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China Has Ability to Hijack U.S. Military Data, Report Says

China in the past year demonstrated it can direct Internet traffic, giving the nation the capability to exploit “hijacked” data from the U.S. military and other sources, according to a new report.

Recent actions raise questions that “China might seek intentionally to leverage these abilities to assert some level of control over the Internet,” according to excerpts from the final draft of an annual report by the U.S.-China Economic and Security Review Commission. “Any attempt to do this would likely be counter to the interests of the United States and other countries.”

On April 8, China Telecom Corp., the nation’s third-largest mobile-phone company, instructed U.S. and other foreign-based Internet servers to route traffic to Chinese servers, the report said. The 18-minute re-routing included traffic from the U.S. military, the Senate and the office of Defense Secretary Robert Gates.

“Although the commission has no way to determine what, if anything, Chinese telecommunications firms did to the hijacked data, incidents of this nature could have a number of serious implications,” the report said. The re-routing showed how data could be stolen and communications with websites could be disrupted, the report said.

Chinese Denial

Wang Baodong, a spokesman for the Chinese Embassy in the U.S., denied that China had any intention of using the capability to harm the U.S. or other nations.

“Chinese laws strictly forbid hacking or any other illegal activities that’ll compromise the legitimate interests of China or any other countries,” he said in an e-mail.

The report reaches “unacceptable” conclusions, Wang said in an interview. “The report was based on unfounded, groundless information,” Wang said.

Created by Congress in 2000, the commission has been documenting what China’s economic and military rise means for the U.S. An October 2009 report Northrop Grumman Corp. prepared for the commission detailed the importance the Chinese military places on computer networks.

China’s Internet policies raised concerns in the Obama administration after Google Inc., owner of the world’s most popular search engine, said in January it would stop censoring search results in China following a security breach.

Shortly after Mountain View, California-based Google’s announcement in January, Secretary of State Hillary Clinton said perpetrators of cyber attacks such as the one made on Google must face consequences.

The Chinese government repeatedly has said it wasn’t behind the attacks on Google, which the company said originated in China.

Decline in Attacks

The report also focuses on how China is interested in stripping away the Internet’s anonymity.

China wants to create a system that would require people to provide their given names and potentially other information to gain access to the Internet, the report said, citing a Chinese official’s speech.

The Chinese government has farmed out much of its censorship activities to the private sector, such as Baidu Inc., which operates the country’s most popular search engine, according to the report.

Executives at Beijing-based Baidu have criticized the censorship, which they’re required to fund, the report said.

While the government’s strategy is to control as much of the Chinese Internet dialogue as possible, it’s been “selectively responsive” to grievances aired on the Web, giving citizens a sense of empowerment, the report said.

The commission’s report also said that 2010 “could be the first year in a decade” the Defense Department recorded a decline in attacks against its computer networks. The department said the decrease is the result of pre-emptive measures it’s taken to thwart attacks.

To contact the reporters on this story: Jeff Bliss in Washington at jbliss@bloomberg.net Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net

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