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Australians have told us they want to do more of their business with government online.
They are also demanding the same levels of simplicity, security and convenience that they enjoy from their banks, airlines or retailers that help them manage their busy lives.
But up until now, governments have been unable to meet these expectations due to the difficulty of proving the identity of online users to an appropriate standard.
That is why we have developed a new digital identity solution, called myGovID. The system enables users to complete the digital equivalent of a 100-point ID check—unlocking easy access to a host of new and existing services.
myGovID will also do away with the need for users to have multiple logins for different departments, which can be a nightmare to keep track of and create headaches when passwords or usernames are forgotten.
The first pilot program using this new system started last week, enabling users to apply for a tax file number online.
Currently, if you need a TFN, you have to download a form from the ATO website, which you then have to take to a post office along with your passport and driver’s licence to prove that you are who you say you are.
The form is then posted to the tax office and you have to wait for a TFN to be generated and posted back to you within about 30 days.
Using myGovID, you will be able to complete the entire process online, using your mobile phone, at any time of the day or night, wherever you are. And, best of all, you can get your TFN within minutes, as opposed to having to wait a month.
While the system is still only a prototype, extensive work has been done to ensure that the privacy and security of users have been built into its very heart.
We have also worked closely with privacy advocates from the beginning to incorporate best practices in the standards, design and workings of the system.
For those reasons, I was extremely disappointed to read a report by ASPI’s Fergus Hanson, which threatened to undermine public trust in this new system by attempting to conflate it with the Australia Card issue.
I was also baffled by Hanson’s claims that myGovID could become a Chinese-style social credit system—a claim contradicted by his own report.
What Hanson demonstrated was a clear lack of understanding of both the technical aspects of our digital identity solution and the role that it fulfills.
His report also contains basic factual errors and self-contradictions and is not, in any way, an objective appraisal of the program.
This is even more disappointing given the substantial time my own Digital Transformation Agency spent with him, walking him through the program prior to his writing the paper.
The DTA also provided written feedback to a draft version of the report, highlighting the numerous mistakes. But that feedback was dismissed as a ‘difference of opinion’.
As an example, Hanson asserted that private-sector companies will somehow be able to harvest data from people using the system.
The reality is that the system is deliberately designed to prevent that from happening, by using privacy-protecting architecture. A ‘double blind’ identity exchange sits between the digital service and the identity provider, ensuring personal information cannot be shared and is not visible to service providers and that services being accessed are not visible to identity providers.
As a government, we are acutely aware that myGovID will only be successful if the Australian public can trust it.
That is why we have consulted with thousands of people during development of the system.
We have also made the system opt-in to give users a choice whether to use it or not and made the system a federated one, so there is never the possibility of a single identifier for Australians.
The digital identity program is aligned with the Australian Privacy Principles and the Privacy Code, the Information Security Registered Assessors Program, and the Australian Government Protective Security Policy Framework and Information Security Manual.
Hanson fails to mention these facts in his report.
I fully expect that we will face some disapproval from certain commentators as we move forward with this project over the next six months.
Every major government reform inevitably faces some level of opposition when challenging the status quo. In the case of technology initiatives, calls of ‘Big Brother’ are often associated with progress.
But if we were to continually yield to the views of the naysayers, we would still be lining up in queues at airports to have our passports checked, rather than breezing through using biometric SmartGates.
Out of interest, I went back and looked at media reporting from the mid-2000s when the merits of SmartGates were still being debated.
It was ‘Big Brother’ at its worst according to one commentator. Another claimed the technology would never work and was doomed to be an expensive failure.
History has proven the alarmists wrong. No doubt it will do so again when it comes to myGovID.
The benefits to the Australian public and the nation’s economic future are too great to allow important reforms such as this to be derailed by misinformation and misunderstanding.
The UK House of Commons Digital, Culture, Sport and Media Committee recently published its interim report on its inquiry into disinformation and ‘fake news’. The report makes a lot of good recommendations, but one in particular stands out: dropping the term ‘fake news’ in favour of more specific terms like ‘disinformation’ and ‘misinformation’.
Disinformation (deliberately false information) isn’t the same as misinformation (unintentionally false information). While misinformation is problematic—say, when ‘misspeaking’ is twisted to mean saying the opposite of what was said—it’s also mostly nonthreatening.
But disinformation and disinformation campaigns are neither new nor benign. The so-called dark arts of psychological warfare, disinformation campaigns are a tried and tested tactic to foster distrust in the government.
During World War II, a journalist named Sefton Delmer was recruited for Britain’s Political Warfare Executive to wage a disinformation campaign against the German population. His team invented rumours suggesting elite corruption, jokes poking fun at the authorities, and anti-authority symbols. He ran a radio station staffed by a supposed German ‘insider’ who spread conspiracies about the German government.
As Delmer put it:
The objective … is subversive. We want to spread disruptive and disturbing news among the Germans which will induce them to distrust their government and disobey it, not so much from high-minded political motives as from ordinary human weakness … We are making no attempt to build up a political following in Germany.
The Russian equivalent—memes, conspiracy theories, fake ‘articles’—was on full display during the 2016 US election. Today, just as in the 1940s, it’s hard to measure the effect. Back then, German newspapers observed that it was difficult to tell the difference between three genuine news stories and a falsified fourth one. In 2016, a marginal effect could have been decisive: only 80,000 votes in three states made the difference between Hillary Clinton’s victory or defeat.
But Russia’s disinformation campaign is different from Delmer’s in two crucial ways. First, Russia has technology that Delmer could have only dreamed of. Delmer couldn’t force radio stations and people to circulate his propaganda, but Russia can by gaming hosting platforms’ algorithms. Second, Russia uses disinformation campaigns in peacetime. According to the authors of Cyber strategy, Russia is unique in using cyber operations to undermine democracies as a strategic goal.
But rather than calling and responding to disinformation operations for what they are, we have adopted, if ironically, one of US President Donald Trump’s favourite phrases: ‘fake news’.
Though the term wasn’t coined by Trump, it was popularised by him. He uses it to describe negative coverage as if it were deliberately false information, conflating two different things. Unflattering portrayals fit within the standard of truth we expect from media organisations, while disinformation undermines the capacities of individuals to make informed choices. Disinformation is only one part of Russia’s interference operations, but in many ways it’s more insidious than using trolls to inflame political divisions because it undermines the basic concept of truth. Democracies can’t fight against the erosion of the informed voter when false information is labelled as a difference of opinion.
So how do we combat these dark arts? For starters, media outlets, analysts, politicians and others need to stop using the term ‘fake news’. It’s too politically loaded, and using it as a catch-all blurs the distinction between opinion and fact and hinders the development of an appropriate response.
Instead, we need to revisit the vocabulary of subversive propaganda (add ‘cyber’, if need be). Terms like ‘disinformation’ are firmly grounded in historical precedent, even with the Russians (for example, the Soviets tried to spread rumours that the US military invented AIDS), and have a basis in international law (subversive propaganda has been regulated since World War I). These terms provide a stronger conceptual basis from which to criticise and oppose Russian actions. The methods are different, but fundamentally the strategic purpose of Russia’s cyber-interference operations is no different than in bygone eras.
Next, democracies need to actively defend themselves against disinformation. It’s not enough to pin responsibility on social media companies. Certainly, platforms like Twitter and Facebook must bear some of the blame—they are neither neutral nor powerless. Taking down fake accounts should become a routine operation, rather than a ‘spare time’ task. Moderating false information should be done carefully, with a view to preserving free speech—a group that flags blatantly false articles, similar to Wikipedia’s taskforce, might be a good model.
Ultimately, though, the real defence must begin with citizens. It’s not disinformation itself, but attention to disinformation that gives it oxygen. A conspiratorially minded fringe is okay—sites like 4chan and InfoWars churned out conspiracy theories long before the Russians weaponised them—but it’s problematic that we appear peculiarly willing to suspend disbelief and give attention to disinformation that appeals to our political points of view. Worryingly, Facebook’s attempts to reduce disinformation often result in users flagging articles they don’t like as ‘false’.
Digital literacy and critical analysis skills need to be prioritised, so that people can better identify disinformation, and distinguish between opinion and fact. In the meantime, journalists must continue to produce quality, fact-based news, and politicians need to lead in openly supporting journalism as the main weapon against disinformation. They need to refrain from using ‘fake news’—especially to describe negative coverage—and deny disinformation airtime. Politicians can also learn from international experiences: the failure of Russian interference in France’s election is particularly instructive.
However democracies choose to defend themselves, the first step is recognising that we’re under attack. In the 1940s, Delmer noted that the trick of spreading disinformation is disguising it so people don’t see it for what it is. Today, the term ‘fake news’ makes that easy.
There’s been a lot of focus on the security arrangements for the My Health Record system. Most of the commentary has been about protecting the data, how secure the platform is for storing the data, and who will have access to the database. But very little attention has been given to the glaring security weaknesses of the health provider systems that will be used daily to access patient information stored in My Health Record.
In addition to hospitals and large health providers, a range of small providers will be able to access My Health Record. These include not only general practitioners and medical specialists, but also allied health professionals such as physiotherapists, speech pathologists, osteopaths, optometrists and dentists, who can also register to access My Health Record. There are many thousands of these small health providers across Australia and most are small clinics with only a handful of staff.
What this amounts to is an attack surface comprising hundreds of thousands of endpoints, most of which have a level of cybersecurity that is virtually non-existent. This is further compounded by staff who have little or no cybersecurity awareness. As an IT service provider with over 14 years’ experience working exclusively with small businesses, including small health providers, I believe these organisations are ill-equipped to provide an acceptable level of security.
The situation isn’t helped by the fact that, to date, these organisations have never been required to adopt or adhere to a common set of cybersecurity standards. Of course, you could point to the requirements of the Australian privacy principles and the notifiable data breaches scheme, which do apply to health providers. But the reality is that most have only a vague understanding of those rules. Whenever I’ve discussed the privacy principles or the data breaches scheme with the heads of these organisations, most are oblivious to their obligations and consider it an ‘IT issue’. Certainly, none have ever seen or heard of the guidelines on securing personal information issued by the Office of the Australian Information Commissioner.
So, with all of this in mind, it would be reasonable to assume that the Australian Digital Health Agency—the body responsible for national digital health services and systems, including My Health Record—has considered this challenge. Perhaps there’s a cybersecurity framework comprising documented minimum standards, a concise easy-to-understand guide, an education program, a compliance regime, and at least some basic level of monitoring and auditing. The unfortunate reality is that almost none of this is in place.
Both the Australian Digital Health Agency and the My Health Record websites have plenty of content on information security for health providers. Typical of many government sites providing cybersecurity information, it’s a dog’s breakfast—a situation highlighted in a recent policy paper published by AustCyber.
The Australian Digital Health Agency website has a page titled ‘Digital Health Cyber Security Centre’ with a box that provides links to six pieces of cybersecurity guidance, ranging from short webpages on using emails and social media to guides on ransomware and patching aimed at IT professionals. The most useful of these is the Information Security Guide for small healthcare businesses. The document was put together by Stay Smart Online in 2017 and, although it’s a stretch to call it a guide, it does provide some easy-to-understand information about IT security.
On the My Health Record website, there’s a section under ‘For healthcare professionals’ titled ‘Recognise your privacy and security obligations’. Under the heading ‘Implementing security practices and policies’, there’s a statement that ‘healthcare organisations that access digital health records need to meet the requirements under the My Health Records Rule’. It includes a link ‘for a checklist that is based on the requirements outlined in the My Health Records Rule 2016’.
Someone with enough time and energy to follow the link will then end up on a page titled ‘Security practices and policies checklist’. There they’ll find a ‘checklist’ that can be ‘used as a guide to implementing security practices and policies in your healthcare organisation’. The very first point provides an indication of just how useful the checklist is:
Elsewhere on the My Health Record website, there’s a page about the legislation that governs the way the data is managed by health providers, which includes:
I challenge anyone to make any sense of all that, let alone the person responsible for running a small clinic. Where do you start, what is essential, and what is optional?
After wading through it all, I couldn’t find any stated minimum cybersecurity standard that a health provider accessing My Health Record data would be required to implement. Not even the absolute bare minimum—have a password policy with a minimum level of complexity, use a password manager, implement two-factor authentication, and ensure all staff have at least one hour of cybersecurity-awareness training.
My Health Record will put vast amounts of confidential health data into a single online database, and no matter how well the central repository itself is protected, it can only ever be as secure as the weakest link. With thousands of small health providers that have only minimal cybersecurity arrangements accessing My Health Record, it has the potential to leak like the proverbial sieve.
There is general consensus among the government, civil society and industry sectors that data is a critical asset in our lives. Everything from knowing the weather in the morning to reading the news and checking emails is based on an underlying assumption about reliability. In short, we assume that the data, in whatever form it may be, is accessible, accurate and verifiable.
Data is central not only to our personal lives, but to the functioning of society and government. Every nation is sitting on a goldmine of data, from health records to immigration, intelligence and defence data. Yet, there’s an inherent risk in putting so much trust into an asset that is highly vulnerable. The broad spectrum of cyberattacks and technological advancements in cybersecurity highlight how easily our dependence on reliable data can be shattered.
Data is a vulnerable and critical asset. There are four key examples that highlight how it can be manipulated and abused by cyber warfare and information operations. As outlined in the Australian Signal Directorate’s Information security manual, it’s important to have an understanding of the cyber threat environment and of malicious cyber actors to best mitigate such threats.
Firstly, data can be stolen. The practice of stealing information through cyber espionage is well-established in military and intelligence operations. In one example of state-sponsored cyber espionage, millions of government officials’ fingerprints, social security numbers and personal and financial were stolen from the US Office for Personnel Management. China is also active in cyber espionage, for example obtaining military documents and sensitive information from the Philippines government.
Secondly, data can be made inaccessible or restricted. Cyber sabotage attacks information for financial gain or to create chaos and disruption. The WannaCry ransomware attacks of 2017 were a recent example. The virus encrypted files and demanded that a ransom be paid for the data to be decrypted. Various governmental institutions and companies were affected by the attack. Britain’s National Health Service couldn’t access its health records and had to cancel non-urgent operations.
Denial of service (DDoS) attacks are also commonly used against government websites to disrupt services and restrict public access to government information. There have been DDoS attacks on government websites in Thailand, India and Luxembourg, among others. Even NATO’s website has been affected. The Digital Attack Map tracks the top daily DDoS attacks globally and highlights the scope of the problem.
Thirdly, the reliability of information has been compromised by fake news and disinformation. Deliberately disseminating false information is a form of cyber-enabled influence operation, the deliberate attempt to influence decisions and opinions. The most blatant example has been the alleged interference by Russia in the 2016 US elections. China also has a hand in influence operations in Taiwan.
Finally, data is vulnerable due to the systems on which it is stored. Cyberattacks on critical infrastructure is a tool of cyber warfare. As we saw in Atlanta, cyberattacks can cause an entire city to come to a standstill. As a Forbes article rightly pointed out, we must recognise the threat posed by cyberattacks not only to critical infrastructure services, but also to democratic and governmental continuity.
Attacks on critical infrastructure, particularly energy systems, are increasingly common. The world’s biggest oil company—Saudi Aramco—was hit by a malware attack in 2012 that successfully wiped data from approximately 35,000 computers and caused the company to temporarily suspend oil sales. Ukraine’s energy sector was also the target of a cyberattack—attributed to Russia in 2015—that caused power outages to more than 225,000 citizens.
These vulnerabilities threaten the continuity of certain functions within society. The question then arises: can the continuity of our digital national identity also be threatened? Data collections such as our immigration, birth, death and marriage records, parliamentary records and court rulings are the evidence of who we are as a nation. If such assets were stolen, destroyed or manipulated, would we have a point of truth to fall back on? As Anne Lyons argues, our digital national identity assets are vulnerable to manipulation.
We should take a leaf from Estonia’s book. Estonia is the only country to have fully realised the vulnerability of its critical governmental data and taken action to ensure its protection. Estonia is creating an overseas ‘data embassy’ in Luxembourg to store its government data. The idea is that if Estonia suffered a catastrophic attack, either physical or cyber, the essence of Estonian government, history and society wouldn’t be lost. This initiative safeguards Estonia’s critical data by storing that data in different, geographically distributed locations.
Although Australia hasn’t been targeted on a large scale as yet, we haven’t been completely immune either. Most (in)famously was the DDoS attack during the 2016 census, causing the ABS website to crash and delivering a significant blow to the reputation of both the Australian Bureau of Statistics and to the Australian government. Some years earlier, the group Anonymous subjected the Australian Parliament (APH) and a senator’s website to DDoS attacks, shutting down the APH website for 50 minutes.
It is no secret that data is a target of cyber warfare. That vulnerability threatens our national security. Understanding the constantly evolving cyber threat environment and the tools of cyber warfare should make clear the importance of protecting critical data. As the threats expand, so too should our ideas of what data we need to protect.
The Australian government needs to ensure that our critical national identity assets are protected from manipulation, falsification or destruction to ensure the reliability of the data that underpins our democracy, governance and national security.
We’ve all experienced the pain of data loss. Whether a work report, university assignment or family photos—everyone knows that nauseating realisation that hours, days or even years of work have disappeared in the blink of an eye.
In the late 1990s, Pixar almost lost its film Toy Story 2 before its release when backup systems failed. Luckily, the film’s producer, a working mum, had a copy of the film stored on her personal computer.
While the loss of that film might have been difficult to swallow, the devastation of losing critical national identity data would have much broader and more consequential implications, particularly on our national security, our democratic processes and the memory of who we are as a nation.
Estonia, widely acknowledged as a leader in e-government, now have a cache of government data that they consider so valuable that they’re establishing ‘data embassies’. Effectively, these will be, datacentres located on foreign soil.
By classifying these new facilities as embassies—essentially Estonian territory in a foreign land—rather than as offshore datacentres, Estonia will retain sovereign control and security over the data.
The project will be expensive. Estonia’s current embassies don’t meet the technical requirements to properly secure the data, which includes the physical construction as well as the necessary networks and trained personnel. Estonia obviously places a high value on its data if it’s willing to go to such lengths to protect it, and to ensure that its government services are uninterrupted.
So, what might happen if Australia’s national digital identity data were manipulated or deleted? That’s the question that ASPI Visiting Fellow Anne Lyons is asking. Historically, the concept of critical infrastructure (CI) has, understandably, been confined to tangible assets.
However, Canada’s definition of CI also refers to processes and systems, both of which could be considered intangible. So an argument could be made that data is both a process and a system, from its collection and creation to its use and eventual re-purposing.
Australia defines CI as:
those physical facilities, supply chains, information technologies and communication networks which, if destroyed, degraded or rendered unavailable for an extended period, would significantly impact the social or economic wellbeing of the nation or affect Australia’s ability to conduct national defence and ensure national security.
Under that definition, data could be considered CI. So, why should we want to think of data as CI?
Data is a valuable national asset that supports the foundations of our nation—the parliament, the courts, the government. Without it, there would be no evidence of modern Australia, its property ownership, international relations, trade history, immigration records or information proving who we are as individuals.
Our data is also evidence of where we have come from—the songs, stories, communities and iconic representations of Australia through the ages.
Our data is one of our nation’s most important assets because it defines our uniqueness.
But there are some who don’t think data should be classified as CI. So what are the obstacles? In general, there are four primary objections:
In December 2017, the Australian government released the Security of Critical Infrastructure Bill for public comment. One of the consultation questions was, ‘Are there other critical assets (other than ports, electricity and water), such as gas and data centre assets that should be captured [in the bill]?’
ASPI’s Peter Jennings offered a blunt response in asking, ‘How could [datacentres] not be covered?’
But what we’re considering goes one step further. We’re not asking whether the hardware and software supporting data should be labelled CI, but whether the actual data itself should be considered CI.
The Productivity Commission notes that data takes various forms: characters, text, words, numbers, pictures, sound and video, just to name a few. There are plenty of datasets that—if degraded or made unavailable—‘would significantly impact the social or economic wellbeing’ of Australia.
Take, for example, Australia’s census data. This data not only helps us to decide where government funding should be directed, but also affects our democratic processes. David Fricker, Director-General of the National Archives of Australia, believes that ‘we have to value our government data holdings as a national asset and within government we have to adjust our behaviours and our policies accordingly’. While there have been several efforts to identify which data is critical for Australia, so far no significant efforts have been made to classify said data as CI.
If national identity data is compromised, it jeopardises public trust, as noted by the Productivity Commission regarding #censusfail. If Australia’s national identity data were compromised, the consequences would be far greater than those of the cabinet file saga.
Ultimately, we need to ask whether classifying national identity data as CI would change how it was used or protected, or, if not, what purpose this classification would serve. It’s time we had a conversation about how critical our data really is.
At a time when ‘cyber anarchy’ seems to prevail in the international system, the emergence in 2015 of US–China consensus against ‘cyber-enabled theft of intellectual property’ initially appeared to promise progress towards order. The nascent norm against commercial cyber espionage that emerged between Xi Jinping and Barack Obama was later reaffirmed by the G‑20. China subsequently recommitted to this proscription in a number of bilateral agreements, including reaching a parallel commitment with Australia in April 2017.
While frail, such a norm might be celebrated as a triumph for cyber diplomacy, yet its inherent ambiguities have also created a grey zone that makes non-compliance difficult to demonstrate. At the same time, Beijing’s pursuit of economic security means that priority targets will likely continue to face persistent intrusions from more capable threat actors.
In fact, based on the technicalities of its terms, there’s fairly limited evidence of Chinese cyber intrusions since 2015 that obviously or blatantly contravene the Xi–Obama agreement.
Arguably, US diplomacy has contributed to reshaping China’s cyber-espionage operations. However, despite the decline in activities, the results haven’t been entirely as intended. The pattern of activities undertaken by Chinese advanced persistent threat (APT) groups since the agreement reflects China’s exploitation of the leeway in its phrasing. For example, the condition that neither the US nor China will ‘knowingly’ support IP theft may have encouraged higher levels of plausible deniability in Chinese cyber espionage operations since.
Notably, in September 2017 the Department of Justice indicted ‘owners, employees and associates’ of the Guangzhou Bo Yu Information Technology Company Limited (Boyusec). Also known as APT3, Boyusec is notionally a private company, but seems to have operated as a contractor on behalf of China’s Ministry of State Security (MSS).
Despite the apparent redirection of Chinese military cyber forces to develop combat capabilities (see my previous post), MSS-linked APTs have evidently remained quite active. But those groups now seem to operate with greater operational security and sophistication, at least compared to the relative ‘noisiness’ of previous APT groups.
At the same time, because the Obama–Xi agreement emphasised that cyber espionage shouldn’t aim to provide ‘competitive advantages to companies or commercial sectors’, there isn’t a clear proscription against intrusions that target US, Australian and international companies so long as the objective can plausibly be justified by strategic and defence interests.
Even the US has, on occasion, engaged in cyber intrusions against foreign companies, including Huawei and Petrobras. Those activities might be differentiated from Chinese activities on the grounds that the intent was not to seek ‘competitive advantage’. However, the end use of exfiltrated data can be difficult to determine, and Beijing might draw on that US precedent to justify similar targeting for which the aims are ambiguous.
And because the agreement is limited to activities that advantage the commercial sector, Chinese cyber intrusions that target a foreign nation’s defence industry—or pursue IP related to dual-use technologies—could also be justified as consistent with the agreement. Unsurprisingly, APT activities against such targets have continued.
From that perspective—and with the caveat that, as the findings from the US Section 301 investigation in Chinese cyber activities note, ‘publicly available information necessarily represents only a fraction of all relevant activity’—it appears that only a limited proportion of Chinese cyber threat activities since 2015 violates the agreement clearly enough to justify their being singled out.
For instance, the Department of Justice’s indictment of Boyusec identified victims that were clearly commercial—Moody’s Analytics, Siemens AG and Trimble Inc.—and emphasised that stolen technologies such as Trimble’s new GPS systems ‘had no military applications’.
Also of note, APT10’s ‘Operation Cloud Hopper’ targeted managed IT service providers, enabling it to ‘move laterally onto the networks of potentially thousands of other victims’. That would give it access and the capability to acquire information valuable for intelligence purposes. But some of those activities also targeted industries that have been prioritised under China’s 13th Five-Year Plan or, in some cases, appeared to be designed to advantage Chinese corporate interests.
Certainly, it’s clear that Chinese cyber intrusions to steal IP have continued, even if there are fewer of them. And adherence to even the technicalities of the Obama–Xi agreement has been incomplete and imperfect at best. According to the Section 301 investigation:
The US Intelligence Community judges that Chinese state-sponsored cyber operators continue to support Beijing’s strategic development goals, including its S&T advancement, military modernization, and economic development.
This shouldn’t be surprising, given that China’s comprehensive approach to national (or rather ‘state’) security (国家安全) explicitly incorporates economic security, as highlighted in the 2015 National Security Law (国家安全法). Indeed, for the Chinese Communist Party (CCP) economic competitiveness is integral to the performance legitimacy that bolsters regime security.
Xi Jinping’s public denunciation of ‘cyber-enabled theft of intellectual property’ is significant—and, from a more optimistic perspective, could encourage a deeper reshaping of China’s behaviour in the long term. Nonetheless, so long as China remains dependent upon foreign technologies to advance its (oxymoronically) indigenous (自主) innovation, the CCP’s commitment to a range of tools to promote technology transfer is unlikely to succumb to diplomatic pressure without major changes in the incentives for Chinese leaders.
Pursuant to a new strategy for ‘innovation-driven’ development, China is, however, also seeking to advance truly ‘made in China’ innovation. In the near future, its reliance upon overseas ‘innovation resources’—accessed through licit and illicit means of tech transfer, as well as through research partnerships and collaborations—seems likely to persist. However, the ultimate objective is to enable China to emerge as a true leader in disruptive innovation in next-generation technologies, including through major increases in funding for basic research. The outright theft of IP may therefore become less important to Beijing. In the meantime, the Chinese cyber threat will persist, necessitating persistence in cyber diplomacy. Therefore, likely targets of Chinese cyber intrusions should concentrate on bolstering their defences and resilience against risks that will remain persistent, while becoming more sophisticated.
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