Double-edged Sword: Australia Economic Partnerships Under Attack from ChinaDuring a visit in mid-September, China’s Foreign Minister Wang Yi
urged Australia to become “a bridge between east and west.” He was
Down Under to discuss progress on the href="http://www.bloomberg.com/news/2014-07-13/australia-says-boosting-japan-ties-won-t-delay-china-fta.html">free
trade agreement between Australia and China that seems likely by
the end of the year. His comment referred to furthering the trade
relationship between the two countries, but he might as well have been
referring to hackers who hope to use the deepening alliance to steal information.
The Australian Financial Review (AFR) did an href="http://www.afr.com/p/technology/china_ramps_up_spying_on_australian_RAWfIGZ4USnF8RHWsbnA8K">in-depth
article with FireEye regarding Chinese attacks against Australian
businesses, and this blog provides additional context.
Australia has experienced unprecedented trade growth with China over
the last decade, which has created a double-edged sword. As Australian
businesses partner with Chinese firms, Chinese-based threat actors
increasingly launch sophisticated and targeted network attacks to
obtain confidential information from Australian businesses. In the
U.S. and Europe, Chinese attacks on government and private industry
have become a routine in local newspapers. Australia, it seems, is
the next target.
The Numbers
First, let’s review the state of Australian and Chinese economic
interdependence. Averaging an annual 9.10% GDP growth rate over the
last two decades, China’s unparalleled economic expansion has
protected Australia from the href="http://www.tradingeconomics.com/china/gdp-growth-annual">worst
of the global financial crisis effects. href="http://www.dfat.gov.au/publications/stats-pubs/australias-exports-to-china-2001-2011.pdf">Exports
to China have increased tenfold, from $8.3b USD in 2001 to $90b
USD in 2013[i], with the most prominent commodities being href="https://www.dfat.gov.au/geo/fs/chin.pdf">iron ore and natural
gas. Much of these resources originate in Australia, which puts
China’s government under significant pressure to meet the skyrocketing
demand for them. Despite the ever-increasing co-dependence Australia
and China share as regional partners, Chinese authorities are likely
supporting greater levels of monitoring and intelligence gathering
from the Australian economy - often conducted through Chinese
State-Owned Enterprises (SOEs) with domestic relationships in Australia.
SOE direct investment into Australia grew to 84% of all foreign
investment inflows from China in 2014, primarily directed into the
Australian mining and resource sector; demonstrating a further signal
for control as China seeks to capture a level of certainty in catering
for its future internal growth. We suspect this to be
government-commissioned cyber threat actors targeting Australian firms
with a specific agenda: to gain advantage and control of assets both
in physical infrastructure and intellectual property.
![]()
height="263" alt="chn"
src="/content/dam/legacy/blog/2014/10/chn.png" class="aligncenter wp-image-6692 landscape-sm" />
Figure 1. href="http://www.heritage.org/research/projects/china-global-investment-tracker-interactive-map">Chinese
Direct Investment into Australia by industry
The Impacts
How have these partnerships impacted Australian networks? Mandiant
has observed the strategic operations of Chinese threat actors target
companies involved in key economic sectors, including data theft from
an Australian firm. Chinese Advanced Persistent Threats (APTs) are
likely interested in compromising Australian mining and natural
resources firms, especially after spikes in commodity prices. The
upward trend in APT attacks from China is also aimed toward the third
parties in the mining and natural resources ecosystems. Mandiant
believes a significant increase in China-based APT intrusions focused
on law firms that hold confidential mergers and acquisitions
information and sensitive intellectual property. It is no coincidence
these third-party firms are often found lacking in network
protections. The investigation also found that, at the time of
compromise, the majority of victim firms were in direct negotiations
with Chinese enterprises, highlighting attempts by the Chinese
government to gain advantage in targeted areas.
Due to its endemic pollution problems, clean energy has evolved into
a critical industry for China. The country has now engaged a plan to
develop Strategic Emerging Industries (SEIs) to address this.
Australian intellectual property and R&D have become prime data,
and has taken a major position in Chinese APT campaigns. Again, it is
the third parties like law firms that are coming under attack.
Furthermore, to reduce China’s reliance on Australian iron ore
exports, Beijing has initiated a plan to develop an efficient,
high-end steel production vertical through strategic acquisitions in
Australia and intervening to prevent unfavorable alliances. For
example, the SOE Chinalco bought into Australian mining companies to
presumably prevent a merger that would have disadvantaged their
interests. Clearly, the confidential business information of
Australian export partners to China is href="http://www.bloomberg.com/news/2012-01-31/china-based-hackers-target-law-firms.html">becoming
increasingly sought after.
Mandiant found that the majority of compromised firms had either
current negotiation with Chinese enterprises or previous business
engagements with Chinese enterprises. These attacks will persist as
trade and investment grows, though they will do so at the cost of
confidential Australian business information such as R&D and
intellectual property. As large Australian mining and resources firms
themselves may partner with the Australian Signals Directorate for
security, the focus of the threat actors shifts to associated parties
with access to sensitive data, who may not be pursuing partnerships
with the Australian Signals Directorate. This calls for greater
awareness and protection against the increasingly determined and
advanced attacks launched.
The Bottom Line
Although this blog focuses on acts against large Australian mining
and resources sectors, Mandiant has observed these APT actors often
focusing their attention on other sectors such as defence,
telecommunications, agriculture, political organizations, high
technology, transportation, and aerospace, among others. But the
broader lesson and message—drawing from U.S. and European experience
with Chinese attacks—is that no one is or will be exempt. For all
Australian businesses and governments, it’s time to fortify defences
for a new era of cyber security.
[i]"Australian Government Department of Foreign Trade and
Affairs. www.dfat.gov.au/publications/stats-pubs/australiasexports-
Source:
Double-edged Sword: Australia Economic Partnerships Under Attack from China
