China Telecom hijacked traffic, US report says

PUBLISHED : Thursday, 18 November, 2010, 12:00am
UPDATED : Thursday, 18 November, 2010, 12:00am

Hong Kong-listed China Telecom 'hijacked' North American government and military internet traffic, potentially to grab encrypted data, a damning US government report claimed.

In an 18-minute exercise in April that affected 15 per cent of the world's internet traffic, China Telecom re-routed traffic from American internet servers to servers on the mainland, the report claimed.

US government agencies including the Senate, the military, the office of the secretary of defence and the commerce department were affected, the study, released last night by the US-China Economic and Security Review Commission, said.

'China Telecom did not hijack internet traffic,' a Hong Kong-based spokesman said.

The allegation was part of a 316-page litany of complaints against Beijing in the commission's annual report to Congress. The paper slammed China for undervaluing its currency, squeezing foreign technology manufacturers out of the country after accessing their intellectual property, and hurting hi-tech businesses globally by restricting rare earths exports.

The China Telecom case was publicised by bloggers and trade journals in April, though they largely viewed it as a technical mishap. But the study claimed the company may have launched the attacks to 'compromise the security of encrypted data'.

The report added there was 'no way to determine what, if anything, Chinese telecommunications firms did to the hijacked data'.

In January, Google claimed infiltrators from the mainland accessed its servers, stole its valuable source code and hacked into mainland human rights activists' e-mail accounts.

The spat resulted in the search engine giant leaving China.

Google told the US commission that the perpetrators of the attack masqueraded as an acquaintance of one of the search engine firm's employees. By persuading the staff member to open a link to an innocuous looking photo-sharing website, the attackers loaded spying technology, known as malware, on to the Google system and then stole files.

The commission added foreign technology manufacturers were now being 'squeezed out' of the mainland because government-owned companies had not had enough time to copy their technology.

The report claimed international firms were increasingly being shut out of bidding for mainland government contracts. 'Perception is growing among foreign firms that they are no longer welcome in China once their technology has been siphoned off,' the commission said.

It added 57 per cent of US technology firms operating in China felt they were losing business.

The study claimed Boeing, the US-based defence contractor, and its European rival, Airbus, 'are compelled to provide technology and know-how offsets in return for market access'. In 2005, Airbus agreed to set up a final assembly line on the mainland in return for US$10 billion of aircraft contracts, the report said.

Such agreements strengthened China's ability to strike American military bases, it claimed.

An official from the information department of the Ministry of Foreign Affairs said the issues raised in the report were about trade and economics and should be directed to the Ministry of Commerce. The commerce ministry could not be reached.

Intent unclear

The re-routing of servers by China Telecom affected this volume of global internet traffic in April: 15%