That the United States and China have engaged in skirmishes in the cyber domain is no secret. Since the beginning of the 21st century, targeted cyberattacks, often with signs of Chinese origin, have attempted to penetrate the computer networks of U.S. corporations and government agencies in search of potentially valuable information. In response to this new strategic threat, the U.S. Military’s Strategic Command commissioned the creation of a sub-unified Cyber Command in 2009, with one of its stated objectives being the “defense of specified Department of Defense information networks.”
U.S. President Barack Obama very clearly defined the threat that cyberattacks pose to the economy, in both the public and private sectors, when he said that the “cyber threat is one of the most serious economic and national security challenges we face as a nation.” Indeed, conflict in the cyber domain is still having some serious repercussions for the business world.
Civilian Involvement in Cyber Warfare
The characteristic of cyber warfare that makes it so uniquely dangerous to the corporate sector is that military power in the cyber domain must be extended through computer networks provided and maintained by non-governmental bodies. The use of these networks for cyberattacks or defense requires the conscription or cooperation of civilian resources. This creates extreme liabilities for the corporations that provide these networks, as they will quickly become the targets of suspicion and possible retaliation from the enemy state. In recent years, both Chinese and American companies have been caught in just this situation.
On October 8, 2012, the U.S. House of Representatives’ intelligence committee released a report that warned of potential national security threats posed by Chinese telecommunication giants Huawei and ZTE. After conducting a year-long investigation of the suspect companies, the intelligence committee found serious vulnerabilities caused by hidden “backdoors” worked into the companies’ technologies that would allow access to U.S. government and business networks. The report advised against the purchase of products manufactured by Huawei or ZTE, and suggested that policymakers block any mergers between either of the two companies and U.S. telecommunication corporations. These accusations have seriously hurt consumer confidence in the two companies, to the extent that in December of 2013, Huawei’s executive vice president dramatically declared “we are not interested in the U.S. market anymore.” While Huawei has managed to hold on to a small market share in America, the company’s association with Chinese state-sponsored cyberattacks has devastated its ability to operate in the United States.
It became clear last year, though, that the United States was a perpetrator of cyberattacks as well as a victim. In June 2013, former U.S. National Security Agency contractor Edward Snowden provided the world with a look into the intelligence apparatus of the NSA, releasing thousands of classified documents to the media. The released documents revealed that the U.S., like China, was using domestic tech firms (in many cases without their knowledge or consent) as conduits for intelligence gathering cyberattacks. In May 2014, the Chinese government announced that it would no longer purchase or use two of Microsoft’s main products, the Windows 8 operating system and the Microsoft Office 365 Suite. Then, in late July and early August, Chinese officials from the State Administration for Industry and Commerce (SAIC) raided multiple offices owned by Microsoft and its contractors in China. While vague statements about an anti-monopoly probe were made, the company’s decision to end support for the Windows XP operating system – a move that would expose the many Chinese computers that use the operating system to security risks – was also cited as a factor in the raids. While it is likely that the ban and subsequent raids were also intended to pave the way for new operating system technologies created in China, the Snowden revelations allowed potential U.S. espionage activities to be cited as a justification. Just as Huawei and ZTE suffered for their association with espionage activities of the Chinese government, Microsoft took a major hit because of the provocative actions of its government.