China disputes report it’s harboring hackers

Published 10:11 pm Thursday, November 29, 2007

SAN FRANCISCO — The Chinese government on Thursday disputed a report labeling it the world’s most aggressive offender in probing for holes in other nations’ Internet security and encouraging a looming global cyber showdown.

The report, issued Thursday by Santa Clara-based security software vendor McAfee Inc., said government-affiliated hackers in China are at the forefront of a brewing “cyber Cold War” still in its infancy.

Within two decades, according to McAfee, the scuffle could erupt into a worldwide conflict involving hundreds of countries attacking one another’s online networks with sophisticated software.

McAfee said about 120 countries are developing cyber attack strategies and most are merely testing them to determine the risks involved in certain tactics — though devastating international attacks could come one day.

Based on McAfee research and input from security experts with NATO, the FBI and other intelligence outfits, the report said hackers in China are believed responsible for four of five major cyber attacks on government targets in 2007.

The biggest intrusions appear to have targeted a Pentagon computer network and government agencies in Germany, India and Australia and New Zealand.

“The Chinese have publicly stated that they are pursuing activities in cyber espionage … they speak of technology being a large part of war in the future,” the McAfee report read.

McAfee said that in 2007, there were more attacks reported on critical national infrastructure than ever before. Targets included financial markets, utilities and air traffic control machinery, and the attacks were believed to have been launched by governments or government-allied groups.

Another large attack occurred in April, when severe and well coordinated cyber attacks struck Estonia’s banks, government institutions and media outlets. Estonian officials have claimed the attacks originated in Russia. Russian authorities have denied any involvement.

China has steadfastly denied it is engaged in any cyber crime and said its networks too have been targeted.

“China has also been attacked by hackers of some countries, so the Chinese government attaches great importance to and participates in the international law enforcement cooperation in this area,” Foreign Ministry spokesman Liu Jianchao said Thursday.

Liu refused to reveal which countries were targeting China.

The McAfee report also detailed the growing threat to Web surfers from increasingly sophisticated techniques to steal personal information online and install malicious code on victims’ computers to herd them into networks of compromised machines that pump out spam or fire off attacks.

Meanwhile, the Bush administration announced Thursday it had settled a major trade dispute with an agreement in which the Chinese government has pledged to end several trade-distorting tax subsidies.

The deal represents a breakthrough in tense economic relations between the countries by resolving one of four cases the United States has brought before the World Trade Organization attacking Chinese trade practices.

U.S. Trade Representative Susan Schwab said China had agreed to eliminate WTO-illegal tax breaks that supported Chinese exports to the United States and other countries. China also agreed to scrap tax breaks that had penalized U.S. and other foreign countries in trying to sell their goods in China.

Schwab said the economic boost for U.S. companies would be “very substantial” because the tax breaks have been so pervasive. While she did not provide any concrete estimates on the value of the subsidies, she said a whole range of U.S. industries from steel to wood products to information technology would benefit.

“This outcome represents a victory for U.S. manufacturers and their workers,” she said. “The agreement also demonstrates that two great trading nations can work together to settle disputes to their mutual benefit.”