May 21, 2014: The U.S. is trying a new tactic in its battle against Chinese hacking. That is being done by indicting five senior Chinese Army officers (Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui) known to be running a specific army organization (Unit 61398) outside Shanghai that has been tracked at the source of thousands of hacker attacks on American corporations. These attacks resulted in the theft of billions of dollars’ worth of trade secrets and software. China has consistently denied any knowledge or participation in these attacks. The U.S. Department of Defense has long sought permission to go on the attack against Chinese hacking but involving the military struck many as dangerous against a potential foe as large and powerful as China. Lawsuits and sanctions, on the other hand, are a civil matter. Much less risk of military escalation. The Chinese are scrambling to cope with this unexpected form of counterattack and the sanctions and bad publicity that is likely to follow.

In early 2013 it was revealed (at least to the public) by Western Internet security researchers that a specific Chinese military organization, “Unit 61398,” has been responsible for over a thousand attacks on government organizations and commercial firms since 2006. China denied this, and some Unit 61398 attacks ceased and others changed their methods for a month or so. But since then, Unit 61398 has apparently returned to business as usual. The Chinese found that, as usual, even when one of their Cyber War organizations was identified by name and described in detail there was little anyone would or could do about it. There was obviously a Chinese reaction when the initial news became headlines, but after a month or so it was realized that it didn’t make any difference and the Chinese hackers went back to making war on the rest of the world. Unit 61398 is believed to consist of several thousand full time military and civilian personnel, as well as part-time civilians (often contractors brought in for a specific project). Thus a year ago the Chinese thought they were safe despite this unwanted publicity for the secretive Unit 61398.

China's Cyber War hackers have become easier to identify because they have been getting cocky and careless. Internet security researchers have found identical bits of code (the human readable text that programmers create and then turn into smaller binary code for computers to use) and techniques for using it in hacking software used against Tibetan independence groups and commercial software sold by some firms in China and known to work for the Chinese military. Similar patterns have been found in hacker code left behind during attacks on American military and corporate networks. The best hackers hide their tracks better than this. The Chinese hackers have found that it doesn’t matter. Their government will protect them.

It's been noted that Chinese behavior is distinctly different from that encountered among East European hacking operations. The East European hackers are more disciplined and go in like commandos and get out quickly once they have what they were looking for. The Chinese go after more targets with less skillful attacks and stick around longer than they should. That's how so many hackers are tracked back to China, often to specific servers known to be owned by the Chinese military or government research institutes.

The East Europeans have been at this longer and most of the hackers work for criminal gangs, who enforce discipline, select targets, and protect their hackers from local and foreign police. The East European hacker groups are harder to detect (when they are breaking in) and much more difficult to track down. Thus, the East Europeans go after more difficult (and lucrative) targets. The Chinese hackers are a more diverse group. Some work for the government, many more are contractors, and even more are independents, who often slip over to the dark side and scam Chinese. This is forbidden by the government, and these hackers are sometimes caught and punished, or simply disappear. The Chinese hackers are, compared the East Europeans, less skilled and disciplined. There are some very, very good Chinese hackers but they often lack adult supervision (or some Ukrainian gangster ready to put a bullet in their head if they don't follow orders exactly).

For Chinese hackers that behave (don't do cyber-crimes against Chinese targets) the rewards are great. Large bounties are paid for sensitive military and government data taken from the West. This encourages some unqualified hackers to take on targets they can't handle. This was noted when a group of hackers were caught trying to get into a high-security network in the White House (the one dealing with emergency communications with the military and nuclear forces). These amateurs are often caught and prosecuted. But the pros tend to leave nothing behind but hints that can be teased out of heavy use of data mining and pattern analysis.

Over the last decade Internet security firms (especially Kaspersky Labs, Mandiant, and Symantec) have been increasingly successful at identifying the hacker organizations responsible for some of the large-scale hacker attacks on business and government networks. This has led to the identification of dozens of major hacking operations and which campaigns they were responsible for. The security firms also identify and describe major malware (software created by hackers for penetrating and stealing from target systems). For example, earlier this year Kaspersky Labs discovered a stealthy espionage program called NetTraveler. This bit of malware had been secretly planted in PCs used by diplomats and government officials in over 40 countries. Also hit were oil companies and political activists opposed to China. No samples of the NetTraveler from Israel were available for this analysis, but the program apparently did appear in Israel (but may have been prevented from stealing anything). Dissection of NetTraveler indicated it was created by about fifty different people, most of them Chinese speakers who knew how to program in English.

Kaspersky also discovered a similar bit of malware called Red October, because it appeared to have been created by Russian speaking programmers. Red October was a very elaborate and versatile malware system. Hundreds of different modules have been discovered and Red October had been customized for a larger number of specific targets. Red October was found to be in the PCs and smart phones of key military personnel in Eastern Europe, Central Asia, and dozens of other nations (U.S., Australia, Ireland, Switzerland, Belgium, Brazil, Spain, South Africa, Japan, and the UAE). The Red October Internet campaign has been going on for at least five years and has been seeking military and diplomatic secrets. As a result of this discovery, Internet operators worldwide shut down the addresses Red October depended on.

Red October does not appear to be the product of some government intelligence agency and may be from one of several shadowy private hacker groups that specialize in seeking out military secrets and then selling them to the highest bidder. The buyers of this stuff prefer to remain quiet about obtaining secrets this way. In response to this publicity, the operators of Red October have apparently shut down the network. The Russian government ordered the security services to find out if Russians were involved with Red October and, if so, to arrest and prosecute them. Russia has long been a sanctuary for Internet criminals, largely because of poor policing and corruption. It may well turn out that the Red October crew is in Russia and has paid off a lot of Russian cops in order to avoid detection and prosecution. To date, the operators of Red October have not been found. All nations, except China, have become more willing to assist in finding, arresting, and prosecuting criminal hackers. While more are going to jail, it is still a very small proportion of those involved.

What most of these large scale attacks have in common is the exploitation of human error. Case in point is the continued success of attacks via Internet against specific civilian, military, and government individuals using psychology, rather than just technology. This sort of thing is often carried out in the form of official looking email, with a file attached, sent to people at a specific military or government organization. It is usually an email they weren't expecting but from someone they recognize. This is known in the trade as "spear fishing" (or "phishing"), which is a Cyber War technique that sends official looking email to specific individuals with an attachment which, if opened, secretly installs a program that sends files and information from the email recipient's PC to the spear fisher's computer. In the last few years an increasing number of military, government, and contractor personnel have received official-looking emails with a PDF document attached and asking for prompt attention. As more defenses for these types of attacks appear, new attack methods will be developed. Governments and the public are becoming more aware of the extent of the hacker spies. What is not yet known is the impact of all this on the concept of state secrets and military capability.