The Financial Express

Tension mounting between China and the West

| Updated: December 23, 2021 20:03:57

Tension mounting between China and the West

The world has been carefully monitoring several measures being taken by the European Union, the United Kingdom and the United States to combat China's gradual ascendency within the international geo-political and economic framework and its growing sphere of influence.

The emerging world of digitalisation has also led the United States, the United Kingdom and the EU to focus on cyber security and potential breaches that might have taken place due to efforts by both China and Russia. One needs to remember how over the past two years there have been allegations of intrusions and hacking by Russia within the USA political paradigm.

In this context, analysts have noted carefully recent revelations as outlined by CNN on  December 2. Apparently, a suspected Chinese hacking campaign had breached four US defence and technology companies in the last month, and hundred more US organisations were running the type of vulnerable software that the attackers have exploited.

This apparent espionage activity came to the surface with the assistance of the US National Security Agency. Those associated with the investigation were surprised to find out that it was more extensive than previously known and facilitated by the hackers stealing passwords from targeted organisations with a goal of intercepting sensitive communications. It has since been confirmed by cyber security firm Palo Alto Networks that globally cyber security of at least 13 organisations within the defense, health care, energy and transportation sectors were breached. Palo Alto Networks have also identified about 600 cases in the US of systems running a type of vulnerable software that the hackers have exploited. That includes installations at 23 universities, 14 state or local governments and 10 healthcare organisations.

Palo Alto Networks, according to CNN, has observed that it is the type of digital spying that the US government has for years tried to expose before it ended up compromising sensitive data related to national security or trade secrets. It has also been noted that such hacking effort is almost similar to the techniques of a group Microsoft had identified as operating in China. The ultimate impact of the computer intrusions is not yet clear because investigations of the breaches are still going on. Cyber security experts have observed that the hackers could be trying to gain long-term access to computer systems in order to siphon off key data from US companies. It has also come to the surface that the hackers have in recent weeks shifted from exploiting one popular piece of software to another in a quest to compromise more organisations. Fixes, according to cyber experts, are available for both software products, which are made by the multinational technology firm Zoho. However, many of the firms' customers have yet to update their systems, and remain vulnerable.

Eight Chinese-based technology firms have been added to the so-called "Entity List" for their alleged role in assisting the Chinese military's quantum computing efforts and acquiring or attempting "to acquire US origin-items in support of military applications". This entity list has increasingly been used for national security reasons since the previous Trump administration. The US Commerce Department has also said 16 individuals and entities operating in China and Pakistan were added to the list due to their involvement in "Pakistan's unsafeguarded nuclear activities or ballistic missile program." A total of 27 new entities have been added to the list from China, Japan, Pakistan, and Singapore.

Separately, the Moscow Institute of Physics and Technology has been added to the Department's military end user list. The new listings will help prevent American technology from supporting the development of Chinese and Russian "military advancement and activities of non-proliferation concern like Pakistan's unsafeguarded nuclear activities or ballistic missile program," Commerce Secretary Gina Raimondo said in a statement. Potential suppliers to firms on the list will now need to apply for a license before they can sell to them, with applications likely to be denied.

It may be recalled that Chinese telecoms giant Huawei was added to the list in 2019 over claims that it posed a risk to US national security. The move cut it off from some of its key suppliers and made it difficult for the company to produce mobile phones. The Chinese government has however denied that it takes part in industrial espionage.

 It may be recalled at this point that earlier this year in July the Biden Administration had blamed China for different hacking activity that exploited Microsoft email software. Quite understandably, the Chinese Embassy in Washington has not responded to requests for comment in this regard since then. Beijing has denied any such involvement.

UK MI6 Intelligence Chief Richard Moore has also stepped into the public arena, and according to George Bowden of the BBC, openly recently warned of China's "debt traps and data traps" in his first live broadcast interview. He has observed that China has the capability to "harvest data from around the world" and uses money to "get people on the hook". In this regard, he has also supported closer links with technology partners and speeding-up the vetting process for new tech-savvy recruits.

According to him Beijing is "trying to use influence through its economic policies to try and get people on the hook." Explaining the "data trap", he also observed that "If you allow another country to gain access to really critical data about your society, over time that will erode your sovereignty and you no longer have control over that data." According to him the UK is aware of such a possibility and their national security experts have "taken measures to defend against."

Speaking later at the International Institute for Strategic Studies in London, Mr Moore also pointed out that China was now "the single greatest priority" for his agency and has warned that a "miscalculation" by an over-confident regime in Beijing over an issue like Taiwan could pose a "serious challenge" to global peace. He also said it was essential for Western countries and their technology industries to stand up to the "full spectrum" of threats from Moscow-- from state-sanctioned attacks, such as the Salisbury poisoning, to using political proxies to undermine stability in the Balkans.

This adversarial approach has also gained particular attention with the USA restricting trade with a dozen more Chinese technology firms. They have been added to its restricted trade list, citing national security and foreign policy concerns. Washington has claimed that some of the firms are helping to develop the Chinese military's quantum computing programme. This latest move has emerged as tensions have grown between the US and China over the status of Taiwan and other issues.

Now, within this confrontational matrix has also been added the multi-billion US Dollar European Union "Global Gateway" initiative -- a bid to challenge Chinese influence -- that has emerged because of China's Belt and Road strategy which now extends from China into the Western Balkans, including Montenegro. Belt and Road has been a centrepiece of Chinese foreign policy-- through developing trade links by investing money into new roads, ports, railways and bridges. The strategy has reached into Asia, the Indo-Pacific and Africa and even into the EU's nearer neighbours in the Balkans.

The EU has now announced details of a global investment plan that is widely seen as a rival to China's Belt and Road initiative within the context of digital, transport, climate and energy schemes. It is regarded as part of the West's efforts to counter Chinese influence in Africa and elsewhere.

The EU is also looking at how it can leverage billions of Euros, drawn from member states, financial institutions and the private sector for this purpose. Analysts have remarked that this could be considered as the first serious effort from the European side to put packages together and figure out financing mechanisms, so that countries considering taking loans from China have an alternative option.

Either way, China's economic and geopolitical footprint has grown as tensions rise with the West. Chinese BRI infrastructure projects around the globe now have a massive footing. Within Asia itself, it casts a long shadow -- in Pakistan with US Dollar 27.3 billion, in Kazakhstan with US Dollar 12.01 billion and in Indonesia with US Dollar 20.3 billion.

Now, the EU according to its new plan will attempt to marshal its own clout and resources-- a difficult task within an evolving geo-strategic paradigm. The EU will obviously try to make this into an arena of common interest with their transatlantic friends in the US and UK. The EU has pointedly emphasised that its effort will be "values-based" and "transparent" as it wants to create links not dependencies.

However, the Centre for Global Development (CGD) has rightly observed that it must not be forgotten by the EU that sharing a common interest does not mean that it will not also create more competition. For example, the USA has its own "Build Back Better World" initiative which it launched at the G7 meeting last June. This might mean, according to CGD, "a noisy space with a lot of brands bumping into each other."

Nevertheless, it may be recalled at this point that after seven years of discussion, the EU and China finally reached an 'agreement in principle' in December 2020 on a platform that was dubbed as the ambitious Comprehensive Agreement on Investment (CAI). However, a year later, several dimensions have gradually appeared and in their own way generated controversy between the important actors within the framework.

It needs to be noted here that EU-China relations appear to have been affected due to sanctions and counter sanctions over human rights issues. This has resulted in the European Commission and the European Parliament taking their own time in finalizing their decisions about when the desired Agreement can come into force. However, analysts have observed that despite the latest scenario, behind the curtains, technical preparation and translation of the CAI are still ongoing. This is so because of the economic and geopolitical importance of the EU-China trade and investment relationship.


Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.

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