U.S. Congressional Report Accuses China, Russia of Cyber-Espionage

The United States government, in a report to Congress, said China and Russia are attacking U.S. companies to steal intellectual property and technology.

A U.S. government report has directly accused China and Russia of conducting cyber-espionage campaigns against American companies.

Cyber-espionage attempts by China and Russia are a "pervasive threat" to the United States and surpasses traditional forms of spying, the Office of the National Counterintelligence Executive wrote in a report to Congress released Nov. 3.

"Foreign Spies Stealing US Economic Secrets in Cyberspace" departed from diplomatic language and directly named China and Russia, instead of accusing unnamed "foreign nation-states" for backing cyber-attacks. These types of attacks are expected to grow with the increased adoption of cloud services and mobile devices, the report said.

China was named the "world's most active and persistent" perpetrator of economic espionage against U.S. private sector companies in the report. Chinese- and Russian-supported hackers breach U.S. enterprise computer networks to gather information, the report found. The Internet and the growth in technology devices have made it easy for foreign entities to collect enormous quantities of data quickly and with little risk, according to the report.

"We judge that the governments of China and Russia will remain aggressive and capable collectors of sensitive US economic information and technologies, particularly in cyberspace," according to the report.

China predictably denied the report's accusations. "I hope the international community can abandon prejudice and work hard with China to maintain online security," Hong Lei, the Chinese Foreign Ministry spokesman, told a daily news briefing on Nov. 4, according to Reuters. Hong noted that it is difficult to identify attackers because it is easy to be anonymous and make it appear the attacks are coming from different places. "Making inferences about the attackers is both unprofessional and irresponsible," Hong added.

U.S. Counterespionage Chief Robert Bryant called cyber-espionage a "national, long-term, strategic threat" to the country at a press conference where the report was released.

Cyber-spying is efficient, since it can be conducted with fewer resources and more safely because it is easy for attackers to hide their tracks. The nation-backed attackers may use malicious software and Web- and network-based techniques to breach networks.

"Cyberspace makes it possible for foreign collectors to gather enormous quantities of information quickly and with little risk, whether via remote exploitation of victims' computer networks, downloads of data to external media devices, or email messages transmitting sensitive information," according to the report.

Foreign governments are interested in a wide range of information, including information and communications technologies, location of natural resources, and military and civilian technologies such as clean-energy and medical technology. The stolen information can be used to aid the other country's economic development, gain a competitive agenda or promote its own domestic agenda, according to the report. In fact, the report noted that some U.S. allies are also employing social engineering tactics to obtain "sensitive U.S. economic and technology information" from various U.S. institutions, the report found.

The United States "doesn't engage in economic cyber-espionage like other countries do," Richard Clarke, former cyber-security czar for President George W. Bush, said recently at a conference in Washington, D.C.

During the same speech, Clarke accused China of stealing not just intellectual property from American businesses, but also "transactional and other business data that gives advantages" to Chinese companies. China has to "pay" for its cyber-espionage activities, Clarke said.

The Office of the National Counterintelligence Executive recommended several security measures for organizations, including encrypting information, deploying multifactor authentication to secure network and application access, and conducting real-time network monitoring.

The report is part of an annual assessment of industrial espionage and data collection. The Office of the National Counterintelligence Executive used information from 2009 to 2011 collected by the various military branches, the FBI, the Department of Energy, the State Department, the National Security Agency, the CIA and other government organizations.