As Chinese hackers continue their raid of American companies, the threat reaches new levels of urgency, not so much for the sophistication of these hackers, but because of the sheer volume of attacks. And yet, victims continue to keep their breaches under wraps, and the government is hamstrung in what they can say because most everything they know about Chinese cyberespionage is classified. Then, the Times’ outing of its own breach, and its Shanghai assailants, gives the White House an opening. The Obama Administration decides to indict the Chinese military hackers responsible for thousands of hacks on American businesses. But the naming-and-shaming only sends China’s hackers further underground. In Episode 4, host and former New York Times cybersecurity reporter, Nicole Perlroth explores China’s hacking talent pipeline and how the PRC shifted tasking for its most sensitive operations from slipshod PLA hackers to high-precision, digital ninjas.
Chapter 1: How did China become a leader in technology manufacturing?
Within a few decades, the Chinese economy went from agrarian backwater to manufacturing middleman to world-class innovator in its own right. American companies had been the pioneers, the innovators, but somewhere along the way, we got beat at our own game. And in too many cases, it was with our own stolen IP. Throughout the 2010s, examples surfaced everywhere.
The world's top telecom player, Huawei.
They're the biggest supplier of telecoms equipment in the world. So why are countries increasingly turning away from Huawei?
The world's top solar panel makers, all Chinese. The first solar panels were invented in America in 1954, and yet it's been China that's been better able to capitalize on the technology. Now, China controls over 80% of the global solar panel supply chain, while the United States manufactures virtually none of the required components for solar panel production. The fastest growing social media app,
TikTok is the latest app to capture the attention of teens and young adults across the world. The app came as the number one downloaded app of 2018.
Even the drones flown by U.S. law enforcement are no longer American.
For almost the last two decades, Chinese-made drones have dominated the consumer market.
China's DJI owns the sky. As for electric vehicles, it's not Tesla anymore. As of 2023, it's China's BYD.
In the world of electric vehicles, Tesla has reigned supreme, but its days as top dog may be numbered. In China, the world's largest EV market, it's been losing ground to domestic automakers as a ruthless price war has inflamed an already competitive market.
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Chapter 2: Why are Chinese companies surpassing American firms?
When you start to look at it through the lives of people like that who lost their jobs, had to go on Social Security, or had to migrate out of the cities because of the Chinese espionage, it's a real factor.
These shutterings were happening to hundreds of companies and towns across America. Some, like Solar World, tried to fight back. Here's Steve Stone. He worked with a turbine maker that discovered its Chinese competitor had copied its hardware and software. down to mistakes in the original source code.
There was only a handful of companies that really built that technology, both the software and the hardware. And one of those U.S. companies went out of business and then they sued the Chinese government in U.S. court because they said they literally stole our design and then they just sold turbines at a much discounted rate and they displaced our business.
And the court case came down to an actual source code review, and it had the US company's name in the Chinese source code. The US company went and bought one of these Chinese turbines and then just mapped everything out. So they were able to say, this isn't just a manifestation of our source code, it's our actual source code. We're going to point out spelling errors.
Our actual company name is in this. And that company no longer exists. It was taken to create a viable Chinese business, which now is one of the top turbine producers. This is a very much a long game for the Chinese side of the house.
It's worth noting that four of the world's top five turbine makers are now Chinese companies. Meanwhile, Western competitors like Capstone Turbine filed for bankruptcy in 2023, citing decreased demand. Factories closing, towns hollowed out, and yet so many Chinese cyberattacks flew under the radar.
mainly because victims were so reticent to step forward, scared what the disclosures would mean for their reputation, for their stock price, for class action lawsuits. That's why our own disclosure of the Chinese breach of the New York Times was such a game changer.
We've been reporting on the warnings and seeing the examples over and over. State-sponsored computer hacking of American companies by China. Well, tonight, it's the news media itself under siege, including some very big names.
The New York Times has been hacked.
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Chapter 3: How did Chinese hacking impact American businesses?
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