Pentagon: China Threatened to Bankrupt Defense Contractor

Not only is espionage in the form of technology theft a serious issue, but the Chinese have also been manufacturing microchips Americans use [i.e. Huewei smartphones — founded by a PLA engineer on behest of the CCP (See also HERE)]… and it’s not limited to the average American consumer, but the U.S. military as well.


U.S. President Barack Obama walks past Chinese President Xi Jinping / AP


Incident involving jet fighter logistics highlights aggressive Chinese cyber espionage

A U.S. defense contractor was threatened with bankruptcy by Chinese hackers seeking jet fighter logistics secrets, according to the Pentagon’s Joint Staff.

A report earlier this month by the Joint Staff’s J-2 intelligence directorate revealed that the American contractor, a company involved in classified defense work, was threatened by Chinese hackers, according to Pentagon officials familiar with the report.

The Chinese demanded access to the company’s intellectual property, and said unless the company secrets were provided, China would steal the data, reverse engineer it, and then sell it internationally in a bid to force the company into bankruptcy.

The unidentified company is involved in supplying logistics support for U.S. fighter aircraft, such as parts and maintenance for fighters.

A Joint Staff spokesman declined to comment.

Other details of the Chinese cyber industrial espionage were not disclosed, but officials said the incident is an example of a new kind of bold cyber espionage that has been underway for years, involving China targeting U.S. companies such as defense contractors, manufacturers, and high-technology firms.

A Pentagon official said the defense contractor case suggests China likely is conducting similar threatening activities against U.S. companies beyond the defense industry.

“What if they’re doing that to the rest of our industry?” the official said. “The Chinese are likely to tell U.S. manufacturing entities either share your stuff with us we’ll reverse engineer it and bankrupt you.”

China has engaged in massive cyber theft of U.S. intellectual property over the past decade, stealing secrets on U.S. jet fighters and bombers and valuable information on logistics from the U.S. Transportation Command.

A report by a congressional commission on China made public last month said China gained military benefits from industrial and cyber espionage carried out by its intelligence services.

“In recent years, Chinese agents have extracted data on some of the most advanced weapons and weapons systems in the U.S. arsenal, such as jet fighters and unmanned submersible vehicles,” states the annual report of the US-China Economic and Security Review Commission, released on Nov. 16.

“The loss of these and other sensitive defense technologies undermines U.S. military superiority by accelerating China’s military modernization and giving China insight into the capabilities and operation of U.S. weapons and weapons systems,” the report added.

The Chinese attempt to obtain sensitive data from a U.S. defense contractor cyber espionage incident may involve Lockheed Martin’s computer logistics system used on the new F-35 joint strike fighter.

The F-35’s computerized logistics system produces and disseminates digitally extensive data on the stealth fighter’s functions, maintenance needs, avionics, engine systems and other functions, such as pilot and technician training, scheduling, technical data, and need for replacement parts.

The Autonomic Logistics Information System, or ALIS, “integrates a broad range of capabilities including operations, maintenance, prognostics, supply chain, customer support services, training and technical data,” according to the jet manufacturer Lockheed Martin.

“A single, secure information environment provides users with up-to-date information on any of these areas using web-enabled applications on a distributed network,” the company said.

A Lockheed Martin spokesman would not say whether China had attempted to hack the F-35 jet program, but said both the company and the U.S. government are working to safeguard the F-35 against “the continually evolving cyber threat.”

A report by the Defense Science Board warned that foreign hackers like China are conducting devastating attacks on both government and contractor networks.

“The adversary is in our networks,” the 2013 report said. “The DoD, and its contractor base are high priority targets that have sustained staggering losses of system design information incorporating years of combat knowledge and experience.”

“Employing reverse engineering techniques, adversaries can exploit weapon system technical plans for their benefit,” the report noted.

More significantly, foreign state hackers have “gained insight to operational concepts and system use (e.g., which processes are automated and which are person controlled) developed from decades of U.S. operational and developmental experience—the type of information that cannot simply be recreated in a laboratory or factory environment.”

Such data “provides tremendous benefit to an adversary, shortening time for development of countermeasures by years.”

Full article: Pentagon: China Threatened to Bankrupt Defense Contractor (Washington Free Beacon)

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