Colonial Pipeline was a warning shot. Now, Chinese hackers are inside the digital guts of hundreds of Colonial equivalents across the U.S.—power, water, transportation, and more. The question isn’t if they’re in. It’s why. And what happens next. Is this digital coercion? A warning to stay out of Taiwan? Is an invasion imminent—and are we ready for the cyber fallout that could come with it? In the final episode of this series, host and former New York Times cybersecurity reporter, Nicole Perlroth, investigates the nightmare scenarios U.S. officials are gaming out behind closed doors. The battlefield is already shifting—tilting toward Beijing. And while China prepares, America’s attack surface only grows. This isn’t just a problem for Washington. The new front line runs through all of us.
Chapter 1: What triggered the Colonial Pipeline cyber attack?
Tonight, we're learning more about a cyber attack forcing the shutdown of one of the main pipelines supplying gas and diesel fuel to the East Coast. You can see hundreds of cars here, and this is just one gas station. Drivers here tell me they're waiting up to an hour. That's where the line starts. We can't even see where it ends.
The lines for gas getting longer from the Carolinas down to Florida. Panicked drivers, overwhelming gas stations.
It's May of 2021. Jets are grounded. Up and down the eastern seaboard, lines at gas stations sneak for blocks. Panicked Americans vie to fill up garbage bags with gas.
Chapter 2: How did the Colonial Pipeline attack affect gas prices?
I was suspected just prices would go way up. I didn't suspect that there wouldn't be any.
We put a stop to the can sales today. People were coming in and trying to buy, you know, five and ten cans worth of gasoline. They're just hoarding it. The partial shutdown of the Colonial Pipeline is causing panic buying.
The U.S. Consumer Product Safety Commission can't believe they had to warn the public about this, but they did. They warned people about filling plastic bags with gasoline.
The warning comes after images surfaced on social media of the trunk of a car holding bags filled with gas and video of a woman pouring gas into a plastic bag.
Colonial Pipeline, the 5,500-mile artery that carries America's lifeblood, gas, diesel, jet fuel, from Texas up to New Jersey, had been shut down. A cyber attack took the company's IT systems out of commission, jolting all operations to a sudden halt. People panicked. If someone, say China, wanted to wreak chaos and havoc on the United States, this was how to do it.
But this wasn't the work of China or Russia or Iran for that matter. This was a group of cyber criminals looking for a quick payday. Colonial Pipeline was hit by ransomware and the attack didn't even hit the pipeline itself.
But without any way to bill its customers and with shaky confidence in the air gap between employees' computers and its pipeline operation, Colonial preemptively shut that down too. The country's largest pipeline was out of commission for five days. And had Colonial Pipeline not paid off its extortionists or had backups they could tap into, the paralysis could have been much, much worse.
Back at the Times, we got our hands on a confidential Department of Energy assessment that found that as a country, we could have only afforded three or four more days of downtime before that attack brought the entire U.S. economy to its knees. It wasn't so much the gas or jet fuel. We had the reserves for those. It was the diesel required to run our factories.
The attack and the dependencies it revealed caught the nation completely off guard. And China's leaders paid careful attention.
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Chapter 3: What are the implications of China's cyber capabilities?
China's made no secret that it hopes to be there by 2049, the centennial party.
They're building up their military at an alarming rate. They want to be the number one economic power of the world and the number one economic military power in the world by 2049.
And in Xi's grand vision, anything less than total reunification with Taiwan would render China's great rejuvenation incomplete. It's Xi's version of manifest destiny. And it's not just symbolic. It's a strategic imperative. In the party's eyes, Taiwan is more than just a renegade province. It's a U.S. outpost, a threat to China's territorial integrity.
Geographically, Taiwan sits at the heart of the first island chain, a natural barrier to China's naval dominance in the Pacific.
Taiwan sits at the heart of what we call in the United States the first island chain.
The first island chain stretches from Japan through Taiwan and the Philippines to the Malay Peninsula. This line of defense is designed to stop China's military from expanding into the Pacific.
If you look at the first island chain, these are all formal treaty allies of the United States or close partners in the case of Taiwan.
The islands form the first major geographic barrier between mainland China and the Pacific. The US and our allies see it as a containment line. China sees it as a strategic chokehold. And at the center, just 100 miles off the coast of mainland China, sits Taiwan, a linchpin, geographically, militarily, and symbolically. Because lest we forget China's all-consuming five poisons,
Well, it's the Uyghurs, it's Tibetans with the Dalai Lama, it's Falun Gong, the democracy movement, and then finally Taiwanese independence.
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Chapter 4: How does Taiwan fit into China's military strategy?
Here's John Holquist, Mandiant's chief analyst.
One of the strange things about this space is that you are fighting the next cyber war now, regardless of how far along it is to the actual game time, right? You have to do it now because when the big conflict comes, it's too late to root out these adversaries and it's too late for them to get access.
The reality is, is most adversaries want to be in place in advance so that they're prepared where they are digging in for contingency.
Now, what's clear in hindsight is rarely clear before the fact. But looking back on Russia's twin cyber assaults against the Ukraine grid back in 2015 and 2016 is like reading the tea leaves for Putin's eventual military invasion in 2022. So should we be reading China's incursions into our own infrastructure as tea leaves for a Taiwan invasion?
Even saying that out loud risks falling down the creeping determinism trap. The economic and military risks to China of a Taiwan invasion would be massive. But China's cyber assaults on our infrastructure, and by the way, we're seeing very similar intrusions in Japan and Taiwan.
suggests at the very least that Xi is keeping his options open and ensuring that if he ever does pull the trigger, the battlefield is already tilted in his favor. Here's Andrew Scott again.
I think much of what we may see in a Taiwan environment from the PRC is inside Taiwan very much a intel gathering, maybe disruption of services to support sort of military activity, along with disinformation and misinformation and all of those avenues. I think the thing that is fundamentally different here that we are most concerned about is the implications for the US homeland.
The implications for the U.S. homeland. This brings me to Matt Turpin. Turpin spent his career tracking the PRC's battlefield preparations. His resume spans decades and administrations. As Xi was stepping into power in 2012, Turpin was in Honolulu, serving as the chief war planner for the U.S. Pacific Command.
In 2013, he moved to the Pentagon, where he served as China advisor to the chairman and vice chairman of the Joint Chiefs of Staff under Obama. When Trump first came to office, Turpin became China director to the National Security Council and Commerce Departments. These days, he's a senior advisor at Palantir and visiting fellow at Stanford's Hoover Institution.
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Chapter 5: What is the significance of Taiwan in global semiconductor supply?
You have to be pre-positioned. You have to learn their system. You mentioned Stuxnet earlier. You look at all the time involved to create that system. So you have to do the work ahead of time so that you can press the button if you choose to.
Stuxnet, if you'll recall, was a surgical U.S.-Israeli cyber strike that sabotaged Iran's nuclear program. But Stuxnet's code was only half the magic. The other half was in the years of preparation, the groundwork, learning the system, sneaking the code in on a USB stick, the pre-positioning. And that is exactly what China is doing with its living off the land attacks.
Only this isn't a precision strike. It's a mass infiltration campaign targeting hundreds of critical systems, power, water. And these systems, they're far easier to infiltrate than Iran's nuclear lab. The bulk of our gas, our water pipelines were built decades ago when their primary threat was a tree root, not nation state hackers.
You're talking about networks and environments that for decades have been architected and run in a way that was never intended to take into account these sorts of risks. They were intended to take into account how do we maintain delivery of services in the event that a water pipe breaks or a lightning strike takes out a power generation facility.
Volt Typhoon, China's elite infrastructure hackers, have radically changed the calculus. For now, they're lurking, lying in wait. The fear is, what happens when, or if, they decide to detonate on the access they already have? The everything, everywhere, all at once cyber attack.
To state it plainly, should they so choose, the PRC has the capability to cut off our access to water, power, transportation, gas, and a shutdown might be our best case scenario. The worst case scenario, it's almost too gruesome to spell out, but we've caught flashes.
In the summer of 2017, Russian hackers launched a more brazen and potentially much more dangerous attack, this time on Petro-Rabig, a massive oil refinery along the Red Sea in Saudi Arabia. On a Friday night in August, a safety system triggered the whole plant to shut down.
The hackers made a small coding mistake and they ended up shutting down the refinery instead of triggering a deadly explosion.
Saudi Arabia, 2017. Russian hackers got into Petro-Rabig, a major petrochemical facility, and were able to shut off the safety locks that prevent an explosion. Hackers have already demonstrated they have the ability to contaminate our drinking water by hacking into the chemical controls at water treatment facilities. Now, none of these scenarios have come to fruition.
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Chapter 6: What could a cyber attack on U.S. infrastructure look like?
Last year, he broached whether the PRC would be open to drawing red lines around civilian targets, like water.
I don't negotiate for the U.S. government, but I will occasionally ask questions that the U.S. government has asked me to ask. And the answer was no, we're not interested. Some of these are people I've known for a long time, and they had a good point. It's like, look, five years from now, 10 years from now, we're going to be much stronger than you. So why should we make a deal with you now?
Because we'll have a better hand to play five years from now.
So the answer was no. So long as the U.S. abides by the law of armed conflict, there will be targets that are off limits to us, but fair game to the CCP. And they know it. Which starts to make the mutual and mutually assured digital destruction ring a little hollow.
I used to think that the Chinese had an advantage because when they showed up, they never brought lawyers. We, of course, had thousands or even millions of lawyers with us. It's like, geez. One time I said, the worst thing we could do to you people is teach you to do this rule of law stuff.
And speaking of red lines, here's Jenny Sterling in conversation at our live panel in March.
Well, first of all, they're not tiptoeing over the line. They're like way over the line, man. They're like, I mean, this was the whole point, right? This is not a theoretical threat. It's a very urgent threat where China is deep into our critical infrastructure, water, power, transportation, communication, specifically to lay in wait so they can launch disruptive and destructive attacks.
I think that is way over the line.
So here we are. China has tilted the digital battlefield in its favor. They're not respecting red lines. They've already crossed them. They're inside the house, inside our most critical infrastructure. And as tensions rise with Trump's trade war, the escalating rhetoric, this dangerous game of chicken, the economic entanglement that once acted as a break, is giving way.
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Chapter 7: How do U.S. cyber defenses compare to China's?
All of this is what's called secure by design. And under Jenny Sterling, this became a major priority at CISA.
You've seen out of CISA and out of the administration, in the Biden administration, very much a focus on shifting the burden of security to those who can bear it, to the manufacturers of hardware and software that, quite frankly, need to do better with building in security by default into their hardware and software. We can't keep expecting small to medium-sized critical infrastructure
to owners and operators who have limited bandwidth, limited resources to bear all the burden of securing their networks and infrastructure. And we think that there's a lot more that industry can do in that space to really build in and bake in security from the beginning.
Secure by Design is really focusing on technology vendors doing everything they can to prioritize security and product development. So safer, more secure products so that the burden isn't placed on customers and the end users and the small businesses or even the big businesses to have to constantly patch vulnerabilities.
Secure by design is perhaps most urgent in one particular burgeoning field, AI. Artificial intelligence is rapidly embedding itself in how we communicate, how we diagnose illness, in surveillance and national defense. It promises incredible advancements and efficiency, freeing us to focus on higher order tasks. But behind the scenes, it's unleashed a Pandora's box of complexity.
And complexity is security's greatest enemy. It allows for entirely new points of entry and an entirely new range of dependencies. Many we don't and won't understand until someone exploits them. Every time we engage Gen AI, we're not just asking a question. We're handing over the keys to our private lives, our medical histories, our business secrets, even our unspoken thoughts.
I find the whole exercise to be a quiet, compounding surrender of trust. And soon that trust will be granted to AI agents, not just to answer our questions, but to manage business operations on our behalf. As a society, it appears we're determined to dive head first into AI, without a second thought as to how this might one day be used against us.
On this, I want to play you an interview that Paul Tudor Jones, the hedge fund manager, recently gave to Andrew Ross Sorkin this May.
I went to this tech conference about two weeks ago out west, and I just want to share with you what I learned there. There was a tech panel that had four of the leading modelers of the AI models that we're all using today. The quick three takeaways from that are, one, wow, AI can be such a force for good. And we're gonna see it immediately in both health and education very quickly.
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Chapter 8: What are the potential consequences of a Taiwan invasion?
Here's Nate Fick, our inaugural cyber ambassador who served under Biden.
Is AI being used offensively? Yes, undoubtedly. I mean, I think it's intrinsic. We have to recognize that these technologies are always going to be used to generate advantage. But I'm even more excited, actually, about what AI can do on the defensive side.
I think about the years that I spent running a company that was doing its best to build safe and secure software and investing an enormous amount of time and energy and money in quality assurance. And yet, still, when you're talking about millions and millions of lines of code, it was buggy stuff.
And using AI to build better software, to create things that are more truly secure by design, I think is pretty exciting.
What Nate's saying is yes, AI is already being used to hunt for vulnerable systems, to generate zero days and break in. But the same capabilities that can bind flaws can also fix them. all those bugs we introduced in our rush to move fast and break things, AI can do what our puny human mind seemingly cannot. Build secure code from inception.
And theoretically, it could even be used to go back and refactor faulty code at scale. All those sitting duck routers out there, the ones that reached end of life, the ones Chinese hackers are using right now to burrow into our infrastructure, AI could theoretically be used to hunt them, lock them down, and kick hackers out. Not yet, but that application is not far off.
And maybe most exciting of all, right now, AI tools exist that can spot the tiniest blips, the faintest signal, like a Volt typhoon hacker pinging a system every 90 days just to check they still have access. AI could help slash those dwell times from years and months down to days, maybe even down to minutes and seconds. Here's John Holquist.
But I'll tell you what, we did a hackathon, a security AI hackathon to see how some of the security engineers at Google could use AI. And there are 43 teams competing to just show us what cool thing you could do with AI for security. Nicole, if you sat in that room and you were a VC, you could have walked away with 20 new companies.
Like it is massively powerful for what security practitioners do because it's really good at finding anomalies, finding efficiencies. There's just a lot of really cool applications for what we do every day that are really exciting. And I actually think it's going to be ultimately a better tool for us than them.
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