CCP Stealth War 141; Feature: Chinese Perspectives on Offensive Cyber Operations and Infiltrating the US Power Grid 

(Source: The University of Texas at Austin)

This Week: 

* Feature: Chinese Perspectives on Offensive Cyber Operations and Infiltrating the US Power Grid 

* Taiwan Anticipates Chinese Interference Leading up to 2024 Presidential Election 

* Lithuania’s Indo-Pacific Strategy Sidelines China 

* China Moves to Deepen Ties with the Solomon Islands 

* Belarus Signs Action Plan With Chinese SOE to Develop Agricultural Machines

Chinese Perspectives on Offensive Cyber Operations and Infiltrating the US Power Grid

By Daniel Fu

Foreign infiltration into the US power grid has been a persistent national security concern. Russian-affiliated groups have routinely staged cyberattacks on the US power grid, including on strategic installations such as nuclear power plants, water facilities, and critical manufacturing sites. China, increasingly, poses a similarly acute threat to the US power grid as its offensive cyber capabilities improve rapidly. In 2019, for example, an electricity transformer being exported to Colorado from China was seized by the Department of Energy and Department of Homeland Security due to the presence of backdoor electronics that could have enabled Chinese entities the ability to manipulate sections of the US power grid (Global Times, June 3, 2020; WSJ, May 27, 2020). As competition between Beijing and Washington heightens in the cyber domain, it becomes important to examine the perspectives of Chinese academics and policy elites on offensive cyber operations and efforts to manipulate the power grids of adversaries such as the US.

Chinese academics and policy elites have written extensively about improving Beijing’s offensive cyber capabilities in recent years. Wang Dongsheng of the Hefei-based PLA Electrical Engineering Institute has stated the necessity of “strengthening offensive guidance” in cyberspace and improving joint attack capabilities. He wrote that only by “combining attack with defense” can the country’s “cyber border be maintained” (People’s Daily Online, July 22, 2014). Li Minghai, deputy director of the Cyberspace Security Research Center of the PLA National Defense University, has written that “offensive warfare is an important way to seize initiative in cyberspace.” He asserted that cyberattack capabilities are the “atomic bomb of the poor” and noted that cyber-warfare represents an asymmetric means to fill gaps in weapons development (China News, September 29, 2014).

Liang Siyu of the Third Research Institute of the Ministry of Public Security and Kong Huafeng of Wuhan Business University have written that China needs to “break the traditional concept of offense and defense and incrementally shift from passive defense to comprehensive active defense” as cross-border network attacks grow both in number and complexity (Computer Applications and Software, December 2019). Researchers at the China Academy of Information and Communications Technology, a think-tank directly subordinate to the Ministry of Industry and Information Technology (MIIT), have discussed the importance of focusing on breakthroughs in “core offensive and defensive technologies,” bolstering the training of personnel working on offensive cyber operations, and learning from offense-oriented cyber drills organized by the US and European countries (Information and Communications Technology and Policy, November 17, 2020).

Simultaneously, Chinese academics and policy elites have conducted extensive research on power grid infiltration, noting that it is a highly effective tactic to deter or defeat an adversary that requires minimal resources. Cao Qiang, an associate researcher at the Asia-Pacific Development Research Center of Nanjing University, published an article in the academic journal of the MIIT stating that “attacking opponents’ power grids, water networks, financial terminals, communication networks, nuclear facilities, and other physical institutions have become one of the most cheap and efficient options for war” (Information Security and Communications Privacy, September 26, 2019). He noted how the US was able to successfully destroy centrifuges Iran utilized to extract enriched uranium for its nuclear program without using any troops whatsoever.

To this end, Chinese scientists have engaged in research projects determining how to exploit vulnerabilities specifically in the US power grid. As far back as 2009, Jian Weiwang and Li Lirong of the Institute of Systems Engineering at Dalian University of Technology published a paper in an international journal on the process of attacking a small US power grid sub-network with the aim of causing cascading failure in the entire US power grid (Safety Science, December 2009). Li Xianrong, deputy chief engineer of the State Grid Corporation of China, has demonstrated in interviews an in-depth understanding of what measures the US has undertaken to secure its power grid and identified continued vulnerabilities within it that could presumably be exploited (Confidential Science and Technology, 2016). Chinese sources note that the US power grid is particularly vulnerable due to “insufficient funds and aging equipment” and noted that “70 percent of transmission lines and power transformers in the United States have been running for more than 25 years” while “60 percent of circuit breakers have been running for more than 30 years.” They note that in contrast to China’s power grid, which is managed by the state, the US power grid is “decentralized” and comprises more than 500 different electricity companies. This could lead to coordination challenges when a regional power grid in the US is attacked (Sina, June 17, 2019).

As tensions between the US and China heighten further, cyber competition between Beijing and Washington will inevitably become more acute. Key areas to watch include whether escalating cyber competition causes China to collude with Russian actors to stage cyberattacks against the US power grid or other strategic installations. Chinese elites such as Liu Yangye, Associate Professor at the National University of Defense Technology, has written that the “trend of military alliances in cyberspace is becoming increasingly clear” and that the “development of artificial intelligence, big data, and other technologies” will require “deeper information sharing” between countries. He states that it will “naturally be easier to promote alliances between countries with traditional mutual trust,” although he stops short of naming Russia (Information Security and Communications Privacy, June 17, 2019).

Overall, Chinese political elites and military strategists are becoming increasingly invested in researching and facilitating more robust offensive cyber operations. Such operations include the infiltration of the US power grid, which many Chinese analysts note is vulnerable to cyber-attacks. Concerns have already been raised about Chinese hacking and leverage over power grids in places like the Philippines and India, although Beijing vehemently denies all accusations of malign cyber activity in these countries (, November 27, 2019; Sohu, April 8, 2022). The possibility that Beijing could instigate similar attacks against the US power grid going forward, either as part of a brute force campaign to weaken the US or to deter Washington from intervening in scenarios such as a Taiwan Strait contingency, is becoming an increasingly probable scenario.

Daniel Fu is a Research Associate at Harvard Business School where he studies Chinese businesses, US-China relations, and companies caught between the US-China geopolitical crossfire.


Taiwan Anticipates Chinese Interference Leading up to 2024 Presidential Election

The Taiwanese government is on high alert regarding the possibility of Chinese election interference leading up to Taiwan’s presidential election in January 2024. While Taiwanese elected officials—such as President Tsai Ing-wen—have repeatedly alluded to the challenges posed by Chinese influence operations and misinformation, this recent report from Taiwan’s National Security Council provides explicit details of the PRC’s methodology. As one Taiwanese security official noted, “they hope to influence Taiwanese by reaching out to the grassroots. They hope to influence swing voters who don’t have particular political affiliation and would vote for whoever gives them benefits.” Under the Anti-Infiltration Act (反滲透法), it is illegal in Taiwan for any political organization to accept campaign funds from “external hostile forces”—including the PRC. China has, however, developed covert tactics to bypass Taiwan’s law enforcement. According to Taiwanese government officials, Beijing plans on illicitly funding PRC-friendly candidates using two main methods: group tours and communication apps.

Historically, to exert influence on Taiwanese public opinion, Beijing has sponsored free trips to Mainland China under the auspice of cross-Strait exchange organizations. Typically, the PRC aims to target Taiwanese citizens involved in election campaigns in order to influence voting decisions. Given this approach, small political parties that advocate for the one-China principle (一中国原则), local councilors, and religious organizations that organize exchange activities with the PRC are regarded as especially high risk targets. Leading up to the 2024 election, Taiwanese officials anticipate Beijing will offer free trips to hundreds of influential Taiwanese, specially targeting local politicians ranging from borough chiefs to village heads. Working with travel agencies, China could ask members of Taiwanese tour groups to carry cash back into Taiwan, a covert operation that could bypass Taiwan’s Anti-Infiltration Act.

Another election interference method identified by Taiwanese intelligence is Beijing’s use of communication apps. China could employ popular social networking apps such as WeChat to directly transfer funds to Taiwanese users. The report cautions against the potential for the CCP to “instruct candidates to set up public WeChat accounts and then mobilize users to give monetary support via ‘viewer donation.’” Through the use of these apps, the CCP may specifically direct their political donations towards domestic groups that hold pro-China positions.

Given the challenges the Taiwanese government faces in regulating illicit election funds, many grassroots NGOs in Taiwan such as Citizen Congress Watch are advocating for stronger oversight and enforcement mechanisms during elections. In their view, the Anti-Infiltration Act is not enough to prevent PRC interference. Notably, despite the fact that the law was enacted over three years ago, no Chinese individual, organization, or corporation has been prosecuted. As China’s intention to influence the election is abundantly clear to many Taiwanese observers, NGOs such as Citizen Congress Watch contend that stronger measures will need to be implemented leading up to the 2024 election.

Lithuania’s Indo-Pacific Strategy Sidelines China

On July 5, days before the NATO summit in Vilnius, Lithuania’s Ministry of Foreign Affairs released a new report, titled “Lithuania’s Indo-Pacific Strategy – For a Secure, Resilient and Prosperous Future.” Approved by the Lithuanian government, the strategy sets Vilnius apart from other European countries by employing unusually harsh language in its approach toward Beijing. Various European countries such as Germany, France, the UK, the Netherlands, and the Czech Republic as well as European Union have released their own Indo-Pacific strategies, emphasizing the importance of deepening strategic engagement in the region. However, Lithuania’s document stands out for its explicit mention of “red lines,” which serve as a warning against possible Chinese military assistance for Russia’s aggression against Ukraine and any use of force to alter the status quo in the Taiwan Strait. The strategy underscores that such actions would “prompt a legitimate response from countries committed to upholding the rules-based international order.”

Lithuania’s Foreign Affairs Minister, Gabrielius Landsbergis, stated that “the Indo-Pacific Strategy is a new and significant step in strengthening comprehensive cooperation between Lithuania and the region. I am pleased to note that, with the Strategy having been approved, Lithuania now finds itself among global leaders.” Landsbergis expressed that the upcoming NATO summit in Vilnius will welcome the heads of Australia, Japan, the Republic of Korea, and New Zealand for the opportunity to discuss joint actions on implementing the strategy.

Vilnius has taken a more belligerent stance toward Beijing as it has faced Chinese economic coercion due to its increased engagement with Taiwan and other Indo-Pacific countries. The strategy even notes that “unsuccessful attempts by China to exert economic and diplomatic pressure on Lithuania proves that a country can withstand economic blackmail if it has built up societal resilience and has reliable partners.” Despite establishing diplomatic relations in 1991, the relationship between China and Lithuania deteriorated in 2021 when Taiwan opened a de facto embassy in Vilnius, which was called “The Taiwanese Representative Office.” This action, the first of its kind in Europe to use the appellation “Taiwan” rather than “Taipei,” led to tensions between the two nations. In response, Lithuania further provoked China by opening an office in Taiwan. These actions resulted in China recalling its ambassador, downgrading diplomatic relations, and imposing export controls as a means of punishing Lithuania for its stance. In this vein, Lithuania has opened embassies in Australia, the Republic of Korea, and Singapore. In return, Indo-Pacific countries are strengthening their diplomatic engagement with Vilnius. For example, Australia has opened a trade office in Lithuania, while India has opened an embassy and South Korea has also expressed its intention to do so in the near future.

“Lithuania’s Indo-Pacific Strategy – For a Secure, Resilient and Prosperous Future” demonstrates the growing importance of the Indo-Pacific region as a cornerstone of shared security and prosperity. In short, Lithuania’s Indo-Pacific strategy offers a viable approach to enhancing a country’s resilience in the face of economic and diplomatic coercion. Despite efforts from Beijing to punish Lithuania’s engagement with Taiwan, Vilnius has found a means to bolster security, prosperity, and connectivity with likeminded partners in the Indo-Pacific. As one Lithuanian official noted: “It is crucial to work with Indo-Pacific societies in order to curtail the spread of Russian disinformation bolstered by China and China’s informational pressure against Taiwan.”

China Moves to Deepen Ties with the Solomon Islands

On July 10, the Prime Minister of the Solomon Islands, Manasseh Sogavare, and Chinese President Xi Jinping announced plans to bolster relations and establish a new “comprehensive strategic partnership.” The new partnership is China’s latest move in its attempt to project its influence deeper into the Pacific Island region militarily, economically, and politically.  According to the two governments, the partnership is aimed at accelerating the development of the Solomon Islands, with Sogavare stating that his country: “Has a lot to learn from China’s development experience.”

In terms of economic and technical assistance, China has already invested significantly into its relations with the Solomon Islands. Notably, the Solomon Islands have relied on Chinese products for its internal infrastructure, including the PRC’s state-run China Railway promising to improve the Solomon Islands’ transportation lines for the upcoming Pacific Games. Additionally, Beijing provided the Solomon Islands a $66 million loan to have Huawei construct 161 mobile telecommunication towers.

As China’s security ambitions and power projection expands, Beijing seeks to further de-couple the Solomon Islands away from its traditional security relationship with Australia. Through a gradual process of economic and military engagement, Beijing has been largely successful in strengthening its security ties with the Pacific Island country. The first significant move was the Solomon Islands’ decision to switch its diplomatic recognition from Taiwan to Beijing in 2019. In 2022, to the concern of many in Washington, a security arrangement was signed between China and the Solomon Islands, the details of which have not been publicly publicly disclosed. Following this development, many fear that the Solomon Islands will be host to some form of Chinese troops, despite Sogavare’s efforts to quell Western fears by assuring Australia, the US, and other regional partners that it would not allow a Chinese military base on its soil. This most recent development, the comprehensive strategic partnership, is likely to push the Solomon Islands toward China’s sphere of influence and away from Australia and the West, heightening security concerns given the strategic location of the islands.

Belarus Signs Action Plan With Chinese SOE to Develop Agricultural Machines

On July 10, the Belarusian Ministry of Industry signed an “action plan” in a meeting with China National Machinery Industry Corporation (Sinomach), a Chinese state-owned enterprise (SOE), in order to develop Belarusian production of “agricultural and utility machines [and] machine tool[s],” as well as pave the road for future Chinese investment in Belarus. The meeting also included discussions regarding the general modernization of Belarussian industrial enterprises and the possible supply of component parts from China to be used in Belarus’s machine industry.

Sinomach is one of China’s SOE conglomerates, and by 2019 had invested more than $4 billion in Belarus. This has been done alongside their role as a major investor and biggest shareholder (initially 60 percent, now 45.7 percent) of the Great Stone Industrial Park outside Minsk. Great Stone was initially proposed in March 2010 by then-Vice President Xi Jinping; two months after construction on the industrial park began in March 2015, Xi called the project “the Pearl on the Silk Road.” Since the first phase of construction was completed in 2019, Great Stone has transformed into the central locus of Chinese investment in Belarus—becoming the largest industrial development zone in Europe, with more than 100 companies participating, more than half of which are Chinese.

This most recent move is also representative of at least two other major trends: ongoing cooperation between Minsk and Beijing, and China’s specific efforts to diversify its agricultural imports away from the US and/or increase domestic production of foodstuffs. In September 2022, Belarus’s relationship with China was upgraded to an “all-weather” comprehensive strategic partnership, notionally placing it at a level next to or above Pakistan (and below only Russia) in the hierarchy of Beijing’s diplomatic nomenclature. That same month, Belarus formally began the process to join the Shanghai Cooperation Organization (SCO) as a full member; Belarus has been an Observer in the SCO since 2015, and President Lukashenka recently expressed confidence that his country’s application would be accepted in the near future.

On the agricultural side, Belarus is a major supplier of potash, a key fertilizer. In 2021, Belarus was the world’s third largest supplier of potash (16.5 percent), just behind Russia. In 2022, however, production fell to a mere 7.5 percent of the global total, despite having the second-largest proven reserves of the mineral. As China works to expand its domestic agricultural production, as mentioned in the 14th Five-Year Plan (2021-2025), it will continue to demand more potash (as well as expand its own, already sizable, production). China has moved to expand the import of foodstuffs from Belarus; this amounted to $500 million in 2022, up 40 percent from 2021, and is expect to reach nearly $1 billion by the end of 2023. While this represents only a small portion of China’s $122.8 billion foodstuff import market in 2022, it follows a trend of increased Chinese interest in importing agricultural goods from countries like Brazil and South Africa in order to decrease their reliance on the US.