Are China's hackers shying away from US targets?

A report indicates that Chinese cyberattacks on US companies are declining. But other experts say hackers are simply changing tack.

Chinese hackers appear to have curtailed attacks on US businesses since Washington and Beijing inked a landmark deal to reduce corporate cyberespionage, according to a firm that investigates international digital crimes.

But even though research released Monday shows Chinese President Xi Jinping may be working to uphold the agreement reached in September, many cybersecurity experts cast doubt on the notion that China's hackers will give up trying to infiltrate US corporate networks on the hunt for intellectual property.

"Even in the best of worlds, nobody expected this to totally disappear,” says Adam Segal, a senior fellow for China studies at the Council on Foreign Relations. “If there is a significant decline, I suspect there would still be cases of commercial espionage."

President Obama made China's alleged digital misdeeds a national policy priority after the massive Office of Personnel Management breach that administration officials blamed on Beijing – following a string of corporate breaches connected to Chinese hackers. 

Administration officials reportedly said the White House was considering retaliating against Beijing for the OPM incursion, but there hasn't been any public evidence of action related to OPM on the part of the US. Following the cyberespionage deal between Obama and President Xi, the Washington Post reported that Chinese government had arrested several hackers in connection with the OPM breach.

While the report released Monday by the cybersecurity firm FireEye seems to indicate US pressure and China's actions are curbing the number of digital attacks, Mr. Segal says that Chinese hackers may simply be changing tactics or targets so they don't draw US condemnation. 

The new normal when it comes to cyberattacks from China, he said, "would probably be below a certain bar that would provoke a US response.”

FireEye has been tracking Chinese hacker activities for many years, and has been instrumental in pinpointing groups that appear to operate within the People’s Liberation Army (PLA), but it's a challenge for any firm to fully assess the scope of China's myriad hacker operations.

"There’s not enough data to know the true extent of these operations,” says Oren Falkowitz, a former National Security Agency analyst who's chief executive of the cybersecurity firm Area 1 Security, referring to the FireEye report.

"Saying that there’s some sort of rise or decline is really based upon what I’d call a small sample size – it’s very challenging," he says.

But FireEye executives say there's enough evidence available to show a marked decline in cyberattacks coming out of China, even if it's difficult to pinpoint which groups are slowing down.

"All of the activity that’s coming out of China is by no means assumed to be the work of the Chinese government or even heavily sponsored by it. There’s a lot of possibilities about who might be on the keyboard," says Michael Oppenheim, manager of intelligence operations at FireEye. "China is not a monolith."

Since September's agreement, the firm found that breaches fell from 60 intrusions in February 2013 to just a handful today – mainly against the semiconductor and chemical industries.

What's more, in February, reports indicated that Xi seemed to be taking more control over the military's hacking capabilities. FireEye also suggested the PLA might now have central control over cybersecurity – including more funding to eliminate criminal hacking elements.

The downward trend cited by FireEye also coincides with the Justice Department’s 2014 indictment of five PLA members for allegedly stealing trade secrets from US companies in the steel, nuclear, and solar power industries. None of the soldiers have appeared in a US court.

FireEye also says their current research shows that several dedicated groups are still working to penetrate US corporate networks.

“We took a hard look at all of our holdings going back to 2013, we saw a notable decline in network intrusions from suspected China-based groups,” said William Glass, one of the firm's analysts. “But we still see about 13 China-based groups that continue to conduct cyberespionage operations. The threat has not disappeared, it has just decreased.”