China drains up to $100B a year from US GDP through hacking

That’s the latest estimate from the US, according to this article. A couple interesting observations
1) the NSA fully tracks China’s hacking and reverse engineers the exploits
2) More importantly, there is the view that China has upset the norm in the amount of hacking it conducts.
One US official dubs China the Curtis LeMay of the post-Cold War era.
“It is not abiding the rules of state craft anymore, and it has to change.”
The take-away is that US industry and government are going to be driven further into each others arms – as Eric Schmidt forecasts, because of this extraordinary situation.
“Through the cumulative effects of Chinese economic warfare…has changed the secrecy calculus.”
But this extraordinary situation, becoming the new normal, assures a big place at the table for oversight about the nature of data sharing in general. Cue the EFF with the hope that they understand what has shifted between China and the world.
As for China, it can expect a less porous target. Also, as more Americans in the private sector, in the course of their work, are forced to think about outwitting China’s hackers, expect feelings toward China to sour.

A word about the famed Cold Warrior LeMay, whose answer to many Cold War challenges was to strike first and use overwhelming force. LeMay was the inspiration for Gen Buck Turgidson, played by George C Scott in Dr Strangelove, whose image is used on this blog. So there’s some thematic symmetry here.

Unit 61398 – Remember that number…(More on Chinese hacking)

An interesting element in the New York Times story is the US’s increasing impatience with the Chinese in this matter.

The story says:

The United States government is planning to begin a more aggressive defense against Chinese hacking groups, starting on Tuesday. Under a directive signed by President Obama last week, the government plans to share with American Internet providers information it has gathered about the unique digital signatures of the largest of the groups, including Comment Crew and others emanating from near where Unit 61398 is based.

It goes on to note:

Obama administration officials say they are planning to tell China’s new leaders in coming weeks that the volume and sophistication of the attacks have become so intense that they threaten the fundamental relationship between Washington and Beijing.

This is where the landscape of relations between China and the US could rapidly change – if Obama’s administration takes the step. Someone in the White House must be doing the math on what kind of systemic risk this sort of hacking is to the US economy – and doing it in a time when the number of intrusions on US agencies alone rose: almost ninefold, to 48,562 in fiscal 2012 from 5,503 in 2006, according to Bloomberg.

This has to be looked at against the wider backdrop. China’s strategy is to quietly overwhelm the US in many areas of competition – economic, technological, trade. Having the freedom to tap into the US’s critical infrastructure gives Beijing great strategic leverage. Stealing data and designs by the terabyte underpins the innovative burst in many of China’s industries.

For years, part of the issue for US companies was their unwillingness to talk about getting hacked for fear that it reflected poorly on their own corporate practices. That changes when you realise everyone is getting hosed down by the same guy. By illuminating the issue, US media helps put China’s real role in the systematic hacking of whole systems for plunder and gain under closer examination.

The more public this issue becomes, the more potential it has to enter into the dynamics of global diplomacy and security. It has implications far beyond China and the US, as well. If Obama’s Admin is willing to act, it will embolden less powerful countries with similar grievances, some of which could possibly be tied back to Unit 61398 in Shanghai. It becomes a talking point right alongside trade, security, currency, etc.

Basically, we’ve just exited the Kumbaya phase of globalisation. Now it’s clear that the global linkages which have been sold to people around the world brings linkages that are direct threats to the well-being of a lot of nations.