Chinese goods are not cheap

The real cost of Chinese goods becomes more apparent by the day.

Clyde Prestowitz, The globalization god has feet of clay

According to a popular mantra of the time, globalization would make all nations rich, being rich they would all become democratic, and being democratic they would all become peaceful because democracies don't go to war against each other, or, at least, that was the belief. In effect, globalization was widely viewed among the American policy elite as a kind of Americanization. The whole world would become like the United States and then America would have no enemies and peace would reign.

This thinking was a powerful force behind the drive to bring China into the World Trade Organization. It was widely believed that countries whose industries participated in the same global supply chains would not go to war with each other. This view was reflected in the widely articulated notion of making China "a responsible stakeholder" in the global economy.

To be sure, World War III has not yet begun and hopefully never will. But what we are seeing in Asia looks a lot like what we saw in Europe in the early 20th century. Globalization has not led, at least not yet, to full democratization. The creation of wealth has not only lifted living standards. It has also increased the ability of nations to pursue ambitions and old rivalries despite being in the same supply chains and despite being interdependent.

Far from leading to peace, the god of globalization is revealing feet of clay as the possibility of war becomes more apparent.

Report links years of cyber attacks to Chinese military

The American cyber security firm Mandiant, which worked with the New York Times to expose and counter a China-based hacking campaign, has released an extensive report that it says ties years of cyber attacks on U.S. corporations back to the Chinese military.

Mandiant says it can even narrow down the hackers to a specific military unit in the Chinese army, Unit 61398, and a specific location in Shanghai.

... APT1 is their name for the Chinese hackers.

Shanghai unit that hacked 115 U.S. targets wasn't even China's 'A-Team'

In just the last week, the abbreviation APT1 has come to represent the bogeyman of digital espionage nightmares. On Monday, security response firm Mandiant released a report profiling a hacker group of that name–referring to it as Advanced Persistent Threat One–and providing detailed evidence that it represented the most active hacking unit within China’s People’s Liberation Army, one that’s compromised more than 141 private sector and government targets in seven years, 115 of which were American.

But if APT1 is the most prolific team of hackers in the Chinese military, it’s not necessarily the best. In fact, when I spoke with Richard Bejtlich, chief security officer at Mandiant and a well-known author and blogger on network security, he argued that APT1 is actually a relatively sloppy group of hackers, and that its mistakes were what part of what allowed Mandiant to profile the unit in such detail. More than a dozen more elite groups of hackers likely operate within China’s military, says Bejtlich, groups that are both harder to track and harder to defend against ...

NY Times says Chinese hacked its computers over story on top Communist leader's wealth

Chinese hackers repeatedly penetrated The New York Times' computer systems over the past four months, stealing reporters' passwords and hunting for files on an investigation into the wealth amassed by the family of a top Chinese leader, the newspaper reported Thursday.

Security experts hired to investigate and plug the breach found that the attacks used tactics similar to ones used in previous hacking incidents traced to China, the report said. It said the hackers routed the attacks through computers at U.S. universities, installed a strain of malicious software, or malware, associated with Chinese hackers and initiated the attacks from Chinese university computers previously used by the Chinese military to attack U.S. military contractors.

The attacks, which began in mid-September, coincided with a Times investigation into how the relatives and family of Premier Wen Jiabao built a fortune worth over $2 billion. The report, which was posted online Oct. 25, embarrassed the Communist Party leadership, coming ahead of a fraught transition to new leaders and exposing deep-seated favoritism at a time when many Chinese are upset about a wealth gap.

A spy at NASA? FBI investigating Chinese man arrested fleeing country

The FBI said Tuesday it is actively investigating a Chinese man arrested Saturday with a one-way ticket out of U.S. -- a scientist potentially carrying highly confidential military secrets and rocket technology from NASA labs.

Bo Jiang, a contractor at the National Institute of Aerospace (NIA) who had been working at NASA-Langley, was arrested at Dulles International Airport on Saturday by FBI and DHS agents as he was trying to leave the country, Fox News has confirmed.

... Jiang was arrested carrying several data storage devices, including hard drives, flash drives and computers that likely contained sensitive information.

“What they did here potentially could be a direct threat to our country,” Wolf told Discovery News. “The Chinese have the most comprehensive spying program in Washington that has ever been. They make the KGB look like they were the junior varsity or freshman team.”

Meanwhile, here in Australia ...

Hackers targeting Australia's electronic secrets

Australian intelligence authorities are reporting a major increase in cyber-espionage attacks from abroad and fear the consequences could be devastating.

Hacking attempts are now so frequent that entire teams work around the clock to repel attacks on sensitive Government departments.

Professor Alan Dupont, a defence and security expert at the University of New South Wales, says the bottom line is that spies are trying to get Australia's electronic secrets.

"The incidence of penetration of our cyber-walls here in Australia have gone up astronomically over the last five years," he said.

"You're probably seeing maybe 400 to 600 per month, at least, trying to penetrate the firewalls of the Department of Defence and other national security agencies."

One former Defence staffer hired to repel cyber attacks says genuine hacking attempts are made on the Defence network at least 20 times every day.

But the risk to big business is of equal concern, as hackers and even foreign governments try to steal Australia's valuable commercial secrets ...

Former intelligence analyst Paul Monk dismisses Chinese denials on the issue.

"We see this massive, very intrusive, very sophisticated cyber-espionage taking place, more or less certainly based in China," he said.

It’s global cyber war out there

Sitting in an office in the Australian Security Intelligence Organisation’s Soviet-style building, which mirrors the Orwellian bunker one might imagine, Australia’s most experienced spy master, David Irvine, has a lot on his mind as he gazes over Lake Burley Griffin.

Irvine, the director-general of ASIO, knows Australian business and the government are engaged in a new, and irreversible, “cold cyberwar”, which the Americans have designated as the fifth and most uncertain defence domain.

And he believes the “target environment” is becoming richer by the day as our electricity, power, transport, and communications infrastructures are inexorably integrated into the internet.

... with the privatisation of so many utilities over the past three decades, government has unwittingly delegated national security to business ...

“The more rocks we turn over in cyberspace, the more we find ... the internet and increased connectivity has expanded infinitely the opportunities for [these threats]”, Irvine says...

Since 2003 the Chinese have executed advanced cyber-espionage operations against the West, including Australia, stealing hundreds of billions worth of business and military secrets in what United States officials say is “the greatest transfer of wealth in history”.

The Chinese were fingered in the hacking of Barack Obama’s and John McCain’s computers in the 2008 US presidential election campaign. In 2011 they allegedly penetrated the parliamentary email systems of 10 Australian federal ministers, including Prime Minister Julia Gillard, and compromised emails belonging to the European Union President and his advisers...

ENORMOUS COSTS

In July 2012 General Keith Alexander, head of the US National Security Agency and the Pentagon’s Cyber Command, declared cyber-theft constituted the “the greatest transfer of wealth in history”.

“The cost of IP theft to the US companies [is] $US250 billion a year” with an additional $US1 trillion spent globally on remediation.

“That’s our future disappearing in front of us”, Alexander said.

Shun US 'tiger' and Japanese 'wolf', Chinese colonel warns

Senior Colonel Liu Mingfu, of the National Defence University, blamed America’s "orchestration" and Japan’s "militarism" for rising tensions over disputed islands known as the Senkaku in Japan and the Diaoyu in China.

"America is the global tiger and Japan is Asia's wolf and both are now madly biting China," Colonel Liu said. "Of all the animals, Chinese people hate the wolf the most."

China was a peaceful nation but it would fight to the death if seriously attacked, he said ...

Colonel Liu directly warned Australia not to follow the US or Japan into any military conflict with China. He said Australia should play the role of a "kind-hearted lamb" and China would discourage it from being led astray.

"Australia should never play the jackal for the tiger or dance with the wolf," he said...

"American hegemony is not at its dawn and not at its zenith," Colonel Liu said. "It is at its sunset and night is coming." ...

Great, world peace is now in the hands of colonels with animal metaphors.

So if this is the cost of making China rich with our trade, why are we still buying their goods?

Maybe that's why Obama wants a trade deal with Europe. If so, that's a step in the right direction. Trade with our allies, and returning manufacturing to the West, is the path to peace and growth.

China is pricing itself out of the market.

File under: economics is a matter of national security.