FORWARD BASE B

"Pay my troops no mind; they're just on a fact-finding mission."

US-China Economic & Defense News

The current Chinese system is interdependent with the West,  they are in a fast-follower position but lack the political infrastructure to take over as innovators. Here are some assorted pieces of economic/defense related news:

I’ve made previous posts on Chinese espionage attempts, however as we see here bribery can be much more effective than outright theft:

http://www.theatlantic.com/international/archive/2012/07/pentagon-contractor-caught-illegally-selling-military-technology-to-china/259469/

A six-year U.S. probe found that Pratt & Whitney, a key military hardware supplier to the U.S., sold China the software and engines needed to make its first-ever modern attack helicopter.

Nothing in the settlement agreement, in which Pratt & Whitney and two related companies, United Technologies and Hamilton Sundstrand agreed to pay a total of $75 million for multiple violations of export rules, directly threatens Pratt’s existing or future government contracting.

http://archives.cnn.com/2002/BUSINESS/asia/01/09/china.loral/

HONG KONG, China – U.S. satellite maker Loral Space & Communications Ltd. has agreed to pay a $14 million fine for passing missile technology to China.

The satellite and communications company will pay the fine over seven years to the U.S. State Department, through its Space Systems/Loral Inc. subsidiary.

The subsidiary neither admitted nor denied the charges but has agreed to pay the fine. It contends the information was “mistakenly sent to the Chinese.”

The investigation started as a criminal case, after the U.S. government adjudged Space Systems/Loral might have broken export laws when it gave technical help to China, on its rockets.

On the other hand, what we get sent isn’t known to be of the highest possible quality. China is extremely diverse and fragmented, the quality products varies highly. Fraud is endemic inside the country. In some cases it might be deliberate sabotage, but we don’t have too much of a reason to believe that most of China’s own parts are in much better condition:

http://defensetech.org/2012/03/28/gao-buys-fake-submarine-parts-from-china/

Remember how the Senate Armed Services Committee held a rather dramaitc hearing on the flood of counterfeit weapons parts coming from China a few months ago?

Well, as part of the committee’s investigation into the problem, lawmakers asked the Government Accountability Office to buy weapons parts from Chinese companies (that U.S. weapons companies sometimes buy from) to see if the Chinese government is doing anything to crack down on the massive problem. A shadow company set up by GAO to buy the parts specifically requested brand new parts for F-15 Eagles, MV-22 Ospreys and two nuclear submarines. What did they get? You guessed it, fake parts from China!

How massive is the problem? Over one million fake weapons parts have been identified as coming from Chinese companies since 2009. You don’t have to be  genius to see the safety nightmare presented by fake parts on incredibly complex systems like submarines, fighter jets and tiltrotors.

Of course, that’s not to say that they only spy on the US:

http://astuteblogger.blogspot.com/2008/03/ethical-country-of-china.html

Prosecutors in Seoul, Korea, indicted an ex-LG employee for spying for a Chinese company in a case they say cost the South Korean economy more than $1 billion. The Chinese company, Changhong-Orion PDP-Chaihong, reportedly paid the LG manager $300,000 per year, an apartment and a car (he was still collecting his LG salary) in exchange for copying 1,182 files from the LG network and giving it to the Chinese company

If you’re interested in finding out more examples of China leveraging it’s fast follower advantage, look to Bruce Hall.

As the US Government has found out, tech companies are required to create the infrastructure for a true “big brother” state.

http://www.wired.com/politics/security/magazine/15-11/ff_chinafirewall?currentPage=all

The Golden Shield hardware — supplied by Cisco and other US companies — is supplemented by human censors who are paid about $170 a month. They sit at screens in warehouse-like buildings run by the Public Security Bureau. These foot soldiers in China’s information war monitor domestic news sites, erasing and editing politically sensitive stories. Some sites provide the censors with access so the authorities can alter content directly. Others get an email or a call when changes are required. Similar methods are applied to blogs. Sensitive entries are erased, and in the most egregious cases blogs are shut down altogether.

The censors also monitor email traffic, looking for politically sensitive content like calls for protest marches and anti-government tracts. Because it would be impossible to screen millions of Internet users, they home in on watchlists of potentially suspicious emailers — known dissidents, suspicious foreigners — and notify investigators of possible violations.

Most of our manufacturing base is directly dependent on Chinese materials in one form or another, supply chain disruption can wreck havoc on even the largest companies. In the event of a serious conflict, large companies will be easy targets for supply chain disruption and cyber attacks. They are slower moving, larger targets that cannot quickly innovate in the face of disruption. Kevin Mitnick showed that you don’t even need superior technical knowledge to break open networks, the people will always be the weakest link in security. In the meantime we are reliant on China for an ever widening base of commodities:

 http://www.nytimes.com/2008/11/02/magazine/02fda-t.html?_r=3&oref=slogin&partner=permalink&exprod=permalink&pagewanted=print&oref=slogin

Concerns about Chinese drugs have become so intense that just three weeks ago, the Health and Human Services secretary, Michael O. Leavitt, announced that the F.D.A. would open an office in Beijing by the end of the year and offices in Shanghai and Guangzhou next year. The agency still plans to send inspectors to China from the U.S., but the offices will provide “an infrastructure that will make those people more effective,” Leavitt said at the time of the announcement.

China’s leap to one of the biggest suppliers of pharmaceutical ingredients in the world happened over the last decade, as the Chinese government subsidized the construction of manufacturing plants that have undercut prices everywhere. Generic drug makers in the United States, where price competition is fierce, were the first to seek cheaper drug ingredients in China. Last year, generic drug applications to the F.D.A. listed 1,154 plants providing active pharmaceutical ingredients: 43 percent of them were in China, and another 39 percent were in India. Only 13 percent were in the United States. 

We’ve been having on-going problems with obtaining Rx drugs in the US:

http://colonyofcommodus.wordpress.com/2012/06/04/hospitals-experience-drug-shortage/

In 2005, the Food and Drug Administration reported 61 drugs in short supply. By 2011, the number had almost quadrupled, the majority injectable drugs used for cancer treatment, anesthesia and intravenous feeding.
The FDA reports that among many reasons, 43 percent of shortages stem from below-standard drug manufacturing facilities. Numerous FDA accounts describe drugs coming out of manufacturing plants contaminated with microbes, impurities, bits of metal and rust and other particulates.
If you read the FDA inspections of these plants, basically it’s scary,” said Erin Fox, pharmacist and manager of the Drug Information Service at University of Utah Hospitals and Clinics. “It’s crumbling buildings with mold on the walls, rust on the equipment. It doesn’t seem like what you would think a factory in the U.S. would look like.”

Visit this link if you want an educated guess on what’s next to be rolled out by big brother:

http://www.blacklistednews.com/14_Incredibly_Creepy_Surveillance_Technologies_That_Big_Brother_Will_Soon_Be_Using_To_Spy_On_You/20455/0/38/38/Y/M.html

The Pentagon has made a lot of noise about cyberwarfare, which has generally been dismissed by pundits. However the pundits rarely mention “who” the threat might be, generally thinking that the government is worried about anonymous haktivists. They aren’t, the FBI keeps them under control as much you can for a decentralized movement.

http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=249#

For 18 minutes in April, China’s state-controlled telecommunications company hijacked 15 percent of the world’s Internet traffic, including data from U.S. military, civilian organizations and those of other U.S. allies.

This massive redirection of data has received scant attention in the mainstream media because the mechanics of how the hijacking was carried out and the implications of the incident are difficult for those outside the cybersecurity community to grasp, said a top security expert at McAfee, the world’s largest dedicated Internet security company.

In short, the Chinese could have carried out eavesdropping on unprotected communications — including emails and instant messaging — manipulated data passing through their country or decrypted messages, Dmitri Alperovitch, vice president of threat research at McAfee said.

Nobody outside of China can say, at least publicly, what happened to the terabytes of data after the traffic entered China.

http://www.csmonitor.com/USA/2012/0510/Exclusive-potential-China-link-to-cyberattacks-on-gas-pipeline-companies

Investigators hot on the trail of cyberspies trying to infiltrate the computer networks of US natural-gas pipeline companies say that the same spies were very likely involved in a major cyberespionage attack a year ago on RSA Inc., a cybersecurity company. And the RSA attack, testified the chief of the National Security Agency (NSA) before Congress recently, is tied to one nation: China.

Three confidential alerts since March and a public report on May 4 by the Department of Homeland Security warn of a “gas pipeline sector cyber intrusion campaign,” which apparently began in December. That campaign, against an undisclosed number of companies, is continuing, DHS said in the alerts, which were first reported by the Monitor.

http://en.wikipedia.org/wiki/Operation_Aurora

Operation Aurora was a cyber attack which began in mid-2009 and continued through December 2009.[1] The attack was first publicly disclosed by Google on January 12, 2010, in a blog post.[2] In the blog post, Google said the attack originated in China. The attacks were both sophisticated and well resourced and consistent with an advanced persistent threat attack.
The attack has been aimed at dozens of other organizations, of which Adobe Systems,[3] Juniper Networks[4] and Rackspace[5] have publicly confirmed that they were targeted. According to media reports, Yahoo, Symantec, Northrop Grumman, Morgan Stanley[6] and Dow Chemical[7] were also among the targets.
As a result of the attack, Google stated in its blog that it plans to operate a completely uncensored version of its search engine in China “within the law, if at all”, and acknowledged that if this is not possible it may leave China and close its Chinese offices.[2] Official Chinese media responded stating that the incident is part of a U.S. government conspiracy.[8]

Cyberwarfare is important, even if most pundits downplay it, because of the vulnerability of our SCADA systems, in the event of conflict an entity would only need to put out a bounty on the system, not even needing it’s own skilled personnel to subvert the system:

 http://spaces.icgpartners.com/index2.asp?NGuid=54D49E8BF0B6431696BB76956FB8AF91

In the past two years, hackers have in fact successfully penetrated and extorted multiple utility companies that use SCADA systems, says Alan Paller, director of the SANS Institute, an organization that hosts a crisis center for hacked companies. “Hundreds of millions of dollars have been extorted, and possibly more. It’s difficult to know, because they pay to keep it a secret,” Paller says. “This kind of extortion is the biggest untold story of the cybercrime industry.”

http://www.newscientist.com/article/mg21228415.400-vital-utilities-vulnerable-to-hacking.html

This was compounded by news of the hack at the Texas water plant, where on 20 November a hacker named “prof” gained access to the plant’s systemsusing a three-character default password on an internet-accessed SCADA made by Siemens of Germany. “No damage was done to any machinery; I don’t really like mindless vandalism. It’s stupid and silly. On the other hand, so is connecting your SCADA machinery to the internet,” he wrote on the Pastebin website.

One response to “US-China Economic & Defense News

  1. Pingback: Daily Linkage – July 11, 2012 | The Second Estate

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