China Stealing U.S. Computer Data, Says Commission

The top 10 U.S. defense contractors are said to be victims of cyber-espionage through Chinese "penetration of their unclassified networks"

By Keith Epstein

A congressionally created commission has warned that China is stealing vast amounts of sensitive information from government and corporate computer networks in the U.S., including those of the nation's top defense contractors. This theft is part of China's preparation to outmaneuver the U.S. electronically in any future conflict, according to the bipartisan U.S.-China Economic & Security Review Commission.

The panel, established eight years ago, said in its annual report, released on Nov. 20: "China is targeting U.S. government and commercial computers for espionage."

The 10 most prominent U.S. defense contractors are believed to have been "victims of cyber-espionage through penetrations of their unclassified networks," the report said. Among them: Raytheon (RTN), Lockheed Martin (LMT), Boeing (BA), and Northrop Grumman (NOC).

The commission used its own analysts and investigators to compile information on data theft, based on input from defense, military, and intelligence agencies and specialists. Its findings echo the themes of several recent articles in BusinessWeek, which over the past 11 months has published a series on high-tech security threats to U.S. weapons systems and government and defense industry computer networks. The three main installments in the BusinessWeek series were based on previously undisclosed documents and interviews with more than 100 current and former government employees, defense industry executives, and people with ties to U.S. military, space, and intelligence agencies. They are: E-spionage (BusinessWeek, 4/10/08), () Dangerous Fakes (BusinessWeek, 10/2/08), and The Taking of NASA's Secrets (BusinessWeek, 11/20/08).

Spying on NASA

In its report, the China security commission examined the implications of China's pursuit of dominance in cyberspace and outer space. The panel asserted that the Chinese have sought both military secrets from U.S. government networks and lucrative proprietary information from American corporations. The advantage that China has gained from this espionage could reduce current U.S. conventional military dominance in any future conflict, the commission said.

An example of Chinese espionage cited in the report involves an incident in 2005 in which Chinese cyber-burglars downloaded files about the propulsion system, fuel tanks, and solar panels of NASA's Mars Reconnaissance Orbiter, an incident with details similar to those described in the BusinessWeek story on secrets stolen from NASA.

The report accused China of "rationalizing" its behavior while "devising unique interpretations" of treaties. That development by China, the report said, "coupled with its military modernization, its development of impressive but disturbing capabilities for military use of space and cyber warfare, and its demonstrated employment of those capabilities, suggest China is intent on expanding its sphere of control even at the expense of its Asian neighbors and the United States."