China yesterday reacted angrily to an independent report by US corporation Northrop Grumman, accusing China of amassing cyber warfare capabilities against the US as "fabrications" and out of ''a Cold War mindset."

"This so-called commission has all along exaggerated the China threat," China's foreign ministry spokesman Ma Zhaoxu said in a statement, which was posted on his ministry's website yesterday.

This is not the first time that China has reacted in such a fashion on reports from the Western media and foreign governments accusing it for conducting cyber warfare.

In the past, Canada, Germany, the UK, the US, France, Spain, the diasporas from Tibet and even its close commercial ally, Australia, have accused China of conducting cyber attacks and hacking, which China has time and again denied despite massive evidence from all these countries of these attacks originating from mainland China.

The US-China Economic and Security Review Commission had contracted US defence aerospace contractor Northrop Grumman Corporation to produce a report on China's cyber warfare capabilities.

In its report, which took two years to prepare, Capability of the People's Republic of China to Conduct Cyber Warfare and Computer Network Exploitation, Notrthrop said that a major element of China's modernisation effort, known as informationisation, is guided by the doctrine of fighting ''Local war under informationised conditions (LWUIC).''

The LWUIC is the People's Liberation Army's effort to develop a fully networked architecture capable of coordinating military operations on land, in air, at sea, in space and across the electromagnetic spectrum.

The government of the People's Republic of China (PRC) is building its cyber warfare capabilities and is a decade into a sweeping military modernisation programme that has transformed its ability to collect US intelligence through cyber espionage and fight high tech wars, the independent Northrop report says.

The report begins with an introduction by saying, ''The People's Republic of China (PRC) may be a global power economically but its military lacks force projection beyond the Asia Pacific region. Its traditional military hardware is one to three generations behind the US and Russia.

"In light of these deficiencies it is probable that cyber warfare will provide China with an asymmetric advantage to deter aggression from stronger military powers as they catch up in traditional military capabilities.

"Cyber warfare would also allow China to leapfrog by means of technology transfer and exploiting adversary weaknesses.''

The report is intended to investigate and address three primary questions - What is China's current military capability? How would cyber warfare allow China to seriously advance its strategic abilities? And what is the evidence that China is headed in a cyber warfare direction?

The report was commissioned by a US Congress panel to find out the magnitude of the threat of cyber attacks to the US and its defence establishments from China in the event of a war.

According to Northrop's analysis, there is evidence to strongly suggest that the Chinese government is conducting a sophisticated hacking  and cyber warfare campaign against US defence sites and conduct industrial espionage.

"The problem is characterised by disciplined, standardised operations, sophisticated techniques, access to high-end software  development resources, a deep knowledge of the targeted networks, and an ability to sustain activities inside targeted networks, sometimes over a period of months."

The report has been generated mainly from media reports, Chinese hacker web sites, technical articles, which have reported a series of attacks originating from Chinese cities with high-tech military operations like Lanzhou, Beijing and Guangdong Province on US government computers, including those belonging to the US Department of State, the White House, NASA, and Department of Defense agencies.

The report has warned the US government that in the event of a war with China, Beijing would use cyber warfare to attack US military computer networks in order.

The report also says that China would also attack the computer networks of US allies in the Asia-Pacific region, suggesting Taiwan, Japan and India would be among the list of China's targets.

The voluminous report says that China is using sophisticated, methodical techniques, and probably has connections with the country's hacker community to infiltrate and probe into the US defense systems.

"Little evidence exists in open sources to establish firm ties between the [People's Liberation Army] and China's hacker community, however, research did uncover limited cases of apparent collaboration between more elite individual hackers and the [People's Republic of China's] civilian security services," the report says.

The report also says that Chinese telecom gear manufacturer Huawei Technologies has close relations to the People's Liberation Army of China.

''Huawei is a well established supplier of specialised telecommunications equipment, training and related technology to the PLA that has, along with others such as Zhongxing and Datang, received direct funding for R&D on C41SR systems capabilities.

"All of these firms originated as state research institutes and continue to receive preferential funding and support from the PLA,'' says the report.
Shenzhen, Guangdong-based Huawei has been trying desperately to make some headway in the US and North American markets, which has established players like AT&T and Verizon Communications.

In August, Clearwire Communications added Huawei to its vendor mix, for a new high-speed wireless network it is building. (See: Clearwire adds Huawei to WiMax vendor list)

Although Huawei is a privately owned company with 2008 revenue of $23.3 billion, one of its directors was a former PLA member, which has added insecurities to global companies and government agencies in doing business with it.

Amid this background, Indian state owned BSNL awarded a part of its huge Southern zone GSM contract to Huawei, citing that the Southern region of India does not shares any geographical borders with China.

This is despite the fact that China is spending $1 billion for building the Hambantota port in Sri Lanka, which will be used by the Chinese as a refuelling and docking station for its navy for patrolling and mapping the sea bed in the Indian Ocean and has a well established listening post at Coco islands, which was leased from the military junta of Myanmar.

It is also a well known that the Chinese bankrolled billions of dollars and arms to Sri Lanka during its fight with the Tamil rebel group LTTE.
The only statement to come out from India in May was from India's home minister Palaniappan Chidambaram, who had said, ''China is fishing in troubled waters.''

See full report : Capability of the People's Republic of China to Conduct Cyber Warfare and Computer Network Exploitation)