China is using cyber warfare to exploit the Covid-19 pandemic

Cybersecurity is one of the few areas where significant growth is expected, as China, South Korea and Russia engage in cyberwar with the west and criminals target homeworkers.

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  1. Garry White

Australia is a giant kangaroo that serves as a dog of the United States. That’s according to a letter published this week in the Chinese state-run tabloid The Global Times. Australia’s successful push for an “impartial, independent and comprehensive evaluation” of the international response to Covid-19, which was agreed by the World Health Organisations (WHO’s) Health Assembly this week, has caused Beijing to bristle. It has deployed it two main weapons – trade restrictions and cyberattacks. The latter of these is more significant.

China accelerates internet activity

Accusations of cyberattacks by China on its foes are becoming increasingly common. The biggest battlefront in the new Cold War between the West and China look set to be fought online, making cybersecurity one of the most important growth areas in technology over the next few years. 

As a direct result of the push for a Covid-19 inquiry by Scott Morrison’s government, China is targeting imports of Australian imports of beef, barley – and now iron ore. It also appears that Beijing is using the Covid-19 crisis to direct internet attacks on its geopolitical foes.

Last week, US authorities directly accused the People’s Republic of China of targeting Covid-19 research organisations. The Federal Bureau of Investigation (FBI) and Cybersecurity and Infrastructure Security Agency (CISA) issued a joint statement accusing investigating the targeting and compromise of US organisations conducting Covid-19-related research by “China affiliated cyber actors and non-traditional collectors”. The potential theft of this information jeopardises the delivery of secure, effective, and efficient treatment options, US authorities argue.

The statement told US companies to assume that any press attention associating a business with Covid-19 research will lead to increased cyber activity against them. It advised that such businesses actively scan their web applications for unauthorised access, modification or anomalous activities.

Trade war threats against China

On Wednesday, Australia issued a similar statement. While not mentioning China specifically, Canberra accused “countries” of conducting and supporting cyberattacks under the cover of the Covid-19 crisis. In response, China ratcheted up its rhetoric against Australia, targeting its most important export, iron ore. This trade dispute could directly impact UK-listed miners BHP and Rio Tinto if it escalates further.

China is imposing new inspection procedures and rules from 1 June that could ultimately be used to block or delay up Australian shipments of the steel-making ingredient, as customs officials may be required to conduct toxic element checks. A notice was issued that will force investigations on iron ore shipments at the request of the trader or importer. This is probably not a major issue in the short term for the listed miners – but is more a threat to the Australian government that Beijing won’t tolerate dissent.

Earlier this month, there was an alleged cyberattack on the office of the Western Australian Premier Mark McGowan. This is the country’s main iron-ore producing region and has been blamed on actors affiliated with China. An investigation by Israeli cybersecurity group Check Point has identified the tool used as a weapon developed by a group of hackers called Naikon, previously identified as part of the Chinese military.

Lockdown a boon for cybercrime

Cyberattacks are accelerating because of the swift introduction of remote working during lockdown, with many ad hoc systems put into place that have significant vulnerabilities. Away from state actors targeting intellectual property and corporate secrets, lockdown measures mean Christmas has come early for the world’s cybercriminals. Phishing emails, which attempt to grab personal information such as bank account details, increased significantly in the wake of Covid-19, with mass emails promising windfalls such as virus-related tax returns. WHO has warned of fraudulent emails sent by criminals posing as the health organisation and cybercriminals have also been impersonating the US Center for Disease Control. There has also been the spread of fear-mongering claims including that the Covid-19 transmission was increasing – claims that are more likely to come from a state actor than a criminal organisation.

Of course, China’s cyber-targeting of western companies to illicitly obtain valuable intellectual property is nothing new – but these attacks appear to be accelerating. They are more significant threats to western companies than trade threats against iron-ore that are unlikely to be carried out. China’s economy remains vulnerable after shrinking in the first quarter of 2020 for the first time in almost 30 years and such a move against commodity imports could potentially dampen activity even more.

No security is not an option

The main point for investors is that the Covid-19 crisis will force businesses into spending significantly more on cybersecurity. This has now become an unavoidable capital expenditure for companies big and small – not only because of regulatory and compliance measures but because new patterns of working have created vulnerabilities in systems that hackers will pounce on with delight. No company wants their valuable intellectual property exposed because of a lack of firewalls or antivirus packages on laptops being used at home.

Online security is therefore positioned to be one of the few significant growth areas in markets, with companies operating in the area seeing a large demand for products and subscriptions, even as businesses cut expenditure in other areas. Technology is widely accepted to be a major beneficiary of the change in working patterns as a result of Covid-19 lockdowns. But, like hackers target their actions in a very specific way, technology investors should be looking at cybersecurity as one of their first ports of call.

A version of this article appeared previously in the Daily Telegraph.

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