 21st-century fighter jets, are one of the toughest engineering challenges in aviation. AVIC has partnered with GE in an attempt to develop engines capable of powering large aircraft: from civilian jetliners to military transports, radar planes to bombers. As U.S. Naval War College professor Andrew Erickson has said, these joint ventures could "give the Chinese aerospace industry a 100 piece puzzle with 90 of the pieces already assembled. Enough is left out so that the exporting companies can comply with the letter of the export control laws, but in reality, a rising military power is potentially being given relatively low-cost recipes for building the jet engines needed to power key military power projection platforms."

Chinese Internet, Wikimedia Commons

National Security

DOD report calls out Chinese hacking, but what do we do to stop it?

So what's new in the Defense Department's new report about Chinese military capabilities? The biggest news seems to be that the Pentagon is actually saying that Chinese-military hackers are attacking its networks. Not that this should be news to readers of Killer Apps.

The report states that numerous U.S. government computer systems around the world are being "targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military." It goes on to say that China is using cyber espionage to collect intelligence on U.S. diplomatic, economic, and "defense industrial base sectors that support U.S. national defense programs."

The same skills being used by Chinese cyberspies to steal information could easily be used in a destructive attack against U.S. networks, the report points out.

Again, nothing new. Heck, this isn't even the first time the U.S. government has called out China on hacking.

The real question is: what will it take to stop widespread cyber espionage before it leads to all-out cyber warfare: Sanctions? A military deterrent? What about a nuclear-armed military deterrent?

Preventing cyber espionage and cyber attacks is "a consequences calculation and the consequences aren't there," said one Senate staffer who works on cyber issues. For "everybody from your common hacker to your professional hacker to the nation states, the consequences aren't there" to deter these kinds of actions.

He went on to compare the current era of cyber espionage to the "Napster days" of free music downloading.

"There was nothing that was going to deter college-age students from ripping off music until there was a consequence that was associated with it and the RIAA [Recording Industry Association of America] had to go out there and start suing," said the staffer.

Richard Bejtlich, chief security officer at Mandiant, thinks that while it's important for the U.S. government to call out the Chinese government's bad behavior, it's going to take more than harsh language to deter state-backed cyber espionage. (Remember, Mandiant is the firm that published a report in February detailing the exploits of what is believed to be a PLA hacking unit against worldwide targets, including the U.S. government.)

"It's important for noncommercial, government entities like DOD to make definitive statements on Chinese cyber capabilities," Bejtlich told Killer Apps. However, "because the Chinese consider espionage a tool for economic development, and the economy is one of their top national security concerns, they will not change course if the U.S. only complains with words. They are more likely to constrain their behavior if the U.S. imposes specific sanctions and exercises all elements of national power."

Bejtlich's comments echo those of Rep. Mike Rogers, chair of the House Intelligence Committee who has repeatedly urged the State Department to impose sanctions on any foreigner found to aid cyber espionage against the United States government or businesses.

Getty Images