While the global focus remains on the Russia-Ukraine War, the Chinese Communist Party (CCP) undermines regional security in the Indo-Pacific. On March 25, 2022, the Solomon Islands, which are northeast of Australia, confirmed drafting a security agreement with the People’s Republic of China (PRC). According to leaked documents, the deal gives the PRC the right to deploy forces on the island to protect its workers and projects. Australia said it has “great concerns” over the agreement between the Solomon Islands and the Chinese State.
However, the Solomon Islands and the PRC’s agreement is only one of many concerns about China’s goals for absolute power on the global stage. Overwatch analyzed the CCP’s capability to threaten the United States for this brief. We determined that the Chinese Communist Party is the most significant national security threat to the U.S. because of its data theft, espionage activities, targeting of dissidents, advances in the global tech race, and its majority control of the rare earths market.
Massive Cyber Theft
In a March 2022 speech to the Detroit Economic Club, FBI Director Christopher Wray said that China has stolen more data from the United States than all other countries combined. Wray said, “To pick just one example, a year ago, hackers with China’s Ministry of State Security targeted a vulnerability in the Microsoft Exchange Server software widely used in corporate e-mail systems. They compromised tens of thousands of computers worldwide and left back doors so they could return whenever they wanted. And to give you a sense of how common that kind of theft is, just using cyber means, Chinese government hackers have stolen more of our personal and corporate data than all other countries combined.”
According to William Evanina, the former Director of the U.S. Counterintelligence and Security Center, the PRC has the Personally Identifiable Information (PII) of 80% of Americans. PII can include a person’s first and last name, phone number, address, Social Security Number, medical records, financial records, criminal history, or driver’s license number.
In 2015, a state-sponsored hacking group working for the Chinese government breached 20 million U.S. government records from the Office of Personnel and Budget Management. These records also included information from peoples’ SF-86 form, which is required to get a security clearance. SF-86 forms have a significant amount of highly personal information about the person applying for a clearance.
Per cybersecurity firm Mandiant, in the last six months, the Chinese-state-sponsored hacking group, APT41 (Advanced Persistent Threat) compromised “at least six U.S. state government networks” through the exploitation of livestock app USAHerds.
China is also developing more sophisticated malware that can be used against “hardened targets.” CyberScoop reports, “A backdoor in use as recently as November 2021 is the ‘most advanced piece of malware’ ever seen from China-linked spies, according to researchers at Symantec.”
Espionage
In February 2022, Wray explained that the FBI pours most of its resources and time into the Chinese threat. Wray said, “When we tally up what we see in our investigations—over 2,000 of which are focused on the Chinese government trying to steal our information or technology—there is just no country that presents a broader threat to our ideas, our innovation, and our economic security than China.”
Convictions in espionage cases in the United States show that China has successfully recruited former Central Intelligence Agency (CIA) Case Officers and former Defense Intelligence Agency (DIA) Case Officers.
In May 2019, Jerry Chun Shing Lee, a former CIA Case Officer plead guilty to “conspiring to communicate, deliver and transmit national defense information to the People’s Republic of China.” Lee, who was recruited in Hong Kong, provided his handlers with classified information, including the identities of CIA operatives and sensitive CIA locations.
In September 2019, Ron Rockwell Hansen, a former DIA Case Officer, was sentenced to ten years in federal prison. According to a Department of Justice press release, Hansen provided national security information to Chinese agents about U.S. military readiness in a particular region — “information closely held by the federal government.”
Targeting Chinese Dissidents
In March 2022, the Department of Justice (DOJ) charged five individuals with spying on U.S. residents on behalf of the PRC’s Ministry of State Security. The DOJ press release, reads, in part, “Two complaints were unsealed, and one amended complaint was authorized today in federal court charging five defendants with various crimes related to efforts by the secret police of the People’s Republic of China (PRC) to stalk, harass, and spy on Chinese nationals residing in Queens, New York, and elsewhere in the United States.” The U.S. residents included a Chinese national and military veteran, who is openly critical of China’s government.
Overwatch spoke to an anti-CCP activist about how China harasses and threatens dissidents in the states. The activist spoke to us on a condition of anonymity. The activist said, “They do target high-profile people. Most Chinese speakers in the U.S. have WeChat on their phones. So, they use that to try and harass or exploit them. They usually use phrases like ‘be careful.’ They will use your family WeChat to deliver the message. Sometimes they will detain your family and talk to you in front of them.”
The activist continued, “In extreme cases, they will freeze your family members’ credit card. Or they might try and trick you that someone is sick at home, and you must go back and see them. We’ve seen this work before.”
The Global Tech Race and Rare Earths
The Chinese state aims to be the global leader in artificial intelligence by 2030. Currently, China produces more scholarly AI research than the United States.
A December 2021 report from the Belfer Center for Science and International Affairs says that China “displaced the U.S. as the world’s top high-tech manufacturer, producing 250 million computers, 25 million automobiles, and 1.5 billion smartphones in 2020.”
However, the Chinese government has been cracking down on the tech sector in the country. As a result, there are reports of significant layoffs in the industry inside of China. The South China Morning Post reports, “The destruction of tech-related jobs from content creation to private tutoring is translating into fears of a jobless wave that could rival the time when millions of rural migrant workers were turfed out of jobs amid the 2008 global financial crisis or when millions of state sector positions were lost amid the reforms of the late 1990s.”
One area where China has the upper hand over the United States in the global tech race is the rare earths market. Rare earths are essential in developing smartphones, flatscreen TVs, electric vehicle batteries, catalytic converters, for some industrial applications, defense systems, lasers, and even used for screening some genetic diseases. The PRC is currently responsible for 60-70% of rare earth production globally. Apple and defense contractors Raytheon and Lockheed Martin rely on rare earth minerals to develop their products.
OUR ASSESSMENT
We assess that China aims to surpass the United States economically, technologically, and militarily, willing to use any resources, tactics, or manpower to meet its objective of becoming the primary global superpower. The PRC will continue to target U.S. government and private sector systems, stealing sensitive data that will likely be used for further offensive cyber operations against the United States. With 80% of Americans’ PII collected, China has the capability to launch social engineering attacks on over two hundred million Americans. No country other than China can launch such a massive attack from its data theft.
The Chinese State will continue to recruit former intelligence community members, compromising classified information and state secrets. Further, as anti-CCP sentiment grows in the United States, the Ministry of State Security could potentially increase its efforts to harass, threaten, and intimidate Chinese government dissidents in the U.S.
As tensions continue to escalate between the U.S. and China, the CCP could use its majority control over rare earth production to further impact U.S. supply chains from companies that rely on rare earth materials for their products. Such a move would likely lead to a significant increase in the price of these products on the U.S. market. Additionally, if China can surpass the U.S. in the field of artificial intelligence, it would displace the U.S. as the global leader in the field and require many more U.S. government and private sector resources to compete with the Chinese state.
