China’s government is sharply increasing its investment in cyber warfare programs in what U.S. intelligence officials say is a major attempt to compete with superior U.S. military cyber capabilities.
The new spending priority was described by U.S. officials as a long-term, large-scale reallocation of resources by the Chinese, considered along with Russia to be among the most capable cyber warfare nation states.
"There is now data we have that suggests that they have redirected as much as 20 to 30 percent more funding to cyber than they have in previous years," said a U.S. official familiar with details of the Chinese cyber warfare program.
The official said new intelligence reports indicate Beijing has "made a long term strategic commitment" to bolstering cyber warfare efforts.
According to U.S. officials who spoke on condition of anonymity, the major increase in Chinese efforts was set off after the Chinese concluded that their military cyber programs lag behind U.S. strategic cyber warfare efforts in significant ways.
The increased investment highlights China’s aggressive cyber activities that have been highlighted by both government and private sector security reports in the U.S.
Details of the amount being spent on the People’s Liberation Army (PLA) cyber program could not be learned. But private analysts said the up to one-third percentage funding increase could be valued anywhere from the hundreds of millions to billions of dollars.
Rep. Mike Pompeo (R-Kan.) said that China, through the PLA, has developed one of the most sophisticated cyber capabilities in the world.
"They have stolen hundreds of billions of dollars of intellectual property from U.S. businesses and continue to commit this theft," Pompeo said. "The Chinese have now increased their capacity to conduct massive attacks and continue to consider this weapon as a primary tool in their are arsenal."
A CIA spokesman declined to comment. Chinese Embassy spokesman Zhu Haiquan declined to directly address China's increased cyber spending. "China advocates for the peaceful use of cyberspace. Efforts should be made by the international community to prevent militarization of cyberspace and a cyber arms race," Zhu said.
The increase in cyber warfare funding is part of what China’s military calls its "information warfare" program and was outlined in the latest Chinese defense budget unveiled in early March.
China’s government announced March 4 that defense spending this year will increase by 10 percent from last year’s budget to around $143.6 billion.
That official figure, however, excludes China’s spending on strategic nuclear forces, foreign weapons imports, military space programs, and research and development. The Stockholm International Peace Research Institute estimates that Chinese defense spending could be 55 percent higher than official figures.
China has been sharply increasing its defense spending nearly every year by double-digit percentages as part of an effort to modernize its military.
The boost in Chinese cyber warfare programs followed a meeting in September of the ruling Communist Party Politburo when General Secretary and President Xi Jinping called for adopting a new information warfare strategy.
State-run Chinese television reported Sept. 2 that Xi called for "more military innovation in China and a new strategy for information warfare amid a global military revolution." The directive was made during an Aug. 29 meeting of the Communist Party Politburo.
"Xi Jinping encouraged the army to change fixed mindsets on mechanized warfare and create a concept of information warfare, as the country faces escalating tensions on intelligence issues with other countries," the report stated.
Xi also called for greater PLA efforts to "counter non-traditional security threats," including economic threats, and to increase joint military operations between Chinese military regions "to improve combat capabilities."
Chinese military hacking into both government and private sector U.S. computer networks prompted the Justice Department to indict five PLA hackers on May 1.
Defense specialists said determining the amount China spends on cyber warfare programs is very difficult as the programs are among China’s most secret operations.
Richard A. Bitzinger, a specialist on Chinese defense issues at the S. Rajaratnam School of International Studies in Singapore, said China does not disclose details of its military budget, although it has said that about a third, or around $45 billion a year, is spent on "equipment," including research and development and procurement.
"How much of this is for cyber, I can’t begin to guess," he said, noting that operations and support funding also might fund cyber programs. "I can imagine that it’s in the billions, nationwide, and certainly in the hundreds of millions within the Chinese military. It’s likely that even a ballpark figure is unobtainable, given how disparate China’s overall cyber activities are.
Cyber warfare and intelligence activities also are spread out among the military and its electronic intelligence service, the civilian Ministry of State Security, as well as semi-official technical institutes and universities, making funding estimates difficult.
Paul Rosenzweig, a cyber security expert and former Department of Homeland Security policymaker, said China regards itself as a close competitor of the United States in the cyber domain and views cyber capabilities as a way of "leveling the playing field."
"They have previously devoted substantial resources to cyber espionage and theft," Rosenzweig said. "It is unsurprising that they are, likewise, investing heavily in more ‘conventional’ cyber warfare capabilities."
Over the longer term, "China’s vision of combined operations, with cyber as a strong component of its capability, will significantly challenge American freedom of action in the Pacific," Rosenzweig added.
While China’s cyber warfare and cyber espionage programs are secret, Chinese military writings have provided some insights into Beijing’s thinking on the subject.
"It is anticipated in the foreseeable future that it is extremely likely for cyber warfare to assist or even replace conventional firepower damage means as a major player in modern and future wars," states an Oct. 1, 2013 technical paper in the journal China Military Science.
"In conventional warfare, material media associated with kinetic energy, such as knifes, bullets, artillery shells and missiles are used as the damage media," the report said. "In cyber warfare, computer technology represented by the Internet, or ‘information flow’ is used as the warring media. Warring parties only need to click a mouse to complete the entire attacking process."
Cyber attacks also are not limited to military personnel but can also be carried out by civilian hackers, and can be conducted anonymously in order to complicate efforts to respond, the report said.
Another factor that may have contributed to the decision by Chinese leaders to increase cyber warfare capabilities were disclosures of U.S. cyber operations by the renegade National Security Agency contractor Edward Snowden.
Late last year, NSA documents provided to Germany’s Der Spiegel revealed that the NSA is so proficient at cyber operations that it can break into the communications networks used by foreign spy agencies and steal the data they are collecting clandestinely from agents.
The technique was called "I drink your milkshake" in the NSA documents, a reference to a line about covertly drilling oil from someone else’s well in the 2007 film There Will Be Blood.
Rick Fisher, a China military affairs expert with the International Assessment and Strategy Center, said gauging Chinese cyber warfare efforts is difficult because of Beijing’s lack of transparency.
However, the Chinese boost could be related to the Snowden disclosures, Fisher said.
"Snowden's revelations obtained by Chinese and then Russian intelligence services, which they likely shared, also likely betrayed superior U.S. cyber capabilities—some detailed in subsequent press reports—that China is now trying to match or exceed," Fisher said.
"China today already poses the most pervasive cyber threat to the world in terms of its rapacious appetite for government, corporate, and financial information," he added, noting the increased effort could be dubbed a "Snowden Effect" that will increase the cyber threat to the United States.
The U.S. military is seeking $5.5 billion for cyber activities in the fiscal year 2016 budget, a figure that was questioned last month by Sen. John McCain (R., Ariz.), chairman of the Senate Armed Services Committee.
"Unfortunately, as it turns out, the budget is disproportionately focused on network infrastructure with only eight percent of that $5.5 billion allocated for Cyber Command and the development of our cyber mission forces," McCain said on March 19.
Adm. Mike Rogers, head of the U.S. Cyber Command, testified that cyber threats are "pervasive" and adversaries growing in sophistication.
"Our military networks are probed for vulnerabilities literally thousands of times per day," Rogers said at a Senate hearing March 19. "The very assets within our military that provide us formidable advantages over any adversary are precisely the reason that our enemies seek to map, understand, exploit and potentially disrupt our global network architecture."
Cyber attackers seek not only to disrupt military action but also "to establish a persistent presence on our networks," Rogers aid. "Quite simply, threats and vulnerabilities are changing and expanding at an accelerated and alarming pace in our mission set."
Rogers said the sophistication of cyber attackers includes nations that are attempting to "confuse our attribution ability by creating different relationships" in cyber space.
"For example, using other partners, trying to distance themselves in a visible way so their activity is not as directly attributable," he said.