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China’s next generation of hackers won’t be criminals. That’s a problem. – TechCrunch

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The TechCrunch Global Affairs Project examines the increasingly intertwined relationship between the tech sector and global politics.

Criminals have a long history of conducting cyber espionage on China’s behalf. Protected from prosecution by their affiliation with China’s Ministry of State Security (MSS), criminals turned government hackers conduct many of China’s espionage operations. Alarming as it may sound, this is not a new phenomenon. An indictment issued by the U.S. Department of Justice last year, for example, indicated that the simultaneous criminal-espionage activity of two Chinese hackers went back as far as 2009. In another case, FireEye, a cybersecurity company, alleges that APT41, a separate cohort of MSS hackers, began as a criminal outfit in 2012 and transitioned to concurrently conducting state espionage from 2014 onward. But there’s reason to believe that since then, China has been laying the groundwork for change.

Read more from the TechCrunch Global Affairs ProjectA spate of policies beginning in 2015 put China in a position to replace contracted criminals with new blood from universities. The CCP’s first effort in 2015 was to standardize university cybersecurity degrees by taking inspiration from the United States’ National Initiative for Cybersecurity Education — a NIST framework for improving the U.S. talent pipeline. One year later, China announced the construction of a new National Cybersecurity Talent and Innovation Base in Wuhan. Including all of the Base’s components, it is capable of training and certifying 70,000 people a year in cybersecurity.

Along similar lines, in 2017, the Central Cyberspace Administration of China announced an award for World-Class Cybersecurity Schools; a program that currently certifies eleven schools in the same way some U.S. government agencies certify universities as Centers of Academic Excellence in cyber defense or operations. But having a new pool of talent untainted by criminal activity is not reason enough to change China’s operational approach.

Efforts to professionalize state hacking teams are also directly linked to President Xi’s political goal of reducing corruption. Xi’s recent purge of China’s state security services demonstrates the risk officials run by enriching themselves using government resources. Patronage relationships between contract hackers and their handlers are precisely the type of profiteering behavior that Xi has targeted in his sweeping anti-corruption campaign.

In an increasingly cutthroat environment, officers running operations that draw international ire or foreign criminal indictments are vulnerable to being turned in by rivals. Officials targeted by internal investigators may find themselves locked up in “black jails.” China’s security services will shed their relationship with underground hackers as they weed out corrupt officials and directly hire hackers.

The implications of these measures suggest that the Chinese hackers that the world’s companies and intelligence services are accustomed to defending against will be far more professional by the end of the decade.

A more capable China will behave differently than the China we see today. Given its reliance on illicit hackers to hide its criminal and espionage activities, the Ministry of Public Security has tolerated some cyber criminals’ Chinese operations, despite the problems they cause. Once criminal activity is no longer the norm, China’s security services will find that they can move these operations in-house, since government spying is an accepted behavior in international relations. As a result, China’s Ministry of Public Security may conduct more operations against cyber criminals. Analysts should be on the lookout for a rise in these internally focused, anti-crime operations, which would be a good indicator of a change in operational tactics.

This shift in Chinese cyber capabilities will be felt abroad as the list of targeted countries and entities grow. Espionage priorities that long languished near the bottom of the list are likely to  receive renewed attention as the roster of state hackers swells. These campaigns will not be more “sophisticated” than past operations, since China’s hacking teams are already on par with the best. But they will become more frequent.

As China’s security-backed hacking steadily sheds its veneer of criminality, we can expect to see a slowdown over the next decade in cybercrime conducted by contract hackers and others connected to the state. But this trend away from thuggery will be paired with a rise in espionage and intellectual property theft. In hindsight, China’s reliance on criminal hackers will seem like a vestige of the old MSS — corrupt and even amateurish.

While this shift will be gradual, we can expect certain indicators, like rumors of crackdowns within the security services or reports of disappearing or indicted criminal groups. Over time, we can expect to see the gradual separation of technical indicators between known criminal and espionage hacking teams.

But since spying isn’t against the rules, U.S. policymakers will need to continue prioritizing cybersecurity across government agencies, the defense industrial base and critical infrastructure operators. The White House is already moving in this direction; in August 2021 the administration rallied NATO allies on cyber policy and identified 500,000 unfilled cybersecurity jobs. For its part, the NSA launched the Cybersecurity Collaboration Center earlier this year to increase systemwide cybersecurity.  The United States already uses competitions like CyberPatriot to push students into the well-developed cybersecurity talent pipeline. Creating new programs aimed at encouraging job retraining through community colleges certified in cyber defense would leverage existing resources but may attract new students who missed the K-12 pipeline the first time around.

Above all, policymakers should remain vigilant. A decline in China’s use of criminals doesn’t mean the threat has disappeared, only changed. The U.S. government should be prepared to seriously consider the full range of options to meet the challenge of China’s next generation of hackers.

Read more from the TechCrunch Global Affairs Project