The Security Interviews: What is the real cyber threat from China?

What does China really want?

Let’s consider the question of how the West and China engage with each other. It is easy to misunderstand the goals and intentions of a country such as China, a nation steeped in ancient history, with a billion-strong population, a largely homogenous culture, and a way of thinking forged over millennia without influence from Eurocentric values.

China sees the world very differently to Britain and America, and currently sees itself as on the rise after what it calls a century of humiliation at Western hands. Part of this rise can surely be attributed to the enthusiastic embrace of a version of free market capitalism that took place after the death of Mao Zedong and has proven a runaway success for China’s development.

This meteoric and enviable growth reflects today in the world of technology; where once China followed, its role largely confined to manufacturing, its IT sector is now able to make markets, with tech giants such as Alibaba, Baidu, Tencent and Xiaomi (BATX) comparable to the Big Five, Alphabet, Amazon, Apple, Meta and Microsoft.

This is leading to an increasingly divided IT industry. Consider China and the West’s war-of-words over silicon chips, access to the rare earth minerals needed to build smartphones and other devices, the role of Huawei in 5G networks, or the United States government’s TikTok ban.

It should be easy to see how cyber fits into the context of a resurgent China seeking global impact and influence, and increasingly at odds with the West. Martin approaches this by suggesting we separate China’s cyber activities into four distinct categories.

“Level one is what we’ve just been talking about – we can expect China, and other states, to be trying to gather information covertly, quietly and without releasing it,” he says. “We can expect that. It’s unpleasant [and] we should push back, or protect as best we can, but it’s not especially aggressive.”

Martin recalls the events of 2015 when then US intelligence chief James Clapper, serving under president Obama, pinned a major breach at the Office of Personnel Management (OPM) on China.

The OPM manages human resources for the federal government and oversees matters such as recruitment and background screening, as well as managing health insurance, benefits, and retirement funds. The attack by a Chinese APT, saw the theft of data on more than 22 million Americans, and included information on security clearance status, and over a million fingerprints.

Needless to say this was a big deal, and Clapper, a seasoned military intelligence veteran of many years standing, took the ‘game recognises game’ approach when, in a talk delivered to a Washington DC symposium, he said: “You have to salute the Chinese for what they did. If we had the opportunity to do that, I don’t think we’d hesitate for a minute.”

“That’s exactly what you’d expect,” says Martin, “and we don’t see it as fundamentally wrong. But then there’s a second level of spying that we do see as wrong, which splits into two – gathering lots of data on British citizens, which is where the Electoral Commission hack comes in, and the wholesale theft of intellectual property from the private sector.

“That gathering, beyond government, of lots of data about our economy and citizenry is happening a lot and it is very serious, and it is beyond the pale, although it’s silent data gathering so it doesn’t directly hurt people.

“Then the third level, which I think is the serious and new one, is the pre-positioning of very disruptive, potentially destructive malware into critical systems,” he says.

There is also a fourth level, which Martin argues began with Huawei, the battle for control of the internet and the ongoing fragmentation of the World Wide Web into different spheres of influence. This is still a concern for the West, but it chiefly affects civil liberties in China, upon which we have little influence.

“So, we have these various levels, but the one around which you hear the most debate is probably the least important and the one that doesn’t really violate any international rules such as we have, and yet it’s the one that has dominated discourse in Britain in 2024,” he says.

Missing the wood for the trees

In making the public conversation about cyber spies, we risk missing something crucial. Given the thesis that it’s not unreasonable to expect that Beijing spies on Westminster, as Westminster assuredly spies on Beijing, if we amplify the Ian Fleming cyber angle, we diminish the Tom Clancy cyber angle – China may be preparing for outright cyber warfare.

“We are missing the fact that the United States has warned that there are the equivalent of digital explosives under a lot of critical infrastructure that can’t kill people, but could cripple the administration of aviation, the administration of healthcare, the administration of all sorts of critical services. That, to me, is a much more important thing to focus national effort on,” says Martin.

Martin is referring to the early February disclosures by FBI director Christopher Wray and CISA leader Jen Easterly, and repeated warnings over the actions of the China-backed Volt Typhoon advanced persistent threat (APT) actor. It essentially has a five-year head start pre-positioning its hackers within critical American networks, all ready to cause chaos should the geopolitical situation deteriorate towards a shooting war – this would likely be over Taiwan, although other flashpoints we have not considered may materialise.

“They mentioned aviation, transport, healthcare, financial services and so forth. It was, kind of in Jen’s words, everything everywhere all at once; a hundred Colonial Pipelines at the same time in the event of a major escalation,” says Martin.

The May 2021 Colonial Pipeline ransomware attack, and another almost concurrent hit on meat supplier JBS USA, is a great example of the damage that could be done. The Colonial Pipeline attack in particular caused chaos across parts of the US as queues and panic buying materialised at gas stations.

Comedians had a field day – gas and burgers – national icons of the US, attacked at once; a crippling blow to the average Joe, or at least the stereotypical Joe.

But even bad satire contains an element of truth, and given the fragile state of public discourse and deep divisions in American society as the country prepares for its next presidential election, it’s easy to envisage a scenario where the “digital explosives” squirrelled away by Volt Typhoon blow up at once.

Water, sewage, electricity, broadband and phones, petrol, food – all disrupted. It’s often said civilisation is only a few missed meals from anarchy, but in the US, the scale of public panic would be nightmarish – and don’t forget that around 42% of American households own a gun.

“Colonial scared me … as did Change Healthcare,” says Martin. “I think they’re two of the scariest incidents of the decade, because both of them showed the sheer dependence of critical infrastructure on software.

“A pipeline is a big complicated piece of infrastructure with all sorts of controls and safeguards, [and] of course the hackers didn’t touch it, they just messed up the ability to administer the pipeline. Colonial switched it off for, depending on who you talk to, a mixture of financial and safety reasons. The pipeline was fine, the oil was going through it, but they turned it off because they couldn’t administer it.”

In the case of Change Healthcare, the story is similar – an attack on a not-insignificant but hardly high-profile part of America’s healthcare system brought a huge amount of day-to-day work, such as filling prescriptions in pharmacies, to a grinding halt.

“It’s these little software vulnerabilities, rather than big, spectacular complicated cyber attacks. You can just see how much they can mess you up,” says Martin.

“We obsessed for ages about the IT-OT [operational technology] interface, and air gaps and all that, and can you jump to the operational technology from the enterprise technology? That’s still important, but it turns out you don’t have to jump. You can already cause absolute mayhem. That’s why Volt Typhoon is quite scary – it’s ransomware without the ransom,” he adds.

The British government has not directly stated that these tactics have been deployed against our own critical infrastructure in the way the Americans have, though the NCSC’s leadership, and its ultimate overseers at GCHQ, are definitely alert to the possibility.

Nor will Martin be drawn on whether or not he thinks the UK is at any more or less risk, as to do so risks scaremongering. But even as he urges politicians and the media to start to more attention to critical infrastructure over spying, he concludes with a measured take – don’t panic.

“There’s no evidence China is going to do this right now… and there’s no evidence they’re planning it for a particular date. It’s an asset to project state power in the event that they need to,” he says.