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Report: Chinese Espionage 'Growing and Persistent Threat' to US Economy

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And China's "increasingly creative and resourceful" cyber spying could also affect the US military's "readiness and ability to operate."

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In some networks where DeepField is deployed, "every single possible host is scanned every day," Labovitz says. "This is tens of millions of individual users/devices." However, he points out that "there has always been scanning on the Internet."

"What is different today," he continues, "is the industrial level scale of the scanning activities."

However, Labovitz says he has "no idea of the source" of the scans.

"Many come from boxes in Asia, but this may bear no relation to the actual location of the attackers," he tells me.

This is part of the difficulty in establishing a definitive culprit in any hacking attempt; according to Labovitz, "In the cloud today, geography does not matter much."

"For example, as part of our commercial cloud mapping activities, we regularly spin up dozens and sometimes hundreds of machines across Asia," he explains. "[It] just takes a keystroke and pennies per hour to rent servers in Asia/Europe/US/etc. from commercial cloud providers. And then there are thousands of companies selling cloud servers. All very cheap."

"If you don't want to leave a paper trail, then there are millions of compromise[d] machines around the world. Like the 'legitimate' cloud providers, you can rent time on these millions of compromised office and home computers from hundreds or thousands of underworld brokers."

The Economic Effect

The Commission's report notes that in June, the Assistant Director of the FBI's Counterintelligence Division, C. Frank Figliuzzi, testified to the House Committee on Homeland Security, revealing that the Bureau's estimate of "economic espionage losses to the American economy" for the fiscal year exceeded $13 billion. Indeed, this includes all economic espionage, not just Chinese cyber espionage -- which independent Internet researcher Collin Anderson says is, in fact, hardly limited to China.

"It would be hard to deny that China conducts these sorts of cyber operations," Anderson tells me. "China uses hacking and other forms of intrusion to further their goals -- just like any other state with an interest in its political posture naturally does."

From China's point of view, the US-China Economic and Security Review Commission is "indulging in cold war mentality."

"We hope they will stop their prejudice, respect facts, and stop interfering in China's internal affairs and hurting China-US relations," Foreign Ministry spokesman Hong Lei said at a briefing on Wednesday. "China is firmly opposed to cyber attacks and has enacted laws on this issue."

Strident as Mr. Hong may be, Collin Anderson reiterates: "To say China isn't engaging in this sort of stuff would be implausible."

But he says he sees the report overall as "noncontroversial."

"It's like, okay sure -- we've known about all these things, we've heard it all before," Anderson says. "At the same time, what's next? What's the recommendation? What are we trying to do about it?"

Follow Justin Rohrlich on Twitter: @chickenalaking
No positions in stocks mentioned.
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