China poised to win cyber war?

Google shocked the Chinese government – not to mention all us gmail users – by announcing on January 12 that the company had suffered a serious cyber security breach, likely perpetrated by China. Encouraged by Google’s bold step, other companies are now coming forward, and so we see just how widespread China’s industrial cyber espionage against the U.S. has become.

China’s Internet spying used to be fairly focused on acquiring defense and military information from the U.S. As such, the U.S. intelligence and defense community could better focus their retaliatory as well as preemptive defense mechanisms. As China’s interests have expanded to economic and industrial secrets, their cyber attacks are now more than ever before looking to tap into that unique brand of American innovation that the U.S. is so well known for.

Google believes that the hackers responsible for the January 12 attack were after the gmail account information of Chinese human rights activists. The company also reported that intellectual property was stolen.

Apparently Chinese cyber attacks on U.S. companies are common, but most companies don’t volunteer the information for fear that it will speak poorly of their online security. Google’s willingness to call China out, threatening even to leave the Chinese market as a result of the attack and the censorship its search engine is subject to in China, has caused other big companies – like Adobe Systems – to report similar attacks.

According to Alan Paller, Director of Research at the SANS Institute, a computer security firm, says, “The odds of the 25 biggest companies in California not being fully compromised by the Chinese is near zero…That is true of companies across the country.” So, really, no company is safe from the unrelenting force of Chinese espionage.

Paller describes China’s approach to hacking as a massive sweep. No rock is left unturned in search of information that could give China a competitive advantage. Once again, China’s strength in numbers gives it an edge. And, according to Congress’s U.S.-China commission, the U.S. is struggling to keep up.

Even though Obama has emphasized the importance of protecting the online world for both the public and private sectors, how is a question that remains unanswered. Right now, it looks like China might just be winning this war, especially given the recent directive by the White House National Security Council, which basically tells the U.S. spy community to remove China from its primary priority list for intelligence gathering.

CIA Director Leon Panetta and Director of National Intelligence Dennis Blair have objected, referring in part to China’s aggressive cyber attacks. Proponents of the directive don’t seem to think the priority downgrade will significantly affect intelligence operations aimed at China, but if that were truly the case, why issue the directive in the first place…?